Q2 2024 Norwegian Cruise Line Holdings Ltd Earnings Call

[music].

Operator: Good morning, and welcome to the Norwegian Cruise Line Holdings second quarter 2024 earnings conference. My name is Donna, and I will be your operator. At this time, all participants are in a listen-only mode.

Good morning, and welcome to the Norwegian Cruise line Holdings second quarter 2024 earnings Conference call.

Operator: Later, we will conduct a question and answer session, and instructions for the session will follow at that time. If anyone should require 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 will now turn the conference over to your host, Sarah Inman. Ms. Inman, please proceed. Good morning, everyone.

Donna: My name is Donna, and I will be your operator. At this time, all participants are in a listen-only mode.

Donna: My name is Donna and I will be your operator at this time all participants are in a listen only mode.

Donna: Later, we will conduct a question-and-answer session, and instructions for the session will follow at that time. If anyone should require 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.

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

Donna: If anyone should require 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 will now turn the conference over to your host Sara Hinman.

Sarah Inmon: I will now turn the conference over to your host, Sarah Inmon. Ms. Inmon, please proceed.

Speaker Change: Please proceed.

Sarah Inmon: Good morning, everyone. Thanks for joining us for our 2nd 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. As a reminder, this conference call is being simultaneously webcast on the company's investor relations website at www.nclhld.com/backslashinvestors. Throughout the call, we will refer to a slide presentation that can be found on our Investor Relations website. Both the conference call and the presentation will be available for replay for 30 days following today's call.

Sarah Inman: Thanks for joining us for our second 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. As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website at www.nclhltd.com backslash 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 the presentation will be available for replay for 30 days following the call.

Sarah Inman: Good morning, everyone. Thanks for joining us for our second 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. As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website.

At Www dot and CLA to LTV Dot com backslash investors.

Sarah Inman: Throughout the call we will refer to a slide presentation that can be found on our Investor Relations website, both the conference call and the presentation will be available for replay for 30 days. Following today's call before we begin I would like to cover a few items. Our press release. The second quarter 2024 results was issued this morning and is available on the Investor Relations website.

Sarah Inmon: Before we begin, I would like to cover a few items. Our press release with 2nd quarter 2024 results with issues this morning and is available on the investor relations website. This call includes forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with the cautionary statement contained in our earnings release. Our comments may also reference non-GAAP financial measures. A reconciliation is the most directly comparable gap financial measure, and other associated disclosures are contained in our earnings release and presentation.

Sarah Inman: Before we begin, I would like to cover a few items. Our press release with second quarter 2024 results was issued this morning and is available on the Investor Relations website. This call includes forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with the cautionary statement contained in our earnings release. Our comments may also reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and presentation. With that, I'd like to turn the call over to Harry. Okay?

Right.

This call includes forward looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements.

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

Sarah Inman: Our comments May also reference non-GAAP financial measures a reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and presentation with that I'd like to turn the call over to Harry Harry.

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

Harry Sommer: Well, thank you, Sarah. And good morning, everyone. We appreciate you joining us today for our 2nd quarter 2024 earnings call. This is an exciting time for Norwegian Cruise Line Holdings. The 2nd quarter has surpassed our expectations, with results exceeding guidance on all key metrics, allowing us to increase our full-year guidance for the 3rd time this year.

Harry J. Sommer: Well, thank you, Sarah. And good morning, everyone. We appreciate you joining us today for our second quarter 2024 earnings call. This is an exciting time for Norwegian Cruise Line Holdings. The second quarter has surpassed our expectations, with results exceeding guidance on all key metrics, allowing us to increase our full-year guidance for the third time this year. At our Investor Day, we emphasize our unwavering commitment to balancing return on experience, what we call ROX, and return on investment, or ROI. This strategy is clearly yielding results.

Harry: Well, thank you Sarah and good morning, everyone. We appreciate you joining us today for our second quarter 2024 earnings call.

Harry: This is an exciting time for Norwegian cruise line holdings, the second quarter has surpassed our expectations with results exceeding guidance on all key metrics, allowing us to increase our full year guidance for the third time this year at our Investor day, we emphasized our unwavering commitment to balancing return on experience.

Harry Sommer: At our investor day, we emphasize our unwavering commitment to balancing return on experience, what we call ROX, and return on investment, or ROI. This strategy is clearly yielding results. We are witnessing robust demand with strong pricing and looking volumes, leading to record-breaking advanced ticket sales. This demand, coupled with our onboard offering and high quality service, has led to strong get satisfaction scores while we continue to effectively control costs.

Harry: What we call <unk> and return on investment or ROI.

Harry: This strategy is clearly yielding results, we are waiting to see robust demand with strong pricing and booking volumes leading to record breaking advanced ticket sales.

Harry J. Sommer: We are witnessing robust demand, with high pricing and booking volumes, leading to record-breaking advance ticket sales. This demand, coupled with our on-board offering and high-quality service, has led to strong guest satisfaction scores while we continue to effectively control costs. These indicators affirm that our strategic approach is positioning us for sustained long-term success on our well-defined path forward for continued growth to achieve our Charting the Course strategy, which includes ambitious 2026 financial and sustainability targets.

Harry: This demand coupled with our onboard offering and high quality service has led to strong guest satisfaction scores, while we continue to effectively control costs.

Harry Sommer: These indicators affirm that our strategic approach is positioning us for sustained long-term success on our well-defined path forward for continued growth to achieve our Charting the Course strategy, which includes ambitious 2026 financial and sustainability targets. Today, I'm excited to discuss some of our key milestones for the second quarter and the factors that drove our enhanced guidance through for the remainder of 2024. We're thrilled to see how the pillars and initiatives under our Charting the Course strategy are moving the needle for our business. As these are strongly underpinned by our global sustainability programs, Salon Sustain, we're also excited to share the progress outlined in our recent sustainability reports.

Harry: These indicators are affirmed that our strategic approach is positioning us for sustained long term success on a well defined path forward for continued growth to achieve our charting the course strategy, which includes ambitious 2026 financial and sustainability targets.

Harry J. Sommer: Today, I'm excited to discuss some of our key milestones for the second quarter and the factors that drove our enhanced guidance for the remainder of 2024. We're thrilled to see how the pillars and initiatives under our Charting the Core strategy are moving the needle for us. As these are strongly underpinned by our global sustainability program, Sail and Sustain, we're also excited to share the progress outlined in our recent sustainability report.

Harry: Today I'm excited to discuss some of our key milestones for the second quarter and the factors that drove our enhanced guidance for the remainder of 2024.

Harry: We're thrilled to see how the pillars and initiatives under our charting the course strategy are moving the needle for our business.

Harry: As these are strongly underpinned by our global sustainability program CL and sustain we're also excited to share the progress outlined in our recent sustainability report later in the call I will hand, it over to Mark who will provide more color on our second quarter performance and updated outlook for 2024.

Harry J. Sommer: Later in the call, I will hand it over to Mark, who will provide more color on our second quarter performance and updated outlook for 2020. We kicked off the second quarter with impressive momentum, continuing the positive trends from the beginning of 2024 and proudly executing on our exceptional performance pillar. As you can see on slide four, our second quarter results beat guidance across the board. Adjusted EBITDA grew 14%, and adjusted EPS was up 33%.

Harry Sommer: Later in the call, I will hand it over to Mark, who will provide more color on our second quarter performance and updated outlook for 2024. We kicked off the second quarter with impressive momentum, continuing the positive trends from the beginning of 2024 and proudly executing on our exceptional performance pillar. As you can see on slide four, our second quarter results beat guidance across the board. Adjusted a bit of group 14% and adjusted EPS was up 33%. Notably, we hit our year-end target of decreasing net leverage by one and a half turns a full six months early.

Mark: We kicked off the second quarter with impressive momentum continuing the positive trends from the beginning of 2024 and proudly executing on our exceptional performance pillar.

Mark: As you can see on slide four our second quarter results beat guidance across the board adjusted EBITDA grew 14% and adjusted EPS was up 33%, notably we hit our year end target of decreasing net leverage by one and a half churn a full six months early as we move forward, we remain committed to <unk>.

Harry J. Sommer: Notably, we hit our year-end target of decreasing net leverage by one and a half turns a full six months early. As we move forward, we remain committed to further deleveraging with a clear focus and attaining a 2026 target of mid four times. These strong results also allowed us to raise our full-year revenue and earnings guidance. We now expect to end the year with an adjusted operational EBITDA margin of 34.5%, a full 400 basis point improvement over 2023, which puts us well on the way to our 2026 target of approaching historical margin levels of 39%. We also increased our adjusted EPS guidance for the full year to $1.53, an approximate 120% increase over 2023 and an impressive step forward towards our 2026 target of $2.45.

Harry Sommer: As we move forward, we remain committed to further de-leveraging with the clear focus and attaining a 2026 target of mid four times. These strong results also allowed us to raise our full year revenue and earning guidance. We now expect to end the year with adjusted operational Ibnah margin of 34.5%, a full 400 basis point improvement over 2023, which puts us well on the way to our 2026 target of approaching historical margin levels of 39%. We also increase our adjusted EPS guidance for the full year to $1.53 and approximate 120% increase over 2023 and an impressive step forward towards our 2026 target of $2.45.

Mark: Further deleveraging with a clear focus in obtaining a 2026 target of mid four times.

Mark: These strong results also allowed us to raise our full year revenue and earnings guidance. We now expect to end the year with adjusted operational EBITA margin of 34, 5%, a full 400 basis point improvement over 2023, which puts us well on the way to our 2026 target of approaching historical margin levels.

Mark: A 39%.

Mark: We also increased our adjusted EPS guidance for the full year to $1 53, and approximate 120% increase over 2023, and an impressive step forward towards our 2026 target of $2 45.

Harry Sommer: And lastly, we are on track to achieve double-digit adjusted ROIC by year-end. This acceleration in our financial results speaks volumes about our team's dedication and hard work.

Harry J. Sommer: And lastly, we are on track to achieve double-digit adjusted ROIC by year-end. This acceleration in our financial results speaks volumes about our team's dedication and hard work. Turning to slide 5, I want to emphasize how our long-term growth platform pillar is set to deliver measured capacity growth and optimize our fleet to drive strong financial returns. Historically, capacity growth has driven outsized revenue and adjusted EBIT growth, and we expect this trend to continue.

Mark: And lastly, we are on track to achieve double digit adjusted ROIC by year end. This acceleration in our financial results speaks volumes about our team's dedication and hard work.

Harry Sommer: Turning to slide five, I want to emphasize how our long-term growth platform dealer is set to deliver measured capacity growth and optimize our fleet to drive strong financial returns. Historically, capacity growth has driven out-of-size revenue and adjusted Ibnah growth, and we expect this trend to continue with the incorporation of larger and more efficient state-of-the-art decimal store fleet we shall now get some updates on. Turning to slide six, we are currently focused on our next two new ships being delivered in 2025, both currently scheduled for an on-time delivery. Our first milestone in the quarter was the flowed out of Norwegian Aqua, which we celebrated with our partner Fincantieri.

Mark: Turning to slide five I want to emphasize how our long term growth platform pillar is set to deliver measured capacity growth and optimize our fleet to drive strong financial returns.

Mark: Historically capacity growth is 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 store fleet, we shall now give some updates on <unk>.

Harry J. Sommer: With the incorporation of larger and more efficient, state-of-the-art vessels to our fleet, we shall now give some updates. Turning to slide six, we are currently focused on our next two new ships being delivered in 2025, both currently scheduled for on-time delivery. Our first milestone in the quarter was the float out of Norwegian Aqua, which we celebrated with our partner Fincantieri. Norwegian Aqua, the first ship in the next generation Prima Plus class, is an evolution of the previous Prima class ship and will be 10% larger.

Mark: Turning to slide six we are currently focused on our next two new ships being delivered in 2025. Both currently scheduled for an on time delivery. Our first milestone in the quarter was the slowdown of Norwegian Aqua, which we celebrated with our partner Fincantieri Norwegian Aqua. The first ship in the next generation Prima plus <unk>.

Harry Sommer: Norwegian Aqua, the first ship in the next generation Prima Plus Class, is an evolution of the previous Prima Class ship and will be 10% marked. This space allows for more innovative offerings, including the world's first ever hybrid rollercoaster and water slide, the Aqua Slide Coaster. We are also building a digital sports complex with an interactive LED floor and our most expansive 360-degree outdoor promenade, the Ocean Boulevard. We cannot wait for Aqua to make her debut in April 2025. Most recently, we also celebrated the float out of Ocean of the Lora at the Incantiary Shipyard in Genoa.

Mark: <unk> is an evolution of the previous premium class ship and will be 10% larger.

Harry J. Sommer: This space allows for more innovative offerings, including the world's first-ever hybrid roller coaster and water slide, the Aqua Slide Coast. We are also building a digital sports complex with an interactive LED floor and our most expansive 360-degree outdoor promenade, the Ocean Boulevard. We cannot wait for Aqua to make her debut in April 2025.

Mark: This space allows for more innovative offerings, including the worlds first ever hybrid roller coaster in water slide the Aqua <unk> cluster.

Mark: We are also building a digital sports complex with an interactive LGD floor and our most extensive 360 degree outdoor promenade. The Ocean Boulevard, we cannot wait for Aqua to make her debut in April 2025.

Harry J. Sommer: Most recently, we also celebrated the float out of Oceania Veloura at the Cincantieri Shipyard in Genoa. This marks the transition of the vessel from dry dock to fitting out berth, initiating the final stages of construction. Allura will redefine luxury with its designer-inspired interiors, including opulent suites, sophisticated lounges, and exceptional new dining venues.

Speaker Change: Most recently, we also celebrated the float out of Oceana to Lora at the <unk> shipyard in general this marks the transition of the vessels for Drydock to fitting out birth initiating the final stages of construction allure will redefine luxury with its designer inspired interiors, including <unk> suite.

Harry Sommer: This marked the transition of the vessel from dry dock to fitting out the earth, initiating the final stages of construction. A Lora will redefine luxury with its designer-inspired interiors, including opulent suites, sophisticated lounges, and exceptional new dining venues. Scheduled to enter service in the Mediterranean in July 2025, she will follow her normal summer season with winter voyages in the Caribbean. Ocean was also busy this quarter with the return to service of Marina after an extensive refurbishment. This all-encompassing rejuvenation includes the addition of three new dining options and reimagined penthouse suites.

Mark: Sophisticated lounges and exceptional new dining venues scheduled to enter service in the Mediterranean in July 2025, She will follow her normal summer season with winter of wages in the Caribbean.

Harry J. Sommer: Scheduled to enter service in the Mediterranean in July 2025, she will follow her normal summer season with winter voyages in the Caribbean. Oceania was also busy this quarter with the return to service of Marina after an extensive refurbishment. This all-encompassing rejuvenation includes the addition of three new dining options and a reimagined penthouse. And just as we add more capacity and new features on existing ships, we are also excited for enhancements to our destination and home port.

Mark: <unk> was also busy this quarter with the return to service of Marina after an extensive refurbishment.

Mark: This all incumbency rejuvenation includes the addition of three new dining options and re imagine penthouse suites.

Harry Sommer: And just as we add more capacity and new features on existing ships, we are also excited for enhancements to our destination and home ports. We are increasing our sailing to exciting destinations such as Bermuda and Grace Serb K, where we plan to complete construction of our two ship here towards the end of next year. We will also be adding a new home port to our roster in 2025, Jacksport and Jacksonville, Florida. In April of 2026, NCL will make its return to Philadelphia after a 17-year hiatus. With the addition of Philadelphia, NCL will now serve as seven of the top 10 largest metropolitan regions in the United States.

Mark: And just as we add more capacity and new features on existing ships. We are also excited for enhancements to our destination and home ports, we're increasing our scaling to exciting destinations such as Bermuda and great Stirrup Cay, where you plan to complete construction of our two ship here towards the end of next year, we'll also be adding a new home.

Harry J. Sommer: We're increasing our sailing to exciting destinations, such as Bermuda and Great Surf Cay, where we plan to complete construction of our two-ship pier by the end of next year. We'll also be adding a new home port to our roster in 2025, Jaxport, in Jacksonville, Florida. And in April 2026, NCO will make its return to Philadelphia after a 17-year hiatus. With the addition of Philadelphia, NCL will now serve seven of the top ten largest metropolitan regions in the United States.

Mark: Important to our roster in 2025, Jack Port in Jacksonville, Florida, and in April 2026, and seal will make his return to Philadelphia. After a 17 year hiatus with the addition of Philadelphia NCL will now service seven of the top 10 largest metropolitan regions in the United States we are.

Harry Sommer: We are excited about our deployment, and our guests are as well, as shown by our booking trends, which you can see on slide seven. The company continues to experience strong consumer demand. In the second quarter, we continue to see strong bookings, with our 12 month forward book position at the upper end of our optimal range. On strong pricing. During the second quarter, we observed continued strength in onboard revenue as well, which was driven by our guests' continued enjoyment of our short version and onboard amenities, including specialty restaurants and communication services, which had been bolstered by the continued implementation of Starlink across the fleet.

Harry J. Sommer: We are excited about our deployment, and our guests are as well, as shown by our booking trends, which you can see on slide seven. The company continues to experience strong consumer demand. In the second quarter, we continued to see strong bookings, with our 12-month forward book position at the upper end of our optimal range on strong prices. During the second quarter, we observed continued strength in onboard revenue as well, which was driven by our guests' continued enjoyment of our shore excursions and onboard amenities, including specialty restaurants and communication services, which were bolstered by the continued implementation of Starlink across the board.

Mark: Excited about our deployment and our guests are as well as shown by our booking trends, which you can see on slide seven.

Mark: The company continues to experience strong consumer demand.

Mark: In the second quarter, we continued to see strong bookings with our 12 month forward book position at the upper end of our optimal range on strong pricing.

Mark: During the second quarter, we observed continued strength in onboard revenue as well, which was driven by our guests continued enjoyment of our short excursion and onboard amenities, including specialty restaurants, and communication services, which had been bolstered by the continued implementation of starlink across the fleet.

Harry Sommer: Additionally, pre-booked onboard revenue for capacity date showed solid growth, increasing by 15% as more guests opted for pre-cruise purchases. And as we've seen from prior experience, higher pre-cruise spend typically results in higher overall spend throughout the guest cruise journey. As a result, our net yield grew 6.3% during the second quarter, surpassing our guidance by a full 200 basis points. During the second quarter, about 3% of our capacity was originally scheduled to be in the Middle East region, with high team percentages on our oceanic and region brand scheduled to be in that region. The cancellation of these itineraries resulted in a very short resell cycle.

Harry J. Sommer: Additionally, pre-booked onboard revenue for Capacity Day showed solid growth, increasing by 15% as more guests opted for pre-cruise purchases. And as we've seen from prior experience, higher pre-cruise spend typically results in higher overall spend throughout a guest's cruise journey.

Mark: Additionally, pre booked onboard revenue per capacity day showed solid growth increasing by 15% as more guests opted for pre cruise purchases and as we've seen from prior experience higher pre cruise spend typically results in higher overall spend throughout the guests crews journey.

Harry J. Sommer: As a result, our net yield grew 6.3% during the second quarter, surpassing our guidance by a full 200 days of service. During the second quarter, about 3% of our capacity was originally scheduled to be in the Middle East region, with high team percentages on our Oceania and Asia brands scheduled to be in that region. The cancellation of these itineraries resulted in a very short resale cycle.

Speaker Change: As a result, our net yield grew six 3% during the second quarter, surpassing our guidance by a full 200 basis points during the second quarter about 3% of our capacity was originally scheduled to be in the middle East region with high teen percentages on our Oceania and regent brand scheduled to.

Speaker Change: B in that region.

Speaker Change: Cancellation of these itineraries resulted in a very short resale cycle. Despite the setback results for this quarter were strong enough to offset this underscoring the robust demand environment for cruises and the agility and effectiveness of our team to overcome difficult challenges.

Harry Sommer: Despite the setback, results for this quarter were strong enough to offset this, underscoring the robust demand environment for cruises and the agility and effectiveness of our teams to overcome difficult challenges. Without a doubt, our financial performance exceeded our expectations, and we're therefore raising our yearly net yield growth guidance, increasing a hundred basis points from 7.2% to 8.2%. It is worth noting that our occupancy guidance remains essentially unchanged, as we're already guiding to full ships, so the entire increase in our guidance is on the back of stronger pricing. As such, we are anticipating strong pricing growth across all four quarters in 2024.

Harry J. Sommer: Despite this setback, results for this quarter were strong enough to offset this, underscoring the robust demand environment for cruises and the agility and effectiveness of our teams to overcome difficult challenges. Without a doubt, our financial performance exceeded our expectations. And we're therefore raising our yearly net yield growth guidance, increasing 100 basis points from 7.2% to 8.2%. However, it is worth noting that our occupancy guidance remains essentially unchanged, as we are already guiding to full shifts.

Mark: Without a doubt our financial performance exceeded our expectations and we are therefore, raising our yearly net yield growth guidance, increasing 100 basis points from seven 2% to eight 2%. It is worth noting that our occupancy guidance remains essentially unchanged.

Mark: We're already guiding to full shifts so the entire increase in our guidance is on the back of stronger pricing.

Harry J. Sommer: So the entire increase in our guidance is on the back of stronger prices. As such, we are anticipating strong price and growth across all four quarters in 2024. Turning to slide 8, to continue cementing our leading position beyond 2024, I am excited to announce that our second quarter advance ticket sales surpassed the first quarter, increasing 11% year over year and reaching a new all-time high of $3.9 billion. This success was driven by robust pricing, a dynamic deployment mix, coupled with increased pre-sale packages and capacity. Now moving on to what is at the core of our charting the course strategy, our sustainability program, Salem Sustained. In June, we were pleased to present our annual sustainability report.

Mark: As such we are anticipating strong pricing growth across all four quarters in 2024.

Harry Sommer: Turning to slide 8, to continue cementing our leading position beyond 2024, I am excited to announce that our second quarter events ticket sales surpassed the first quarter, increasing 11% year-over-year and reaching a new all-time high of $3.9 billion. This success was driven by robust pricing, a dynamic deployment mix coupled with increased pre-sale packages and capacity growth.

Mark: Turning to slide eight to continue cementing our leading position beyond 2024, I'm excited to announce that our second quarter advanced ticket sales surpassed the first quarter, increasing 11% year over year, and reaching a new all time high of $3 9 billion.

Mark: This success was driven by robust pricing dynamic deployment mix, coupled with increased presale packages and capacity growth.

Harry Sommer: Moving on to what is at the core of our charting the core strategy, our sustainability program sound sustained. In June, we were pleased to result our annual sustainability report. On slide 9, we summarized some of our main 2023 highlights, which underscore our commitment to integrating sustainability into our overall business approach. So noticeful accomplishments included achieving our 2024 target to a quick 50% of our fleet with short power technology a full year early. We ran on track to a quick 70% of our fleet with this technology by 2025. In fact, we recently celebrated the launch of short power at Port Miami.

Speaker Change: Now moving on towards at the core of our charting the course strategy our sustainability program sale and sustained in June we were pleased to result, our annual sustainability report on slide nine we summarized some of our main 2023 highlights, which underscore our commitment to integrating sustainability into our overall.

Harry J. Sommer: On slide 9, we summarized some of our main 2023 highlights, which underscore our commitment to integrating sustainability into our overall business approach. Some noticeable accomplishments include achieving our 2024 target to equip 50% of our fleet with ShorePower technology a full year early. We remain on track to equip 70% of our fleet with this technology by 2025. In fact, we recently celebrated the launch of ShorePower at Port Miami, making it the first major cruise port on the U.S. East Coast to offer ShorePower at five of its terminals, including our own Terminal B, the Pearl of Miami.

Speaker Change: Our business approach.

Speaker Change: So noticeable accomplishments include achieving our 2024 target to 50.

Speaker Change: 50% of our fleet with short power technology up full year early we remain on track to equip 70% of our fleet with this technology by 2025 in fact, we recently celebrated the launch of shore power and Port Miami, making it the first major cruise port on the U S East coast to offer shore power at five of.

Harry Sommer: They can get the first major cruise port on the US East Coast to offer short power at five of its terminals, including our own Toronto Bay. We also reached our goal of testing 20% of our fleet with biodiesel blend by expanding tests to form more shifts throughout 2023. Our new target is 40% of our fleet to test biodiesel by 2024.

Speaker Change: Thats terminals, including our own terminal D. The furloughed Miami. We also reached our goal of testing, 20% of our fleet with biodiesel blend by extend by expanding test to four more ships throughout 2023, our new target is 40% of our fleet to test biodiesel by 2024.

Harry J. Sommer: We also reached our goal of testing 20% of our fleet with biodiesel blend by expanding tests to form more ships throughout 2023. Our new target is 40% of our fleet to test biodiesel by 2025. Finally, doubling down on our people excellence pillar, we continue diversifying our sourcing, having spent over $635 million with small businesses and businesses with minority, women, veteran, or economically disadvantaged qualifications in 2023. And most recently, Forbes named us as the best American employer for women, a milestone we are particularly pleased about.

Harry Sommer: Finally, doubling down on our people excellence pillar, we continue diversifying our sourcing, having spent over $635 million with small businesses and businesses with minority, women, veterans, or economically disadvantaged qualifications in 2023. And most recently, Forbes named us as the best American employer for women, a milestone we are particularly pleased with. Our journey does not stop here. We remain dedicated to advancing towards our sale and sustained targets going forward, maintaining high standards of operational excellence and creating lasting value for our business and very stakeholders through sustainable practices. I couldn't be more proud of our entire team for all of these impressive accomplishments.

Speaker Change: Finally, doubling down on our people excellence pillar, we continue diversifying our sourcing having spent over $635 million with small businesses and businesses with minority women veteran are economically disadvantaged qualifications in 2023 and most.

Speaker Change: Singly Forbes named US as the best American employer for women a milestone we are particularly pleased with.

Harry J. Sommer: Our journey does not stop here. We remain dedicated to advancing towards our sale and sustain targets going forward, maintaining high standards of operational excellence, and creating lasting value for our business and various stakeholders through sustainable practices. 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 and outlook.

Speaker Change: Our journey does not stop here, we remain dedicated to advancing towards our sale and sustained targets going forward, maintaining high standards of operational excellence and creating lasting value for our business and various stakeholders stakeholders through sustainable practices I couldnt be more proud of our entire team for all of these impressive.

Speaker Change: Accomplishments with that I will turn it over to Mark to walk you through our financial results and outlook Mark.

Mark Kempa: With that, I'll turn to Mark to walk you through our financial results and outlook. Mark.

Mark Kempa: Thank you, Harry, and good morning, everyone. My commentary today will focus on our very strong second quarter 2024 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 x fuel PCD are on a constant currency basis and comparisons are to the same period in 2023. Let's begin with our second quarter results, which are highlighted on slide ten. In short, we exceeded guidance across the board, outpacing our targets for the quarter. Starting with the top line, results were impressive, with net yield increasing 6.3%, exceeding our guidance of 4.3% by 200 basis points.

Mark A. Kempa: Thank you, Harry, and good morning, everyone. My commentary today will focus on our very strong second quarter 2024 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 ex-fuel PCD is on a constant currency basis, and comparisons are to the same period in 2023. Let's begin with our second quarter results, which are highlighted on slide 10.

Mark: Thank you Harry and good morning, everyone.

Mark: My commentary today will focus on our very strong second quarter 2024 financial results.

Mark: Our improved full year 2020 for guidance and are increasingly solid financial position.

Mark: Unless otherwise noted my commentary on 2024 net yield and adjusted net cruise cost ex fuel PCB or on a constant currency basis and comparisons are to the same period in 2023.

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

Mark A. Kempa: In short, we exceeded guidance across the board, outpacing our targets for the quarter. Starting with the top line, results were impressive, with net yield increasing 6.3%, exceeding our guidance of 4.3% by 200 basis points. Several factors contributed to the exceptionally strong top-line growth in the quarter, which included robust demand for European, Caribbean, and Alaskan sailings, where the majority of our capacity is deployed this quarter. Additionally, stronger-than-anticipated onboard revenue and close-in sailing demand, and finally, the redeployment of cancelled Red Sea sailings were better than our initial expectations.

Mark: In short we exceeded guidance across the board outpacing our targets for the quarter.

Mark: Starting with the top line results were impressive with net yield increasing six 3% exceeding our guidance of four 3% by 200 basis points.

Mark: Several factors contributed to the exceptionally strong topline growth in the quarter, which included robust demand for European Caribbean, and Alaska Sailings, where the majority of our capacity is deployed this quarter star.

Mark Kempa: On top line growth in the quarter, which included robust demand for European, Caribbean, and Alaskan sailings, where the majority of our capacity is deployed this quarter. Stronger than anticipated, on board revenue and quotient sailing demand. And finally, the redeployment of canceled Red Sea sailings was better than our initial expectations. Looking at costs, adjusted net cruise cost X-Field PCD came in below guidance at 163, primarily due to the timing of certain expenses that will now fall into the third quarter. As expected, our unit cost this quarter included approximately $9 from higher dry dock days and related cost as compared to 23.

Mark: Stronger than anticipated onboard revenue and close in sailing demand and finally, the redeployment of canceled Red Sea sailings were better than our initial expectations.

Mark A. Kempa: Looking at costs, Adjusted Net Cruise Costs xFUEL PCD came in below guidance at $163, primarily due to the timing of certain expenses that will now fall into the third quarter. As expected, our unit cost this quarter included approximately $9 from higher dry dock days and related costs as compared to $23.

Mark: Looking at cost adjusted net cruise cost ex fuel PCB came in below guidance at 163, primarily due to the timing of certain expenses that will now fall into the third quarter.

Mark: As expected our unit cost this quarter included approximately $9 from higher dry dock days and related cost as compared to 23.

Mark Kempa: Excluding the impact of the dry docks, our adjusted net cruise cost X-Field PCD would have been flat year over year, once again demonstrating our ability to fully offset the impact of inflation with our disciplined cost savings initiatives across the entire organization. These initiatives combined with robust top line growth have yielded strong results. Adjusted EBIDAC came in at approximately 588 million, surpassing our guidance of 555 million, resulting in a year-over-year increase of 14%. Adjusted EPS with 40 cents exceeding our guidance of 32 cents and increased 33% compared to the same quarter last year. Overall, we are extremely pleased with our second quarter performance.

Mark A. Kempa: Excluding the impact of the dry docks, our adjusted next cruise cost, ex-fuel PCD, would have been flat year over year, once again demonstrating our ability to fully offset the impact of inflation with our disciplined cost savings initiatives across the entire organization. These initiatives, combined with robust top-line growth, have yielded strong results. Adjusted EBITDA came in at approximately $588 million, surpassing our guidance of $555 million, resulting in a year-over-year increase of 14%.

Mark: Excluding the impact of the dry docks are adjusted next next cruise cost X fuel PCB would have been flat year over year once again, demonstrating our ability to fully offset the impacts of inflation with our disciplined cost savings initiatives across the entire organization.

Mark: These initiatives combined with robust topline growth has yielded strong results.

Mark: Adjusted EBITDA came in at approximately $588 million, surpassing our guidance of $555 million, resulting in a year over year increase of 14%.

Mark A. Kempa: Adjusted EPS was $0.40, exceeding our guidance of $0.32, and increased 33% compared to the same quarter last year. Overall, we are extremely pleased with our second quarter performance. Strong top-line growth combined with our ongoing cost reduction initiatives enabled us to surpass our guidance metrics for the quarter. This strong momentum positions us well as we look ahead, and as a result, we are raising our earnings guidance, as highlighted on slide 11. We are thrilled to announce that for the third time this year, we have raised our full-year guidance, reflecting the strong performance and strength of our business.

Mark: Adjusted EPS was <unk> 40.

Mark: Exceeding our guidance of 32.

Mark: And increased 33% compared to the same quarter last year.

Mark: Overall, we are extremely pleased with our second quarter performance strong topline growth combined with our ongoing cost reduction initiatives enabled us to surpass our guidance metrics for the quarter.

Mark Kempa: Strong top line growth combined with our ongoing cost reduction initiatives enabled us to surpass our guidance metrics for the quarter. This strong momentum positions us well as we look ahead, and as a result, we are raising our earnings guidance, as highlighted on slide 11. We are thrilled to announce that, for the third time this year, we have raised our full-year guidance, reflecting the strong performance and strength of our business. Since our initial guidance in February, net yield growth is expected to increase 280 basis points to 8.2%. And we have maintained our adjusted net cruise cost X-Field PCD guidance, which, excluding the impact of the dry docks, is expected to be flat for the year.

Mark: This strong momentum positions us well as we look ahead and as a result, we are raising our earnings guidance as highlighted on slide 11.

Mark: We are thrilled to announce that for the third time. This year, we have raised our full year guidance, reflecting the strong performance and strength of our business.

Mark A. Kempa: Since our initial guidance in February, net yield growth is expected to increase 280 basis points to 8.2%. And we have maintained our adjusted net cruise cost ex-fuel PCD guidance, which, excluding the impact of dry docks, is expected to be flat for the year.

Mark: Since our initial guidance in February net yield growth is expected to increase 280 basis points to eight 2%.

Mark: And we have maintained our adjusted net cruise cost ex fuel PCT guidance, which excluding the impact of a dry docks is expected to be flat for the year.

Mark Kempa: I will go into more detail on this a bit later in my remarks. As a result of the strong top line and subinflationary unit cost growth, we have increased our guidance for adjusted EBIDA by 150 million, from 2.2 billion to 2.35 billion. All of this is flowing to the bottom line, resulting in an increase in our adjusted EPS guidance of approximately 25%. Underscoring our impressive operational execution and strong market demand.

Mark A. Kempa: I will go into more detail on this a bit later in my remarks. As a result of the strong top line and subinflationary unit cost growth, we have increased our guidance for adjusted EBITDA by $150 million from $2.2 billion to $2.35 billion. All of this is flowing to the bottom line, resulting in an increase in our adjusted EPS guidance of approximately 25%, underscoring our Impressive Operational Execution and Strong Market Demand. These results mark significant progress towards achieving our Charting the Course 2026 targets, as we outlined in May.

Mark: I will go into more detail on this a bit later in my remarks.

Mark: As a result of the strong topline and sub inflationary unit cost growth, we have increased our guidance for adjusted EBITDA by $150 million from $2 2 billion to $2 three 5 billion.

Mark: All of this is flowing to the bottom line, resulting in an increase in our adjusted EPS guidance of approximately 25%.

Mark: Underscoring our impressions impressive operational execution and strong market demand.

Mark Kempa: These results mark significant progress towards achieving our Charting the Course 2026 targets as we outlined in May. Moving on to a more detailed look at our guidance on slide 12, we outline our expectations for the third quarter and full year, as well as the implied metrics for the fourth quarter. Starting with net yield, we anticipate net yield growth of almost 6.5% in the third quarter. This growth is driven by several factors. Over 70% of our sailings in the third quarter are in Europe and Alaska, regions where we are experiencing strong demand from North American customers.

Mark: These results Mark significant progress towards achieving our charting the course 2026 targets as we outlined in May.

Mark A. Kempa: Moving on to a more detailed look at our guidance, on slide 12, we outline our expectations for the third quarter and full year, as well as the implied metrics for the fourth quarter. Starting with net yield, we anticipate net yield growth of almost 6.5% in the third quarter. This growth is driven by several factors.

Speaker Change: Moving onto a more detailed look at our guidance on slide 12, we outlined our expectations for the third quarter and full year as well as the implied metrics for the fourth quarter.

Speaker Change: Starting with net yield we anticipate net yield growth of almost six 5% in the third quarter.

Speaker Change: This growth is driven by several factors.

Mark A. Kempa: Over 70% of our sailings in the third quarter are in Europe and Alaska, regions where we are experiencing strong demand from North American customers. Continued strong on-board revenue trends combined with healthy pre-booking for on-board amenities. Unlike Q2 and Q4, this quarter is unaffected by disruptions from Middle East cancellations and rerouting.

Speaker Change: Over 70% of our sailings in the third quarter are in Europe, and Alaska regions, where we are experiencing strong demand from north American customers.

Mark Kempa: Continued strong on-board revenue trends, combined with healthy pre-booking for on-board amenities. Unlike Q2 and Q4, this quarter is unaffected by disruptions from the Middle East cancellations and reroutings. These favorable trends and are ongoing momentum have allowed us to increase our full year net guidance to 8.2%. I want to emphasize that our latest guidance implies a healthy net yield growth of 5% for the fourth quarter. This builds off an impressive 8% growth in 2023 that was underpinned by 14% pricing. Our Q4 2024 growth also comes in the face of headwinds from rerouted Middle East sailings, which comprise 10% of our deployment in the fourth quarter and was disproportionately weighted to our luxury brands.

Speaker Change: Continued strong onboard revenue trends combined with healthy pre booking for onboard revenue onboard amenities.

Speaker Change: Unlike Q2 and Q4.

Speaker Change: This quarter is unaffected by disruptions from the middle East cancellations and rerouting.

Mark A. Kempa: These favorable trends and our ongoing momentum have allowed us to increase our full-year net guidance to 8.2%. I want to emphasize that our latest guidance implies healthy net yield growth of 5% for the fourth quarter. This builds off of an impressive 8% growth in 2023 that was underpinned by 14% price increases. Our Q4 2024 growth also comes in the face of headwinds from rerouted Middle East sailings, which comprised 10% of our deployment in the fourth quarter and was disproportionately weighted to our luxury brand.

Speaker Change: These favorable trends and our ongoing momentum have allowed us to increase our full year net guidance to eight 2%.

Speaker Change: I want to emphasize that our latest guidance implies a healthy net yield growth of 5% for the fourth quarter.

Speaker Change: This builds off of an impressive 8% growth in 2023 that was underpinned by 14% pricing.

Speaker Change: Our Q4 2024 growth also comes in the face of headwinds from rerouted middle East sailings, which comprised 10% of our deployment in the fourth quarter and was disproportionately weighted to our luxury brands.

Mark Kempa: Now, turning our attention to our adjusted net cruise costs, where our guidance remains unchanged, a true testament to the diligent efforts of the entire organization. For the third quarter, we anticipate adjusted net cruise cost X-Field PCD to increase by 3.3% to 156 from 151 in the same period last year. I would like to highlight a few points about the quarterly numbers, as there are many moving parts, and I will get into those yearly changes later in my remarks. First, in Q3 of last year, we recognized approximately $2 of non-recurring benefits. Second, keep in mind the timing of expenses.

Mark A. Kempa: Now turning to our attention to adjusted net cruise costs, where our guidance remains unchanged. A true testament to the diligent efforts of the entire organization. For the third quarter, we anticipate adjusted net cruise cost XFUEL PCD to increase by 3.3% to 156 from 151 in the same period last year.

Speaker Change: Now turning to our attention to adjusted net cruise cost, where our guidance remains unchanged a true testament to the diligent efforts of the entire organization.

Speaker Change: For the third quarter, we anticipate adjusted net cruise cost ex fuel PCB to increased by three 3%.

Speaker Change: Two 156 from 151 in the same period last year.

Mark A. Kempa: I would like to highlight a few points about the quarterly numbers as there are many moving parts, and I will get into those yearly changes later in my remarks. First, in Q3 of last year, we recognized approximately $2 of non-recurring benefits. Second, keep in mind the timing of expenses. As I mentioned previously, our Q2 unit costs were better than expected, primarily due to timing differences between Q2 and Q3. Consequently, on a year-over-year basis, Q3 unit costs are up.

Speaker Change: I would like to highlight a few points about the quarterly numbers as there are many moving parts and I will get into that those yearly changes later in my remarks.

Speaker Change: First in Q3 of last year, we recognized approximately $2 of nonrecurring benefits.

Speaker Change: Second keep in mind, the timing of expenses as I mentioned previously our Q2 unit cost were better than expected primarily due to timing differences of certain expenses between Q2 and Q3.

Mark Kempa: As I mentioned previously, our Q2 unit costs were better than expected, primarily due to timing differences of certain expenses between Q2 and Q3. Consequently, on a year-over-year basis, Q3 unit costs are up. However, this is merely a timing issue, and for the full year excluding the impact of dry docks, we still expect our unit costs to remain essentially flat and in line with our prior guidance. Third, I will mention variable compensation. We are recognizing higher variable compensation due to our business outperforming initial forecast. and this has a disproportionate weighting in the third quarter, consistent with the seasonality of our earnings.

Speaker Change: Consequently on a year over year basis, Q3 unit cost RF.

Mark A. Kempa: However, this is merely a timing issue, and for the full year, excluding the impact of dry docks, we still expect our unit costs to remain essentially flat and in line with our prior guidance. Finally, I will mention variable compensation. We are recognizing higher variable compensation due to our business outperforming its initial forecast, and this has a disproportionate weighting in the third quarter, consistent with the seasonality of our earnings. As a result of strong net yield growth and cost savings initiatives, our third quarter adjusted EBITDA is expected to be $870 million, which is driving adjusted EPS of $0.92, a 21% increase over the same period in 2023.

Speaker Change: However, this is merely a timing issue and for the full year, excluding the impact of dry docks, we still expect our unit costs remained essentially flat and in line with our prior guidance.

Speaker Change: And third I will mentioned variable compensation, we are recognizing higher variable compensation due to our business outperforming initial forecasts.

Speaker Change: And this has a disproportionate weighting in the third quarter consistent with the seasonality of our earnings.

Mark Kempa: As a result of strong net yield growth and cost savings initiatives, our third quarter to adjust to the EBITDA is expected to be 870 million, which is driving adjusted EPS of 92 cents, a 21% increase over the same period in 2023. Moving to slide 13, I'd like to revisit our net yield guidance since our Q1 results in May and highlight the confidence and strength we are seeing for the latter half of 2024. At our investor day, we increased our full-year guidance, indicating that the majority of the uplift was expected in the second half of the year.

Speaker Change: As a result of strong net yield growth and cost savings initiatives, our third quarter. Adjusted EBITDA is expected to be $870 million, which is driving adjusted EPS of <unk> 92.

Speaker Change: A 21% increase over the same period in 2023.

Mark A. Kempa: Moving to slide 13, I'd like to revisit our net yield guidance since our Q1 results in May and highlight the confidence and strength we are seeing for the latter half of 2024. At our Investor Day, we increased our four-year guidance, indicating that the majority of the uplift was expected in the second half of the year. Giving more detail on this now, we had expected that about 35 million of the 50 million adjusted gross margin improvement, or an increase of 120 basis points of net yield, to materialize in the second half.

Speaker Change: Moving to slide 13, I'd like to revisit our net yield guidance since our Q1 results in may and highlight the confidence and strength, we are seeing for the latter half of 2024.

Speaker Change: At our Investor Day, we increased our full year guidance, indicating that the majority of the uplift was expected in the second half of the year.

Mark Kempa: Giving more detail on this now, we had expected that about 35 million of the 50 million adjusted gross margin improvement, or an increase of 120 basis points of net yield, to materialize in the second half. Today, we are raising our full-year guidance once again, with an additional 35 million improvement in adjusted gross margin or 120 basis points in the second half. This positions us to achieve solid net yield growth of 5.9% in the back half of 2024.

Speaker Change: Giving more detail on this now we had expected that about $35 million of the $50 million adjusted gross margin improvement or an increase of 120 basis points of net yield to materialize in the second half.

Mark A. Kempa: Today, we are raising our full-year guidance once again, with an additional $35 million improvement in adjusted gross margin, or 120 basis points, in the second half. This positions us to achieve solid net yield growth of 5.9% in the back half of 2024. Moving to slide 14, I want to dive a bit deeper into our Margin Enhancement Initiative. As we stated at our Investor Day, a key pillar of our algorithm is boosting margins and reducing costs across the entire organization. And we continue to see the fruits of these efforts in 2024. During the first and second quarters, we have been able to keep our unit costs flat, excluding dry dock.

Speaker Change: Today, we are raising our full year guidance once again with an additional $35 million improvement in adjusted gross margin or 120 basis points in the second half.

Speaker Change: This positions us to achieve solid net yield growth of five 9% in the back half of 2024.

Mark Kempa: Moving to slide 14, I want to dive a bit deeper into our margin enhancement initiatives. As we stated at our investor day, a key pillar of our algorithm is boosting margins and reducing costs across the entire organization. And we continue to see these fruits, the fruits of these efforts during 2024. During the first and second quarters, we have been able to keep our unit costs flat, excluding dry dock. And as I mentioned earlier, due to the timing, this metric will increase in the third quarter but should decline in the fourth quarter. And as a result, our adjusted net-curus cost X-Fuel PCD will be essentially flat year over year, fully offsetting inflation, as well as the increased variable compensation due to the company's strong performance.

Speaker Change: Yeah.

Speaker Change: Moving to slide 14, I want to dive a bit deeper into our margin enhancement initiatives as.

Speaker Change: As we stated at our Investor Day, a key pillar of our algorithm is boosting margins and reducing costs across the entire organization and.

Speaker Change: And we continue to see these fruits the fruits of these efforts during 2024.

Speaker Change: During the first and second quarters, we have been able to keep our unit costs flat excluding drydock.

Mark A. Kempa: And as I mentioned earlier, due to the timing, this metric will increase in the third quarter but should decline in the fourth quarter. And as a result, our adjusted net cruise cost XFUEL PCD will be essentially flat year over year, fully offsetting inflation, as well as the increased variable compensation due to the company's strong performance. This feat is not easy and is the result of the tireless work of our entire organization and transformation team.

Speaker Change: And as I mentioned earlier due to the timing this metric will increase in the third quarter, but should decline in the fourth quarter and as a result, our adjusted net cruise cost ex fuel PCB will be essentially flat year over year fully offsetting inflation as well as the increased variable compensation.

Speaker Change: Due to the Companys strong performance.

Mark Kempa: This feed is not easy and is the result of the tireless work of our entire organization and transformation team. I am confident that we will be able to continue this momentum in the years that come.

Speaker Change: The speed is not easy and is the result of the tireless work of our entire organization and transformation team.

Mark A. Kempa: I am confident that we will be able to continue this momentum in the years that come. Turning to slide 15, we can clearly see the impact of our disciplined approach to earnings and returns as outlined during our recent Investor Day. The key elements of our algorithm are straightforward, improve net yields, and rigorous cost management drive margin expansion. That margin expansion, in conjunction with controlled capacity growth, results in substantial adjusted EPS growth.

Speaker Change: I am confident that we will be able to continue this momentum in the years that come.

Mark Kempa: Turning to slide 15, we can clearly see the impact of our disciplined approach to earnings and returns as outlined during our recent Investor Day. The key elements of our algorithm are straightforward; improved net yields and rigorous cost management drive margin expansion. That margin expansion and conjunction with controlled capacity growth results in substantial adjusted EPS growth. Moreover, this adjusted EPS growth, when paired with our disciplined capital allocation strategy, allows us to prioritize debt repayment in the short to midterm. This approach not only reduces our net leverage, but also strengthens our balance sheet and enhances our adjusted ROIC, which, by the way, is on target to hit double digits this year, another important milestone toward our 2026 target of 12%.

Speaker Change: Turning to slide 15, we can clearly see the impact of our disciplined approach to earnings and returns as outlined during our recent investor day.

Speaker Change: The key elements of our algorithm are straightforward.

Speaker Change: Improved net yields and rigorous cost management drive margin expansion.

Speaker Change: That margin expansion in conjunction with controlled capacity growth results in substantial adjusted EPS growth.

Mark A. Kempa: Moreover, this adjusted EPS growth, when paired with our disciplined capital allocation strategy, allows us to prioritize debt repayment in the short to mid-term. This approach not only reduces our net leverage but also strengthens our balance sheet and enhances our adjusted ROYC. Which, by the way, is on target to hit double digits this year, another important milestone toward our 2026 target of 12%. During the second quarter, we improved our trailing 12-month adjusted operational EBITDA margin to 33%.

Speaker Change: Moreover, this adjusted EPS growth when paired with our disciplined capital allocation strategy allows us to prioritize debt repayment in the short to mid term.

Speaker Change: This approach not only reduces our net leverage but also strengthens our balance sheet and enhances our adjusted ROIC seek.

Speaker Change: Which by the way is on target to hit double digits. This year another important milestone toward our 2026 target of 12%.

Mark Kempa: During the second quarter, we improved our trailing 12-month adjusted operational EBITDA margin to 33%. As we closed out the year, we anticipate ending with a margin of 34.5%, marking a substantial improvement of 400 basis points from 2023. This progress is a significant milestone as we strive toward our target of approaching historical margins of approximately 39%.

Speaker Change: During the second quarter, we improved our trailing 12 months adjusted operational EBITDA margin to 33%.

Mark A. Kempa: As we close out the year, we anticipate ending with a margin of 34.5%, marking a substantial improvement of 400 basis points from 2023. This progress is a significant milestone as we strive toward our target of approaching historical margins of approximately 39%. Now let's shift to our balance sheet and debt maturity profile on slide 16, which has not changed significantly since Q1. During the quarter, and as expected, our 6% 2024 exchangeable notes converted to shares.

Speaker Change: As we close out the year, we anticipate ending with a margin of 34, 5%, marking a substantial improvement of 400 basis points from 2023.

Speaker Change: This progress is a significant milestone as we strive toward our target of approaching historical margins of approximately 39%.

Mark Kempa: Now let's shift to our balance sheet and debt maturity profile on slide 16, which has not changed significantly since Q1. During the quarter and as expected, our 6% 2024 exchangeable notes converted to shares. And our next maturity is our 565 million notes due to 2024, which we are expecting to refinance and/or partially repay by its maturity in December. Turning over to leverage on slide 17, we are proud that we achieved our net leverage goal six months ahead of schedule, reducing our leverage by approximately one and a half turns and ending the quarter at 5.9 times.

Speaker Change: Now, let's shift to our balance sheet and debt maturity profile on slide 16, which has not changed significantly since Q1.

Speaker Change: During the quarter and as expected our 6% 2020 for exchangeable notes converted to shares.

Mark A. Kempa: And our next maturity is our 565 million notes due 2024, which we are expecting to refinance and or partially repay by its maturity in December. Turning over to leverage on slide 17, we are proud that we achieved our net leverage goal six months ahead of schedule, reducing our leverage by approximately one and a half turns and ending the quarter at 5.9 times. Achieving leverage in the five is no small feat since we ended 2023 at 7.3 times.

Speaker Change: And our next maturity is our $565 million notes due 2020 for which we are expecting to refinance and or partially repaid by its maturity in December.

Speaker Change: Turning over to leverage on slide 17, we are proud that we achieved our net leverage goal six months ahead of schedule and reducing our leverage by approximately one five turns and ending the quarter at five nine times.

Mark Kempa: Achieving leverage in the 5 is no small feat since we end in 2023 at 7.3 times. As you know, we are on a multi-year deleveraging journey to de-risk the balance sheet, targeting the midfours, and this quarter's results are another significant milestone in that journey.

Speaker Change: Achieving leverage in the fives is no small feat since we ended 2023 at seven three times.

Mark A. Kempa: As you know, we are on a multi-year deleveraging journey to de-risk the balance sheet, targeting the mid-fours, and this quarter's results are another significant milestone in that journey. In closing, I want to emphasize that this has been an exceptional quarter where we surpassed guidance across all key metrics. This momentum has enabled us to raise our full-year guidance for the third time.

Speaker Change: As you know we are on a multi year deleveraging journey to derisk the balance sheet targeting the mid fours and this quarter's results are another significant milestone in that journey.

Harry Sommer: In closing, I want to emphasize that this has been an exceptional quarter where we surpassed guidance across all key metrics. This momentum has enabled us to raise our full-year guidance for the third time. This is all a testament to the strategy we outlined at our Investor Day and that I discussed earlier. We are excited about the second half of the year and remain confident in our strategy going forward.

Speaker Change: In closing I want to emphasize that this has been an exceptional quarter, where we surpassed guidance across all key metrics.

Speaker Change: This momentum has enabled us to raise our full year guidance for the third time.

Mark A. Kempa: This is all a testament to the strategy we outlined at our Investor Day and that I discussed earlier. We are excited about the second half of the year and remain confident in our strategy going forward. With that, I'll turn it back to Harry for closing remarks. Well, thank you, Mark.

Speaker Change: This is all a testament to the strategy, we outlined at our Investor day and that I discussed earlier, we are excited about the second half of the year and remain confident in our strategy going forward.

Harry Sommer: With that, I'll turn it back to Harry for closing remarks. Well, thank you, Mark. I want to close by reminding everyone of the ambitious targets and strategies that we laid out in the investor day just two months ago, which are listed on slide 17.

Speaker Change: With that I'll turn it back to Harry for closing remarks.

Harry J. Sommer: I want to close by reminding everyone of the ambitious targets and strategies that we laid out at investor day just two months ago, which are listed on slide 17. Our bold vision is to provide guests with exceptional vacation experiences, allowing them to vacation better and experience more. This vision is the foundation of our Charting the Course strategy, supported by our four pillars of people excellence, guest-centric product offering, long-term growth platform, and exceptional performance. These pillars are all underpinned by our commitment to sustainability through our SAIL and SUSTAIN programs.

Harry: Well, thank you Marc I want to close by reminding everyone of the ambitious targets and strategies that we laid out at Investor day, just two months ago, which are listed on slide 17, our bold vision is to provide guests with exceptional vacation experiences, allowing them to vacation better and experience more this vision.

Harry Sommer: Our board vision is to provide guests with exceptional vacation experiences, allowing them to have vacation better and experience more. This vision is the foundation of our charting the core strategy supported by our four pillars. People, ex-wins, guest-centric product offering, long-term growth platform, and exceptional performance. These pillars are all underpinned by our commitment to sustainability through our Sale and Sustain program. This new strategy and vision lead to a simple yet powerful earnings and return algorithm that Mark discussed earlier that will help us deliver on our 2026 financial targets. Our entire management team is driven and focused on this new strategy, and I'm positive that this quarter's results gives you even greater confidence that we are on track to achieve our long-term goals.

Harry: As the foundation of our charging the core strategy supported by our four pillars people excellent guest centric product offering long term growth platform and exceptional performance.

Speaker Change: These pillars are all underpinned by our commitment to sustainability through our scale and sustained program.

Harry J. Sommer: This new strategy and vision led to a simple yet powerful earnings and return algorithm that Mark discussed earlier that will help us deliver on our 2026 financial target. Our entire management team is driven and focused on this new strategy, and I'm positive that this quarter's results give you even greater confidence that we are on track to achieve our long-term goal. We are optimistic about our future and look forward to sharing this journey of growth and success with you.

Speaker Change: This new strategy division lead to a simple yet powerful earnings and return algorithm that Mark discussed earlier that will help us deliver on our 2026 financial targets. Our entire management team is driven and focused on this new strategy and Im positive that this quarter's results gives you even greater confidence.

Speaker Change: That we are on track to achieve our long term goals, we are optimistic about our future and look forward to sharing this journey of growth and success with you with that I'll hand, the call back over to the operator to begin our Q&A session.

Harry Sommer: We are optimistic about our future and look forward to sharing this journey of growth and success with you.

Donna: With that, I'll hand the call back over to the operator to begin our Q&A session. Thank you, Harry. If you have a question at this time, please press the star, then one on your touchtone telephone. In order to get as many people through the queue, please limit your time to one question. If your question has been answered, or you wish to remove yourself from the queue, please press star two.

Harry J. Sommer: With that, I'll hand the call back over to the operator to begin our Q&A session. Thank you, Harry. If you have a question at this time, please press the star, then 1 on your touchtone telephone. In order to get as many people through the queue, please limit your time to one question. If your question has been answered or you wish to remove yourself from the queue, please press star 2.

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

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

Steve Wozinski: Today's first question is coming from Steve Wozinski of Steeple. Please go ahead.

Operator: Today's first question is coming from Steve Wieczynski of Stifel. Please go ahead. Hey guys, good morning. Congratulations on the results here. So, Harry or Mark, in terms of booking trends, it seems like you're, you know, obviously well booked out for this year. And, as you noted, most of your bookings today are for 2025 or beyond. So, just wondering, as we kind of look out to 2025, if you're seeing pretty much strength across, you know, all itineraries at this point, or, you know, are there certain itineraries that are getting, you know, more attention right now?

Speaker Change: Today's first question is coming from Steve <unk> of Stifel. Please go ahead.

Harry Sommer: Yeah, guys, good morning. Congrats on the results here. So, Harry or Mark, in terms of booking trends, it seems like you're obviously well hooked out for this year, and as you noted, most of your booking today are for 2025 or beyond. So just wondering, as we kind of look out to 2025, if you're seeing pretty much strength across all itineraries at this point, or are there certain things that you're looking at? There are certain itineraries that are getting more attention right now, and then you also noted, you're at the high end of what you call your optimal book position. But has that optimal book position changed at all given how much further out your customers are booking these days?

Operator: And, and then you also noted that, you know, you're at the high end of what you call your optimal book position. But, you know, has that optimal book position changed at all given, you know, how much further out, you know, your customers are booking these days? So, I'll take that one, Steve, and Terry.

Steve: Hey, guys good morning.

Speaker Change: Congrats on the results here so.

Speaker Change: So heavier mark in terms of booking trends.

Speaker Change: It seems like you're obviously well booked out for this year and as you noted most of your bookings today are for 2025 or beyond. So so just wondering as we kind of as we kind of look out to 2025, if you are seeing pretty much strength across.

Speaker Change: All itineraries at this point or are there certain itineraries that are getting more attention right now.

Speaker Change: And then you also noted.

Speaker Change: We're at the high end of your what you call your optimal position but.

Speaker Change: Is that optimal booked position changed at all given.

Speaker Change: How much further out.

Speaker Change: Customers are booking these days.

Harry J. Sommer: First off, thanks for the kind words. We were very happy with our results this quarter and our increased guidance for the year as well. So, you know, two different questions.

Harry Sommer: So, I'll take that one, Steve. Harry, first off, thanks for the kind words. You were very happy with the results of this quarter and our increased guidance for the year as well. So, you know, two different questions. I'll do my best to address both. You know, on the booking trends, you know, not really seeing any key patterns there. We're happy with the strength across the war. We're seeing good strength in the Caribbean, Europe, Alaska, exotics, all the places that we go to. You know, we were pretty meticulous going into 25 with our itinerary planning to do a good job at balancing our demand and supply by region of the world, and we seem to generally be successful.

Speaker Change: So I'll take that one Steve Terry first of all thanks for the kind words, you were very happy with our results this quarter and our increased guidance for the year as well so two different questions I'll do my best to address both on the on the booking trends.

Harry J. Sommer: I'll do my best to address both. You know, on the booking trends, we're not really seeing any key patterns there. We're happy with the strength across the board. We're seeing good strength in the Caribbean, Europe, Alaska, exotics, all the places that we go to.

Speaker Change: Not really seeing any key patterns there, we're happy with the strength across the board we're seeing good strength in the Caribbean Europe, Alaska exotic all the places that we go to we're pretty meticulous going into 25 with her itinerary planning to do a good job of balancing our demand and supply by.

Harry J. Sommer: You know, we were pretty meticulous going into 2025 with our itinerary planning to do a good job at balancing our demand and supply by region of the world, and we seem to have been generally successful. But I'll point out one thing that I'm particularly pleased with. It's Alaska and Europe for next summer.

Speaker Change: By region of the World and we seem to generally be successful, but point out one thing that I'm, particularly pleased with it's Alaska and Europe for next summer and please don't take that as a comment that I am not pleased with anything else. We're pleased with everything but that's one area that seems to be doing, particularly well and a little bit ahead of our expectations. So we're.

Harry Sommer: But point out one thing that I'm particularly pleased with: it's Alaska and Europe for next summer, and please don't take that as a comment that I'm not pleased with anything else. We're pleased with everything, but that's one area that seems to be doing particularly well in a little bit ahead of our expectations, so we're happy with that. In terms of your second comment about whether or not our view of book position has changed, I think so. I think if you were to compare this, for example, the 2019, which, you know, last normal year way back when, I would say that our optimal book position is probably a little bit ahead.

Harry J. Sommer: And please don't take that as a comment that I'm not pleased with anything else. We're pleased with everything, but that's one area that seems to be doing particularly well and a little bit ahead of our expectations. So, we're happy with that. In terms of your second comment about whether or not our view of book position has changed, I think so.

Speaker Change: Happy with that in terms of your second comment about whether or not our view of book position is has changed I think so I think if you were to compare this for example, the 2019, which.

Harry J. Sommer: I think if you were to compare this, for example, to 2019, which was the last normal year way back when, I would say that our optimal book position is probably a little bit ahead. But I think that's just due to better analytics, better revenue management tools, you know, better thoughts of the future. You know, I just want to reiterate, you know, perhaps a question from someone else in the future. You know, our goal is not to be in record book positions. Our goal is to be at optimum book positions such that we can maximize yield. We don't take record book positions to the bank.

Speaker Change: Last normal year way back when I would say that our optimal booked position is probably a little bit ahead, but I think thats just due to better analytics better revenue management tools better thoughts of the future I just want to reiterate pep save a question from someone else in the future. Our goal is not to be at record booked positions our goal.

Harry Sommer: But I think that's just due to better analytics, better revenue management tools, you know, better thoughts of the future. You know, I just want to reiterate, you know, perhaps say to questions from someone else in the future. You know, our goal is not to be at record book positions. Our goal is to be at optimum book positions such that we can maximize yield. We don't take record book positions to the bank. We take yield to the bank, and we have calibrated our tools such that sometimes it's okay to slow down. Lookings in order to raise prices, and one thing that we're particularly proud of that I mentioned in my prepared remarks is we have really seen robust pricing for 2025, up significantly compared to this time last year for 24.

Speaker Change: Be it optimum book positions such that we can maximize yield we don't we don't we don't take record booked positions to the bank, we take yield to the bank and we have calibrated our tools such that sometimes it's okay to slowdown bookings in order to raise prices and one thing that we're particularly proud of that I mentioned in my.

Harry J. Sommer: We take yield to the bank, and we have calibrated our tools such that, you know, sometimes it's okay to slow down bookings in order to raise prices. And one thing that we're particularly proud of that I mentioned in my prepared remarks is that we have really seen robust pricing for 2025, up significantly compared to this time last year for 24. And that's something that we're obviously going to continue to do our best to deliver towards our 25 and 26 long-term financial goals, which we mentioned yesterday.

Speaker Change: Repaired remarks is we are really seeing robust pricing for 2025 are up significantly compared to this time last year for 24, and that's something that obviously, we're going to continue to do our best on to deliver towards our 25 and 26 long term financial growth, which we mentioned on Investor day.

Harry Sommer: And that's something that obviously we're going to continue to do our best on to deliver towards our 25 and 26 long-term financial goals, which we mentioned on investor.

Speaker Change: Yeah.

Speaker Change: Okay.

Harry J. Sommer: And Harry, maybe I can ask one more real quick question here, but you made a remark in your prepared remarks about, you know, how you're charting the course targets are, you use the word ambitious, which, you know, I think is a pretty interesting adjective there. So, maybe I'm reading too much into that remark, but, you know, as we sit here today, I mean, if you guys are targeting double-digit ROICs by the end of this year, and your target out to 26 is 12%, that doesn't seem overly ambitious to us.

Harry Sommer: And Harry, maybe if I can ask one more real quick one here, but you made a remark in your prepared remarks about how you're charting the course. Targets are, you know, use the word ambitious, which I think is a pretty interesting adjective there. So maybe I'm reading too much into that remark, but you know, as we sit here today, I mean if you guys are targeting double digit, you know, ROIC by the end of this year, and your target out to 26 is 12%. I mean, that that doesn't seem overly ambitious to us. So maybe that's not even a question, but you know, I'll stop there and see how you would respond to that.

Speaker Change: Harry maybe if I can ask one more real quick one here, but you made a remark in your.

Harry: Our prepared remarks about how youre charting the course targets are.

Harry: Use the word ambitious, which I think is a pretty interesting additive.

Speaker Change: They're so so maybe I'm reading too much into that remark, but as we sit here today I mean, if you guys are targeting double digit.

Speaker Change: ROIC cease by the end of this year and your target out to 'twenty, 6% to 12%.

Speaker Change: Doesn't seem overly ambitious to us so.

Harry J. Sommer: So maybe that's not even a question, but, you know, I'll stop there and see how you would respond to that. I'm not sure I read a question in there either, so I'll try to do my best to respond. Listen, you know, when I say they're ambitious, I mean that we believe that it's the proper cadence that drives the company forward to have great results. So I wouldn't read that, you know, my comments as so ambitious that I think they're, they're, they're, they're, you know, crazy optimistic, nor are they in such a way that we can't achieve them.

Speaker Change: Maybe that's not even a question but.

Speaker Change: I'll stop there and see how you would respond to that.

Speaker Change: I'm not sure I read a question in there either so I'll try to do my best to refine listen when I say they are ambitious I mean that we believe that it's the proper cadence that drives the company forward to have great results. So I wouldn't read that my comments that ambitious that I think they're they're there.

Harry Sommer: I'm not sure I read a question in there either, so I'll try to do my best to respond. Listen, you know, when I say they're ambitious, I mean that we believe that it's the proper cadence that drives the company forward to have great results. So I wouldn't read that, you know, my comments that ambitious that I think they're, they're, they're, you know, crazy optimistic. No, no, no. Are they in such a way that we can't achieve them? We're very much committed, and we are reiterating our support today that that that we're committed to hitting these targets in 26.

Speaker Change: Crazy optimistic nor are they in such a way that we can achieve them. We're very much committed and we are reiterating our support today that that we're committed to hitting these targets in 'twenty six and I think the commentary that we gave on book position. The visibility we have into 'twenty five allows us to reiterate the goals that we think we're well on track to achieve that.

Harry J. Sommer: We're very much committed, and we are reiterating our support today, that we're committed to hitting these targets in 26. And I think the commentary that we gave on both positions, the visibility we have into 25, allows us to reiterate the goals that we think we're well on track to achieve. Okay, great. Thanks, Harry. Appreciate it.

Harry Sommer: And I think the commentary that we gave on both position, the visibility we have into 25, you know, allows us to reiterate the goals that we think we're well on track to achieve.

Steve Wozinski: Okay, great. Thanks, Harry. Appreciate it.

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

Speaker Change: Yeah.

Ben Chacon: Thank you. The next question is coming from Ben Chacon of Mizzouho Securities. Please go ahead. Hey, good morning. Thanks for taking my question. I know you've called out timing as a factor between 2Q and 3Q for costs, but it sounds like some incremental progress on the cost side as well that help offset costs both in the quarter and the year. Not sure if there's anything you can elaborate on where these essentially incremental cost aids as part of the longer term goal that you found early or maybe incremental opportunities. And I guess what I'm referring to is the incremental compensation expense, yet essentially unchanged whole year cost guide, and then any quantification would be super helpful.

Operator: Thank you. The next question is coming from Ben Chaiken of Mizzou Host Securities. Please go ahead. Hey, good morning.

Speaker Change: Thank you. The next question is coming from Ben Chaiken of Mizuho Securities. Please go ahead.

Operator: Thanks for taking my question. I know you called out timing as a factor between 2Q and 3Q for costs, but it sounds like some incremental progress on the cost side as well that helped offset costs both in the quarter and the year. I'm not sure if there's anything you can elaborate on.

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

Benjamin Nicolas Chaiken: I know you called out timing of the factor between Q2 and re queue for costs, but it sounds like some incremental progress on the cost side as well to help offset costs, both in the quarter and the year I'm not sure. If there's anything you can elaborate on where these essentially incremental cost saves as part of our longer term goal that you've found early or maybe incremental opportunities and I guess, what I'm referring to.

Speaker Change: The incremental compensation expense, yet essentially unchanged.

Speaker Change: Year.

Speaker Change: Cost got it and then any quantification would be super helpful. Thanks, and then I have one more.

Mark Kempa: Thanks. Yeah, good morning, Ben. This is Mark. So you're absolutely right. We continue to be very, very confident in achieving our cost reduction and waste elimination goals. So when you think about the full year, you know, I think in the quarter, our costs were favorable. I don't think it was what six, seven million. That's just the timing between quarters. But when you step back and you think about that on a full year basis, you are absolutely right. Due to better, better performance that we called out, we do have variable comp that is hitting us both in the second quarter and second half of the year disproportionately weighted for the third quarter.

Mark A. Kempa: Were these essentially incremental cost saves as part of the longer-term goal that you found early, or maybe incremental opportunities? And I guess what I'm referring to is the incremental compensation expense, yet essentially unchanged full-year cost guide. Yeah, good morning, Ben. This is Mark.

Mark: Good morning, Ben This is mark so youre absolutely right. We compete we continue to be very very <unk>.

Speaker Change: Confident in achieving our cost reduction of waste and waste elimination goals.

Speaker Change: When you think about the full year.

Speaker Change: I think in the quarter our costs were favorable I don't I think it was what $67 million. That's just the timing between quarters, but when you step back and you think about that on a full year basis, you are absolutely right due to better better performance that we called out we do have variable comp that is hitting us both in second quarter and second half of the.

Mark A. Kempa: So you're absolutely right. We continue to be very, very confident in achieving our cost reduction and waste elimination goals. So when you think about the full year, you know, I think in the quarter, our costs were favorable. I think it was what, six, seven million.

Mark A. Kempa: That's just the timing between quarters. But when you step back and think about that on a full year basis, you are absolutely right. Due to the better performance that we called out, we do have variable comp that is hitting us both in the second quarter and the second half of the year, and disproportionately weighted to the third quarter. So, all in all, that indicates that we're actually pacing ahead in terms of our overall hundred million goal that we had committed for this year.

Speaker Change: Year disproportionately weighted to the third quarter. So all in all of that indicates that we're actually pacing ahead in terms of our overall $100 million goal that we had committed for this year. So we continue to <unk>.

Mark Kempa: So all in all, that indicates that we're actually pacing ahead in terms of our overall hundred million goal that we had committed for this year. So we continue to find new things. We continue to hone in and eliminate waste. We're committed to that and very happy on the progress we're seeing going forward. Gotcha. That's helpful.

Speaker Change: Find new things, we continue to hold in and eliminate waste, we're committed to that and very happy on the progress we are seeing going forward.

Mark A. Kempa: So we continue to find new things. We continue to hone in and eliminate waste. We're committed to that and very happy with the progress we're seeing going forward. Gotcha, that's helpful. And then, and then switching gears, thinking longer term, a great service. Okay, are you?

Speaker Change: Got it that's helpful and then switching gears thinking longer term at great Stirrup Cay.

Mark Kempa: And then switching gears, thinking longer term. I know the peer will be complete in October 25. Do you plan on making incremental investments in parallel with that opening, or do you think at least I was going to. I think they'll be a little bit of both. I think they'll be some parallel investments, but I think this is a long-term development plan for us. You know, as you know, we have one of the largest private islands in the Caribbean. We have lots of real estate to build on, and we have a long-term master plan. So I think you can look to have some see some things opening up in 25 with the Pierre and more things will come in 26 and 27.

Speaker Change: I know the pier will be complete in October 25, do you plan on making incremental investments in parallel with that opening or do you think would be subsequent to.

Speaker Change: Yeah.

Speaker Change: Like I said, I think there'll be a little bit of both I think there'll be some parallel investments, but I think this is a long term development plan for us.

Speaker Change: As you know we are one of the largest private islands in the Caribbean, we have lots of real estate to build on and we have a long term master plan. So I think you can look to have some see some things opening up in 25 with the peer and more things will come in 'twenty six 'twenty seven we are committed we have a significant percentage, especially of our NCL fleet Disney there in the winter.

Mark A. Kempa: I know the peer will be complete on October 25. Do you plan on making incremental investments in parallel with that opening, or do you think at least subsequent to it?

Mark Kempa: We are committed. We have a significant percentage, especially of our NCL fleet Disney there in the winters, and even now some in the summers as well. Perhaps you've cut some of our deployment changes when we announced our 26th deployment for NCL a couple of weeks ago. And we plan to maximize our real estate and what we believe is a competitive advantage in the Caribbean with this island. And Ben, I just want to highlight that that that will be over time. We are we are not anticipating or should you expect there's going to be some sort some level of ramp up ramped up cat backs over the next year or two.

Speaker Change: And even now some in the summers as well, perhaps you put some of our deployment changes when we announced our 26 appointment for NCL a couple of weeks ago, and we plan to maximize our real estate and what we believe is a competitive advantage in the Caribbean with this with this island.

Harry J. Sommer: I think there'll be a little bit of both. I think there will be some parallel investments, but I think this is a long-term development plan for us. As you know, we have one of the largest private islands in the Caribbean.

Harry J. Sommer: We have lots of real estate to build on, and we have a long-term master plan. So I think you can look to see some things opening up in 2025 with the pier, and more things will come in 2026 and 2027. We are committed. We have a significant percentage, especially of our NCL fleet, visiting there in the winters and even now some in the summers as well.

Mark A. Kempa: Perhaps you caught some of our deployment changes when we announced our 26th deployment for NCL a couple of weeks ago, and we plan to maximize our real estate and what we believe is a competitive advantage in the Caribbean with this island. And Ben, I just want to highlight that that will be over time; we are not anticipating, or should you expect there's going to be some level of ramped up CapEx over the next year or two; we will make measured, disciplined investments there, while looking to repurpose dollars that were otherwise going to be spent within the organization. So again, it will be in a measured way and associated with returns that we would expect with such investments. I got it.

Speaker Change: And then I just want to highlight that that will be over time, we are not anticipating or should you expect theres going to be some some level of ramp up ramped up capex over the next year or two we will make measured disciplined investments there.

Mark Kempa: We will make measured, disciplined investments there while looking to repurpose dollars that were otherwise going to be spent with the new organization. So again, it will be in a measured way and associated with returns that we would expect with such investment. Got it. That's very helpful.

Speaker Change: While looking to repurpose dollars that were otherwise going to be spent within the organization. So again it will be in a measured way and.

Harry: Associated with with with returns that we would expect with such investment.

Operator: That's very helpful. Thank you. Thank you. The next question is coming from Conor Cunningham of Melius Research. Please go ahead.

Speaker Change: Got it that's very helpful. Thank you.

Mark Kempa: Thank you.

Speaker Change: Thank you. The next question is coming from Connor Cunningham of Melius Research. Please go ahead.

Connor Cunningham: The next question is coming from countercutting him of Melius Research. Please go ahead. All right. Thank you. Mark, just sticking with costs. So yeah, the core cost performance seems to be tracking ahead. Just as you start to think about 2025, I realize you have something lingering dry dock headwinds and just any early reads on the puts and takes there. Like, for example, like the development of like Jacksonville or the private island, start to add incremental cost to next year in general, just just any thoughts there right now. Thank you. Yeah.

Speaker Change: Yeah.

Operator: I will thank you, Mark, just sticking with costs. So the other core cost performance seems to be tracking ahead. I just, As you start to think about 2025, I realize you have some lingering dry dock headwinds. And just any early reads on the puts and takes there, like, for example, does the development of Jacksonville or the private islands start to add incremental costs to next year, in general? Just any thoughts there right now? Thank you. Yeah, good morning, Conor.

Conor T. Cunningham: Alright. Thank you Mark just sticking with the cost so the core cost performance seems to be tracking ahead.

Harry: Just.

Conor T. Cunningham: As you start to think about 2025, I realize you have some lingering drydock headwinds and just any early reads on the puts and takes there like for example like does.

Speaker Change: Does the development of like Jacksonville, or the private island start to add incremental cost next year in general just just any thoughts there right now. Thank you yes. Good morning, Conor look I think when you think about 25.

Mark Kempa: Good morning, Connor. Look, I think when you think about 25. You know, we're not expecting any sort of material headwinds from our core fundamental cost. You know, other than what we would expect against normal inflation, which again, we've been very adamant. We believe we can deliver subinflationary costs, but things around the island or even I think you mentioned dry docs. When we think about dry docs year over year, there is no substantial step up. I think our dry dock days, you know, might change year over year. It's in the single digit number. Now, there may be different capacity days in terms of timing of the dry docs are similar of next year.

Mark A. Kempa: Look, I think when you think about 2025, you know, we're not expecting any sort of material headwinds from our core fundamental costs, other than what we would expect against normal inflation, which again, we've been very adamant about; we believe we can deliver sub-inflationary costs. But things around the island, or even I think you mentioned dry docks. When we think about dry docks year over year, there is no substantial step up.

Speaker Change: We're not expecting any sort of material headwinds from our core fundamental costs other than what we would expect against normal inflation, which again, we've been very adamant. We believe we can deliver sub inflationary cost, but things around the island or even I think you mentioned dry docks, when we think about <unk>.

Speaker Change: <unk> year over year, there is no substantial step up I think our dry dock days.

Harry: It might change year over year, it's in the single digit number now there may be different capacity days in terms of timing as a dry docks are similar of next year, but overall, that's not a that's not a headwind when you think about it from a 20000 foot level. So we're focused on as we've been saying we're focused on our algorithm.

Mark A. Kempa: I think our dry dock days, you know, might change year over year, but they're in the single digits. Now, there may be different capacity days in terms of the timing of the dry docks are similar next year. But overall, that's not a headwind when you think about it from a 20,000 foot level.

Mark Kempa: But overall, that's not a that's not a headwind when you think about it from a 20,000 foot level. So, we're focused on, as we've been saying, we're focused on our algorithm. We believe we can deliver subinflationary unit cost growth or better. And, you know, Q two and our second half guidance is another testament, testament to that that we're on a strong path toward that course. You know, and the only the only additional color I'll add, as you asked specifically about Jacksonville, we have no material investment; that's an investment led by the local community, which obviously we're going to partner with by bringing shifts there long term.

Mark A. Kempa: So we're focused, as we've been saying, we're focused on our algorithm; we believe we can deliver sub inflationary unit cost growth or better. And, you know, Q2 and our second half guidance is another testament, testament to that, that we're on a strong path toward that course. The only additional color I'll add, as you asked specifically about Jacksonville, is that we have no material investment. That's an investment led by the local community, which obviously we're going to partner with by breeding ships there long-term, but that's on their dime, so to speak, not ours. Okay, helpful. And then I'll make a comment.

Harry: We believe we can deliver sub inflationary unit cost growth or better and.

Harry: Q2, and our second half guidance is another Testament Testament to that we're on we're on a strong path toward that course.

Speaker Change: And the only.

Speaker Change: The only additional color I'll add as you asked specifically about Jacksonville as we have no material investment that's an investment led by the local community, which obviously, we're going to partner with by Britain shifts there long term, but the desk.

Mark Kempa: But that's on their dime, so to speak, not ours. Okay, helpful. And then comment. I'm sorry, Connor, for color same situation with Philadelphia, which we also. Now. Okay, helpful.

Speaker Change: <unk> so to speak not ours.

Mark A. Kempa: I'm sorry, Connor, for color, same situation with Philadelphia, which we also found to be Okay. Then on the comment of booking for 25 and just where the curve sits, you know, in the past you've talked about the negative impact of having longer, more immersive, you know, cruises that won't let you, basically will inhibit you from getting back to 2019 occupancy levels. But just given the stated demand, like why wouldn't occupancy be a further tailwind into 25 outside of you guys just pushing rates in general for yield?

Speaker Change: Okay helpful and then.

Speaker Change: Amen.

Connor: I am sorry, Connor in for color same situation with Philadelphia, which we also announced.

Connor: Okay helpful.

Harry Sommer: Then, on the comment of booking for 25 and just where the curve sits, you know, in the past, you've talked about the negative impact to having like longer, more immersive, you know, cruises that won't let you, basically, will inhibit you from getting back to 2019 occupancy levels. But just given the stated demand, like why wouldn't occupancy be a further tailwind into 25? I thought you just pushing rate in general for yield. Thank you. You know, I'll just say Conor and I hope I get to the essence of your question. You know, listen, our core, our core driver revenue is the first and second guests in the cabin, not necessarily the third guests in the cabin. The third guests doesn't tend to pay very much.

Speaker Change: Then on the comment of bookings for 25, and just wanted the curve.

Speaker Change: In the past you've talked about.

Speaker Change: The negative impact of having like longer more immersive.

Speaker Change: Cruises that will launch.

Speaker Change: Basically we will inhibit you from getting back to 2019 occupancy levels, but just given the state of demand like why wouldn't occupancy be a further tailwind into 'twenty five outside of you guys. Just a question right.

Speaker Change: General for yields thank you.

Mark A. Kempa: Thank you. You know, I'll just say, Conor, and I hope I get to the essence of your question, listen, our core driver of revenue is the first and second guests in the cabin, not necessarily the third guest in the cabin. The third guest doesn't tend to pay very much.

Speaker Change: I'll, just say Connor and I hope I get to the essence of your question listen our core our core driver of revenue as the first and second guessing the cabin not necessarily the third guests in the cabin. The third gifts tend to pay very much. So our focus is really more on cabin occupancy than then.

Connor Cunningham: So, you know, our focus is really more on cabin occupancy than passenger occupancies, because those third and fourth guests have been very small marginal benefits. So, you know, once again, this really gets to optimizing yield, not necessarily optimizing an occupancy number or something along those lines. That's actually helpful. Thank you.

Harry J. Sommer: So you know, our focus is really more on cabin occupancy than passenger occupancy because those third and fourth guests have a very small marginal benefit. So you know, once again, this really gets to optimizing yield, not necessarily optimizing an occupancy number or something along those lines. That's actually helpful.

Speaker Change: Passenger occupancies, because those third and fourth guests have been very small marginal benefit. So once again this really gets to.

Speaker Change: Optimizing yield not necessarily optimizing an occupancy number or something along those lines.

Speaker Change: Yeah.

Speaker Change: That's actually helpful. Thank you.

Harry J. Sommer: Thank you. Thank you. The next question is coming from Matthew Boss of J.P. Morgan. Please go ahead.

Speaker Change: Thank you. The next question is coming from Matthew Boss of Jpmorgan. Please go ahead.

Matthew Boss: The next question is coming from Matthew Boss of JP Morgan. Please go ahead. Great. Thanks and congrats on a nice quarter. So, two part question. Harry, on the robust demand that you cited into the back half of the year, could you elaborate on pricing power globally or just any pushback at all that you're seeing in any region, and then mark with the fourth quarter net yield raised today. And if we think about demand momentum, if demand momentum continued, I guess how linear is the two and a half point cost spread target multi-year? Thinking if net yields were to continue to outperform your plan, how best to think about that two and a half point cost spread?

Operator: Great, thanks and congratulations on the, So, two part question, Harry, on the robust demand that you cited in the back half. Could you elaborate on pricing power globally or just any pushback at all that you're seeing in any region? And then, Mark, with the fourth quarter net yield raised today, and if we think about demand momentum, if demand momentum continues... I guess, how linear is the two and a half point cost spread target multi-year, thinking if net yields were to continue to outperform your plan? How best to think about that two and a half point cost spread? Okay, those are two good questions.

Matthew Boss: Great Thanks, and congrats on a nice quarter.

Matthew Boss: So two part question Harry on the robust demand that you cited into the back half of the year could you elaborate on pricing power globally or just any pushback at all that youre seeing in any region and then Marc with the fourth quarter net yield raised today and if we think about demand.

Matthew Boss: Momentum.

Marc: Demand momentum continued I guess, how linear is the two and a half point cost spread target multiyear thinking if net yields were to continue to outperform your plan, how best to think about that two and a half point cost spread.

Harry Sommer: Okay, those are two good questions. I made you a crack at both of them, and then Mark will do some cleanup after my second answer, because the first one is relatively straightforward. You know, the overwhelming majority of our demand, especially on the NCO brand, but even across ocean and region, comes from the North American consumer. So, you know, it really wouldn't be, well, I'm happy to share what's happening in the rest of the world, which is really good as well. It wouldn't maturely impact our numbers anyway. So I think that's a more important answer to the question.

Harry J. Sommer: I made sure to crack both of them, and then Mark would do some cleanup after my second answer, because the first one is relatively straightforward. You know, the overwhelming majority of our demand, especially for the NCO brand, but even across Oceania and the region, comes from the North American consumer. So, you know, it really wouldn't be – while I'm happy to share what's happening in the rest of the world, which is really good as well, it wouldn't materially impact our numbers anyway.

Speaker Change: Okay. Those are those are two good questions I mentioned the crack at both of them and then Mark will do some clean up after my second answer.

Speaker Change: Because the first one is relatively straightforward the overwhelming majority of our demand, especially on the NCL brand, but even across Oceana region comes from the North American consumer so it really wouldn't be while I'm happy to share what's happening in the rest of the world, which is really good as well it wouldn't materially impact our numbers anyway. So I think that's a more important.

Harry J. Sommer: So I think that's a more important answer to the question. The European and Asian consumer is very – is only on the margin important to us. But to be clear, they're doing well as well. We are happy with the demand from Europe.

Marc: Answer to the question.

Mark Kempa: The European and Asian consumer is very, is only on the margin important to us, but to be clear, they're doing well as well. We are happy with the demand out of Europe. We're happy with the demand out of Latin America, Australia, all the places that we sell, core consumers to the US, and they continue to do well for us. You know, in terms of next year, listen, you know, two and a half is a baseline. Obviously, we are going to do everything in our power to overachieve on yield. And we're going to do everything in our power to overachieve on cost, coming in with better costs.

Speaker Change: The European and Asian consumer.

Speaker Change: It's very it's only on the margin important to us but to be clear they are doing well as well we are happy with the demand out of Europe, we have to use the demand out of Latin America, Australia up all the places that we sell core consumers the U S and they continued to do well for us.

Harry J. Sommer: We're happy with the demand out of Latin America, Australia, all the places that we sell. Our core consumers are the U.S., and they continue to do well for us. You know, in terms of next year, listen, you know, 2.5% is a baseline. Obviously, we are going to do everything in our power to overachieve on yield, and we're going to do everything in our power to overachieve on cost, meaning coming in with a better cost. But I think 2.5% is a very good place to start.

Speaker Change: In terms of next year listen two and a half as a baseline obviously, we are going to do everything in our power to overachieve on yields and we're going to do everything in our power to overachieve on costs mean coming in with better cost, but I think two 5% is a very good place to start we only announced that about two months ago.

Mark Kempa: But I think two and a half percent is a very good place to start. You know, we only announced that about two months ago. We're still focused on that for 25 and 26. Yeah, Matthew, you know, just to highlight some things. So, look, when we announced our targets, you know, what I think it would be important to understand is, number one, there is no hockey stick implication or assumption that, you know, we're going to do X in 25, and we have to do X in 20 Y and 26. That was a, you know, that was a very broad based spread that we've committed to.

Harry J. Sommer: You know, we only announced that about two months ago, and we're still focused on that for 2025 and 2026. Yeah, Matthew, you know, just to highlight some things. So look, when we announced our targets, you know, what I think it would be important to understand is, number one, there is no hockey stick implication or assumption that, you know, we're going to do x and 25. And we have to do x and 20, y and 26.

Speaker Change: We're still focused on that for 'twenty, five and 'twenty, yes, Matthew just to highlight some things. So look when we announced our targets what I think it would be important to understand is number one there is no hockey stick implication or assumption that.

Mark A. Kempa: That was a, you know, that was a very broad-based spread that we've committed to. So what do I mean by that? Yes, there may be some variability between quarters, either upward or downward of that. I mean, it's very, very early when we look at 25 and 26. So you know, I wouldn't get caught up on the quarterly spread; I would concentrate on the full-year spread, which is what we're aiming for. And again, we're not assuming any sort of hockey stick scenario. And I think that's the important thing to keep in mind in your models and your thinking. Great color, too.

Matthew Boss: We're going to do X 25, and we have to do X in 2020 six.

Matthew Boss: That was that was a very broad based.

Matthew Boss: Spread that we've committed to so what do I mean by that yes, there may be some variability between quarters, either upward or downward of that I mean, it's very very early when we look at 25 and 26, so I wouldn't get caught up on the quarterly spread I would concentrate on the full year spread which is what we're aiming for.

Matthew Boss: So, what do I mean by that? Yes, there may be some variability between quarters, either upward or downward, or that. I mean, it's very, very early when we look at 25 and 26. So, you know, I wouldn't get caught up on the quarterly spread. I would concentrate on the full year spread, which is what we're aiming for. And again, we're not assuming any sort of hockey stick scenario. And I think that's the important thing to keep in mind in your models and your thinking. Thank you. Great color. Best of luck. Thank you, Matt. Thank you.

Speaker Change: Sure and again, we're not assuming any sort of hockey stick scenario and I think that's the important.

Speaker Change: Thing to keep in mind.

Speaker Change: In your models and you're thinking.

Speaker Change: That's great color best of luck.

Matt: Thank you Matt.

Operator: Best of luck. Thank you, Matt. Thank you. The next question is coming from Brandt Montour of Barclays. Please go ahead. Good morning, everybody.

Brent <unk>: Thank you. The next question is coming from Brent <unk> of Barclays. Please go ahead.

Brandt Montour: The next question is coming from Brandt Montour of Barclays. Please go ahead. Good morning, everybody. Thanks for taking my question. So the first one just on the fourth quarter implied guide. I think the fourth quarter implied guidance on our math for per diems is something in a low two percentage range. And I think there's a Middle East there.

Operator: Thanks for taking my question. So the first one, just on the fourth quarter implied guide. I think the implied guidance for the fourth quarter on our math for per diems is something in the low two percentage range. And I think there's the Middle East there.

Brent: Good morning, everybody. Thanks for taking my question.

Brent: So the first one just on the fourth quarter implied guide I think the fourth quarter implied guidance on our math for per Dms is something in the low two percentage range and I think there is middle East can you or can you just sort of quantifying what the middle East impact is on the fourth quarter in particular.

Mark Kempa: Can you or can you just start quantifying what the Middle East impact is on the fourth quarter in particular? Yeah, let's a good morning. And as we've talked about before in the Middle East, you know, I think a caller too earlier in our in our in the year. We had said the Middle East Red Sea was about a one to two impact point impact for the year. And if you think about that on the quarters, it's disproportionately weighted to Q4 of this year because about 10% of our capacity was in that region. So can't give you full, you know, I'm not going to give you full or complete quantification for cue four other than I would I would urge you to to consider that it was 10% of our deployment that was disproportionately weighted on our luxury brand.

Mark A. Kempa: Can you, or can you just start quantifying what the Middle East impact is on the fourth quarter in particular? Yeah, look, good morning. And as we've talked about before, in the Middle East, you know, I think a call or two earlier in our in the year, we had said the Middle East Red Sea was about a one to two point impact for the year. And if you think about that in terms of the quarters, it's disproportionately weighted to Q4 of this year because about 10% of our capacity was in that region.

Mark A. Kempa: So can't give you a full, you know, I'm not going to give you full or complete quantification for Q4. Other than that, I would urge you to consider that 10% of our deployment was disproportionately weighted to our luxury brand, so it is certainly weighing down on the fourth quarter.

Speaker Change: Yes look.

Speaker Change: Good morning.

Speaker Change: As we've talked about before in the Middle East I think a call or two earlier in the year. We had said the middle East Red Sea was about a one to two point impact for the year and if you think about that on the quarters.

Speaker Change: It's disproportionately weighted to Q4 of this year.

Speaker Change: Because about 10% of our capacity was in that region. So.

Speaker Change: Can't give you a full.

Speaker Change: Im not going to give you a fuller our complete quantification for Q4 other than I would I would urge you to consider.

Mark A. Kempa: That said, as I've also said in my remarks, in the fourth quarter of last year, we had 14% pricing growth and 8% yield. And even more importantly, I think when you look at the fourth quarter in the second half, and you think about the progression that we've made over the last four to five months, we have continually increased our guidance for both the third and fourth quarters consistently. And I think that is a testament that we are seeing strength, and we are seeing strong momentum. So I'll leave you with that.

Speaker Change: To consider that it was 10% of our deployment that was disproportionately weighted on our luxury brands. So it is certainly weighing down on the fourth quarter.

Mark Kempa: So it is certainly weighing down on the fourth quarter. That said, as I've also said in my remarks, fourth quarter of last year, we had 14% pricing growth and 8% yield. And even more importantly, I think when you look at the fourth quarter in the second half and you think about the progression that we've made over the last four to five months, we have continually increased our guidance for both the third and fourth quarters consistently. And I think that is a testament that we are seeing strength, and we are seeing strong momentum. So I'll leave you with that.

Speaker Change: That said as I've also said in my remarks fourth quarter of last year, we had 14% pricing growth and 8% yield.

Speaker Change: Even more importantly, I think when you when you look at the fourth quarter in the second half and you think about the progression that we've made over the last four to five months, we have continually increased our guidance for both the third and fourth quarters consistently and I think that is a testament that we are seeing strength and we are seeing strong momentum.

Harry J. Sommer: And but I think we're very satisfied with where we are. And hopefully, some sort of deceleration can finally be put to bed. We tried last time.

Speaker Change: I'll leave you with that and but I think we're very satisfied with where we are and hopefully we can outperform that and the only additional color Brent that I'll add is we know as I said earlier in the Q&A session, we managed to yield not to price when we're guiding now to a five point.

Harry Sommer: But I think we're very satisfied with where we are. And hopefully we cannot perform that. And you know, the only additional color granted that I'll add is, you know, we now, as I said earlier in the Q&A session, we managed to yield not to price, you know, when we're guiding now to a five point yield increase year over year, which quite frankly, considering that we're guiding at 6% now for Q2 and Q3, we don't do that as a material difference. We don't go 6% 1.25% another quarter is anything other than the normal ebbs and flows of distances.

Brent: Yields increase year over year, which quite frankly, considering that we're guiding at 6% now for Q2 and Q3, we don't view that as a material difference. We don't go 6% one quarter, 5% another quarter as anything other than the normal ebbs and flows of the businesses. So I think this this conversation about.

Harry Sommer: So I think this conversation about some sort of deceleration can finally be put to bed. We tried last time, but we obviously weren't successful. Hopefully, after this time we can finally put that to bed. Thanks for that, Harry and Mark.

Brent: Some sort of deceleration can finally put to bed.

Speaker Change: We tried last time.

Speaker Change: But we're obviously werent successful hopefully after this time, we can finally put that Tibet.

Harry J. Sommer: But we obviously weren't successful. Hopefully, after this time, we can finally put that to bed. Thanks for that, Harry and Mark. On a follow-up question, Marriott this morning talked about seeing slightly lower ancillary spend across the system. The U.S. was implicated in that.

Speaker Change: Okay, Thanks for that Harry and Mark.

Harry Sommer: So, on a follow-up question, Maria this morning talked about seeing slightly lower ancillary spend across the system. The US was it was it was it was implicated in that. Again, broad base, but but slight you guys have your own real time cash register. Are you seen any. Wobbles or waivers in that, you know, in that in that onboard spend over the last few. Sorry for the short term question, but it's topical. Sure. I'll give you a short answer and then a longer answer. So the short answer is no. We are seeing no absolutely zero decrease in on board spend.

Speaker Change: On a follow up question.

Speaker Change: <unk>.

Speaker Change: This morning talked about seen slightly lower ancillary spend across the system. The U S was.

Speaker Change: Was implicated in that.

Harry J. Sommer: Again, broad-based but slight: you guys have your own real-time cash register. Have you seen any wobbles or waivers in that on-board spend over the last year? Sorry for the short-term question, but it's topical. Sure, I'll give you a short answer and then a longer answer.

Speaker Change: Again broad based with slight you guys have your own real time cash register or are you seeing any.

Speaker Change: Wobbles or waivers in that.

Speaker Change: In that in that onboard spend over the last one sorry for those short term question, but it's topical sure I'll give you a short answer and then a longer answers. So the short answer is no. We are seeing no absolutely zero decrease in onboard spend I think we mentioned in our prepared remarks in fact have the pre the priest swelling of onboard is actually up.

Harry J. Sommer: So the short answer is no, we are seeing no, absolutely zero, decrease in onboard spend. I think we mentioned in our prepared remarks, in fact, how the pre-selling of onboard is actually up considerably, you know, over the prior period that we counted to. The slightly longer answer is, you know, you need to keep in mind, you know, a couple of factors, namely the huge value gap between hotel ADRs and cruise line yields.

Harry Sommer: I think we mentioned our prepare remarks; in fact, have the pre the pre swelling of on board is actually up considerably, you know, over the prior periods that we prompted to. The slightly longer answers, you know, you need to keep in mind, you know, a couple of factors: you know, the huge value gap between hotel ADRs and cruise line yields. I think in our yesterday reference the 40% value gap, which really still means we have tremendous runway to go to catch up those else. We consider that a long term tailwind for the company, you know, and also the fact that because our booking pattern is so much further in advance, we have lots of opportunities to engage with our consumer and discuss with them all the value of being on our ship.

Speaker Change: <unk> over the prior periods that we constitute the slightly longer answer is you need to keep in mind a couple of factors.

Speaker Change: Huge value gap between hotel ADR and cruise line yields I think at our Investor day, we referenced a 40% value gap, which really still means we have tremendous runway to go to catch up the hotels, we consider that a long term tailwind for the company and also the fact that debt because our bookings pattern is so.

Harry J. Sommer: I think yesterday we referenced the 40% value gap, which really still means we have a tremendous runway to go to catch up with hotels. We consider that a long-term tailwind for the company, you know, and also the fact that because our booking pattern is so much further in advance, we have lots of opportunities to engage with our consumers and discuss with them all the value of being on our ship. But, you know, you have a little bit of the fact that, unlike a hotel where people come and go, they sort of are on the ship for extended periods of their vacation, which gives us a little bit of a tailwind there as well. So overall, the short answer is no cracks.

Speaker Change: <unk> further in advance we have lots of opportunities to engage with our consumer and discussed with them all the value of being on our ship yeah, I'll give a little bit of the fact that the people are in our product the whole time, Unlike a hotel where people come and go they are sort of are on the ship for extended periods of their vacation.

Harry Sommer: But, you know, you have a little bit of the fact that the people are in our product the whole time, you know, unlike a hotel where people come and go, they're sort of on the ship for extended periods of the vacation, which gives us a little bit of the tailwind there as well. So overall, the short answer is no cracks, no deterioration. If anything, it continues to be strong and more long term. I think they're fundamental things that work in our favor that make our business quite a bit more resilient than the hotel. On the ancillary splash on board spin caps.

Speaker Change: Which gives us a little bit of a tailwind there as well. So overall the short answer is no cracks.

Harry J. Sommer: No deterioration. If anything, it continues to be strong and more long term. I think they're fundamental things that work in our favor that make our business quite a bit more resilient than the hotel in the ancillary splash onboard spend category. Perfect. Thanks, everyone. Question?

Speaker Change: No deterioration if anything it continues to be strong and more long term I think they are fundamental.

Speaker Change: Things that worked in our favor that make our business quite a bit more resilient than the hotel on the ancillary slashed onboard spend category.

Harry Sommer: Gregory. Perfect. Thanks, everyone.

Speaker Change: Perfect. Thanks, everyone.

Donna: Next question.

Speaker Change: Next question.

Vince Ciepiel: Donna? My apologies, my mic was muted. The next question is coming from Vinciple of Cleveland Research Company. Please go ahead. Great. So really encouraging to hear about the positive revision of the fourth quarter. And I think you use the word robust to describe what you're seeing for pricing for 2025. So it sounds like things are setting up pretty well for that load amid single-digit yield growth range that you target. Could you comment on how you think new hardware and maybe any itinerary or geographic type changes could impact yield for next year? Is it something that you think will be a creative, neutral, dilutive to yield?

Speaker Change: Donna.

Operator: My apologies, my mic was muted. The next question is coming from Vince Ciepiel of Cleveland Research Company. Please go ahead. Great. So really encouraging to hear about the positive revision for the fourth quarter. And I think you used the word robust to describe what you're seeing for pricing for 2025. So it sounds like things are setting up pretty well for that low to mid single-digit yield growth range that you target. Could you comment on how you think new hardware and maybe any itinerary or geographic type changes could impact yield for next year? Is it something that you think will be accretive, neutral, or dilutive to yield?

Speaker Change: My apologies my Mic was muted. The next question is coming from principal of Cleveland Research Company. Please go ahead.

Operator: Great. So really encouraging to hear about the positive revision of the fourth quarter and I think you used the word robust to describe what you're seeing for pricing for 2025. So it sounds like things are setting up pretty well for that low to mid single digit growth range that you've target could you comment on how you think new hardware.

Speaker Change: And maybe any itinerary or geographic type changes could impact yield for next year is it something that you think will be accretive neutral dilutive to yield how should we be thinking about that.

Harry Sommer: How should we be thinking about that? So thanks, Vince. And I think the reiteration of the load amid single-digit yield growth next year is spot on, and that continues to be our goal for 25 and 26. When we look at our deployment mix for 25 versus 24, obviously there are some changes on the margin, but it's not a substantial change year over year. Obviously, we didn't have any new hardware come online this year, which would be a tailwind for next year. We have two ships coming on next year. One a little earlier, one towards the back half of the year.

Harry J. Sommer: How should we be thinking about that? You know, I, so thanks, Vince, and I think the reiteration of the low to mid-single-digit yield growth for next year is spot on, and that continues to be our goal for 2025 and 2026. You know, when we look at our deployment mix for 2025 versus 2024, obviously, there are some changes on the margin, but it's not a substantial change year over year. Obviously, we didn't have any new hardware come online this year, which would be a tailwind for next year.

Speaker Change: No.

Speaker Change #102: So thanks, Vincent I think the reiteration of the low to mid single digit yield growth for next year is spot on and that continues to be our goal for 25 and 26, when we look at our deployment mix for 25 versus <unk> 24, obviously theres some changes on the margin, but it's not a substantial change year over year, obviously, we did.

Speaker Change #104: Have any new hardware come online this year, which would be a tailwind for next year. We have two ships coming on next year, one a little earlier one towards the back half of the year. So I don't I don't think that new ships will have a material impact is while I think most of what you see next year is just going to be organic based on marketing demand.

Harry J. Sommer: Obviously, we have two ships coming on next year, you know, one a little earlier, one towards the back half of the year, so I don't think that new ships will have a material impact as well. I think most of what you see next year is just going to be organic based on, you know, marketing, demand, tweaking revenue management tools, and just being, you know, more effective at executing in the company. So I don't think there's any huge, you know, one-time or ancillary items that will impact yield for next year. An unrelated follow-up on loyalty.

Harry Sommer: So I don't think that new ships will have a material impact as well. I think most of what you see next year is just going to be organic based on marketing, demand, tweaking, revenue management tools, and just being more effective at executing in the company.

Speaker Change: <unk> revenue management tools, and just being more effective in executing in the company. So I don't think theres any huge.

Harry Sommer: So I don't think there's any huge one-time or our ancillary items that impact yield for next year. Thanks.

Speaker Change: One time or our ancillary items that impact yield for next year.

Harry J. Sommer: I know this is something that we've talked about briefly in the past. Just curious where you guys are at in that process and if you've given more thought to it or are already taking steps to help reward folks for staying within the Brandt family across the portfolio of Brandt. You know, good question, but it's not really something we're prepared to talk about yet.

Speaker Change: And an unrelated follow up on loyalty.

Vince Ciepiel: And unrelated follow-up on loyalty. I know this is something that we've talked about briefly in the past. Just curious where you guys are at in that process and if you've given more thought or are already taking steps to help reward folks for staying within the brand family across the portfolio of brands. You know, good question, but it's not really something we've prepared to talk about yet. You know, obviously, what we've seen in the industry is on a radar screen, and we're studying it, but not really in a place to comment at the current time. Okay, thank you.

Speaker Change #111: This is something we've talked about briefly in the past just curious where you guys are at in that process and if you've given more thought or already taking steps to help.

Speaker Change: Reward folks for staying within the brand family across the portfolio.

Speaker Change: Portfolio of brands.

Speaker Change: Good question, but it's not really something we're prepared to talk about yet obviously, what we've seen in the industry is on our radar screen and we're studying it but but not really in a place to come into the current time.

Harry J. Sommer: You know, obviously, what we see in the industry is on our radar screen, and we're studying it, but we're not really in a place to comment at the current time. Okay, thank you. Thank you. Thank you. The next question is coming from James Hardiman of Citi. Please go ahead. Hey, good morning.

Speaker Change: Okay. Thank you.

James Hardiman: Thank you.

Speaker Change: Yes.

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

James Hardiman: The next question is coming from James Hardam in a city. Please go ahead. Hey, good morning, and thanks for taking my questions. So you guys have done a great job. The last couple quarters and really implied in the guidance for the year on the cost run, basically keeping that cruise cost flat next to dry dock. Maybe help us think through how long you can continue to do that. IE, you know, if we think about this year, was there a disproportionate benefit from some of the cost savings that, you know, would inevitably slow next year, and I guess conversely, how to think about inflation next year, or could that sort of flatish X dry dock trend continue for longer?

Operator: And thanks for taking my questions. So, you guys have done a great job the last couple quarters and really implied in the guidance for the year on the cost front, basically keeping that cruise cost flat next to dry dock. Maybe help us think through how long you can continue to do that, i.e., if we think about this year, was there a disproportionate benefit from some of the costs saved that would inevitably slow next year? And, I guess conversely, how to think about inflation next year? Or could that sort of flattish ex-dry-box trend continue for longer? Good morning, James. It's Mark.

James Lloyd Hardiman: Hey, good morning, and thanks for taking my questions.

Speaker Change: So.

Speaker Change: You guys have done a great job.

James Lloyd Hardiman: The last couple of quarters and really implied in the guidance for the year on the cost front basically keeping net cruise costs flat.

Speaker Change: The dry dock.

Speaker Change #110: Maybe help us think through how long you can continue to do that.

Speaker Change: E.

Speaker Change: Think about this year.

Speaker Change #101: They're a disproportionate benefit from some of the cost saves.

Speaker Change: It.

Speaker Change #114: Would inevitably slow next year and I guess, Conversely, how to think about inflation next year or could that that sort of flattish ex dry dock trends continue for longer.

Mark Kempa: Thanks.

Mark Kempa: Good morning, James. It's Mark. So thanks for the question. Look, you know, as we've stated and, more importantly, as we've committed, we've said that we're targeting 300 million of savings over the course of the three years through 2026. And we're confident in that. Doesn't mean it's in the bag, but it's an ever evolving journey. And we think, you know, we have the right tools. We have the right culture that's in place. We are seeing changes in the organization. And we're starting to eliminate waste effectively. And again, it remains to be seen when you think about next year, what is inflation?

Mark A. Kempa: So thanks for the question. Look, you know, as we've stated, and more importantly, as we've committed, we've said that we're targeting 300 million in savings over the course of the three years through 2026. And we're confident in that. Doesn't mean it's in the bag, but it's an ever-evolving journey.

Mark: Good morning, James It's Mark so thanks for the question look.

Speaker Change #109: As we've stated and more importantly, as we've we've committed we've we've said that we're targeting $300 million of savings over the course of the three years through 2026.

Speaker Change: We're confident.

Speaker Change: And that doesn't mean, it's in the bag, but it's an ever evolving journey and we think we have the right tools, we have the right culture Thats in place.

Mark A. Kempa: And we think, you know, we have the right tools, we have the right culture that's in place. We're seeing changes in the organization. And we're starting to eliminate waste effectively. But again, it remains to be seen when you think about next year. What will inflation be? We generally think of inflation as somewhere around 3%.

Speaker Change: We are seeing changes in the organization and we're starting to eliminate waste effectively.

Speaker Change: And again it remains to be seen when you think about next year. What is inflation. We generally think of inflation is somewhere around 3% and of course, we all know that could be up or down but our goal is to mitigate some or all of that and you know.

Mark Kempa: We generally think of inflation as somewhere around 3%. And, of course, we all know that could be up or down. But our goal is to mitigate some or all of that. And, you know, what I can say is, to date, and our performance indicates it, we are doing well on that track. And we're actually ahead of that for 2024. So a bit early to comment on what 2025 is going to look like. But we have a lot of runway. We have a lot of annualization from initiatives that started this year that will get the full annualization of next year.

Mark A. Kempa: And of course, we all know that could be up or down. But our goal is to mitigate some or all of that. And, you know, what I can say is, to date, and our performance indicates it, we are doing well on that track. And we're actually ahead of that track for 2024.

Speaker Change #103: What I can say is to date and our performance indicates that we are doing well on that track and we are actually ahead of that track for 2024, so a bit early to commit on what 2025 is going to look like but we have a lot of runway. We have a lot of annualized <unk> from initiatives that started this year that will.

Mark A. Kempa: So it's a bit early to commit to what 2025 is going to look like, but we have a lot of runway. We have a lot of annualization from initiatives that started this year that we'll get the full annualization of next year. So we're feeling comfortable with our targets.

Mark A. Kempa: The full annualized <unk> of next year. So we're feeling comfortable on our targets and we are laser focused on this and.

Mark Kempa: So we're feeling comfortable on our targets. And we are laser focused on this and eliminating that waste, but preserving the entire guest experience and the product that we're known to deliver.

Mark A. Kempa: And we are laser-focused on eliminating that waste while preserving the entire guest experience and the product that we're known to deliver. And then, obviously, it's way too early to really handicap 2025 in terms of some of the key sort of demand and cost factors, but I don't know if you could maybe help corral us in terms of some of the below-the-line items. As I think about interest expense, share count, DNA for next year, obviously, your balance sheet is changing, you've got some converts. Any help with that math so we can all be maybe within the same ballpark?

Speaker Change: Eliminating that waste, but preserving the entire guest experience and the product that we're known to deliver.

Speaker Change: Got it.

Mark Kempa: And then obviously it's way too early to really handicap 2025 in terms of some of the key sort of demand and cost factors, but I don't know if you could maybe help corral us in terms of some of the below the line items as I think about interest expense, their account, DNA for next year. Obviously, your balance sheet is changing. You've got some converts; any help with that mask so we could all be maybe within the same ballpark? Yeah, so first on share count, I think we've been guiding to about 515 or 516 million fully diluted, and I would expect that number to be very similar next year because that does assume that all of our convertibles that are out on the horizon are converted to shares.

Speaker Change #106: And then.

Speaker Change: Obviously, it's way too early to really handicap 2025 in terms of some of the key sort of demand and cost factors.

Speaker Change: But I don't know if you.

Speaker Change #112: You could maybe help corral us in terms of some of the below the line item.

Speaker Change: As I think about interest expense share count.

Speaker Change: For next year, obviously your balance sheet is changing.

Speaker Change: Got some converts.

Speaker Change #105: Any help with that math, so we can all be maybe within the same ballpark.

Mark A. Kempa: Yeah, you know, so first on the share count, I think we've been guiding to about 515 or 516 million fully diluted. And I would expect that number to be very similar next year because that does assume that all of our convertibles that are out on the horizon are converted to shares. That is not our intention, of course, for our 2027, as we've always said, but the 2025 convertibles, we expect to convert to shares because we don't have another option.

Speaker Change: Yes.

Speaker Change: So first on share count I think we've been guiding to about $515 or $516 million.

Speaker Change: Fully diluted and I would expect that number to be very similar next year, because that does assume that all of our convertibles that are out on the horizon are converted to shares that is not our intention of course for our 2027 as we've always said, but the 2025 convertibles.

Mark Kempa: That is not our intention, of course, for a 2027, as we've always said, but the 2025 convertibles we expect to convert to shares because we don't have another option. You know in terms of DNA, and you know DNA. I think our DNA generally runs probably about nine and a half percent or so of growth revenue, and I would anticipate that it's probably going to be in that same zone going forward. And in terms of interest, you know again, I think we continue to make progress on the interest. You know, we're guiding to what are we guys, the seven, about seven, six years or so this year.

Mark A. Kempa: We expect to convert to shares because we don't have another option in.

Speaker Change #100: In terms of.

Speaker Change: DNA DNA I think our DNA generally runs probably about nine 5% or so of gross revenue and I would anticipate that its probably going to be in that same zone going forward.

Mark A. Kempa: You know, in terms of DNA and, you know, DNA, I think our DNA generally runs about nine and a half percent or so of gross revenue. And I would anticipate that it's probably going to be in that same zone going forward. And in terms of interest, you know, again, I think we continue to make progress on interest. You know, we're guiding to, what are we guiding to, seven, about 760 or so this year.

Speaker Change: And in terms of interest again, I think we continue to make progress on the interest.

Mark A. Kempa: We're guiding to what do we guide to seven about 760 or so this year and I think that's about what is that about six 5% or so of gross.

Mark Kempa: And I think that's about what is that about six and a half percent or so of growth as we continue to pay down debt, as hopefully we can take out some debt early, as we've potentially indicated with our 2024 December maturity. I think hopefully we can continue to see some improvement on that front, so I'm not going to give you a specific number on it, but you know think about where we are this year 73740 or so. I think that would probably be a consistent percent of growth revenue or better. Got it really helpful. Nice work.

Mark A. Kempa: And I think that's about, what is that, about six and a half percent or so of gross. As we continue to pay down debt, as hopefully we can take out some debt early, as we've potentially indicated with our 2024 December maturity, I think hopefully we can continue to see some improvement on that front. So I'm not going to give you a specific number on that. But, you know, think about where we are this year, 730, 740 or so.

Speaker Change: As we continue to pay down debt as hopefully we can take out some debt early as.

Speaker Change: As we've potentially indicated with our 2024 December maturity I think hopefully we can continue to see some improvement on that front. So I'm not going to give you a specific number on it but think about where we are this year 730, 740, or so I think that would probably be a consistent percent of gross revenue or better.

Speaker Change: Okay.

Speaker Change: Got it really helpful. Thanks Martin.

Lizzy Duff: Thank you.

Mark A. Kempa: I think that would probably be a consistent percent of gross revenue or better. Got it. Really helpful. Thanks, Mark. Thank you. The next question is coming from Lizzie Dove of Goldman Sachs. Please go ahead. Hi there, thanks so much for taking the question and congrats on a nice set of results. I just wanted to ask about the kind of the algo, I suppose, for net yield.

Speaker Change: Thank you. The next question is coming from Lindsay <unk> of Goldman Sachs. Please go ahead.

Mark Kempa: The next question is coming from Lizzy Duff of Goldman Sachs. Please go ahead. Hi there. Thanks so much for taking the question, and congrats on a nice set of results. I just wanted to ask about kind of the algo, I suppose, the net yield. It feels like maybe the growth side of things in terms of onboard and ticket was a touch lower than expected, but really, really nice kind of commissions leverage that you got there. So I guess any change of how you're kind of thinking about that longer term, and I'll ask my follow up now, is there, you know, how much more room to go is there on that kind of commissions leverage that you're getting?

Operator: It feels like maybe the growth side of things in terms of onboard and ticket revenue was a touch lower than expected, but really, really nice kind of commission leverage that you got there. So I guess any change of how you're kind of thinking about that longer term, and I'll ask my follow up now, is there, you know, how much more room to go is there on that kind of commission leverage that you're getting? And is that really just coming from more direct bookings, and changing demographics that you're seeing? Any help there would be great.

Lindsay: Hi, there. Thanks, so much for taking the question and congrats on a nice set of results I just wanted to ask about kind of.

Lindsay: The I'll go I suppose the net yield it feels like maybe the growth side of things in terms of onboard and ticket was a touch lower than expected, but really really nice kind of commissions leverage that you got that so I guess any change of how you kind of thinking about that longer time and I'll ask my follow up now is that how.

Operator: How much more room to go is there on that kind of commissions leverage that you're getting in is that really just coming from more direct bookings change in demographics that you're seeing and any.

Mark Kempa: And is that really just coming from more direct bookings, change in demographics that you're seeing? Any help there would be great. Thank you.

Speaker Change #116: Any help that would be great. Thank you.

Mark Kempa: Yes, so thank you, Lizzy, and we've seen the question in your initial report this morning too, so we appreciate the heads-up on it. So I'll just say, at a high level, I understand how you drew the conclusion you did that the benefit was based on commission or direct bookings or something like that. But I just want to explain what's not the case. The entire benefit we saw in that line was as a result of better air purchasing. So, as you know, we bundle air on ocean at region and Seattle on anywhere between 35 and 60% of our guests, depending on the brand and the regions.

Harry J. Sommer: Yeah, so thank you, Lizzie, and we had seen the question in your initial report this morning, too, so we appreciate the heads-up on it. I understand how you drew the conclusion you did that the benefit was based on commission or direct bookings or something like that, but I just want to explain that was not the case. The entire benefit we saw on that line was as a result of better air purchasing.

Speaker Change: So thank you Lindsay and we'd see the question in your initial report this morning too. So we appreciate the heads up on it. So I'll just say at a high level I understand how you view. The conclusion you did that benefit was based on commission or direct bookings or something like that but I. Just wanted to I just want to explain that was not the case the entire.

Speaker Change #108: Here benefit we saw in that line was as a result of better are purchasing so as you know we bundle air on Oceana region NCL on anywhere between 35, and 60% of our guests depending on the brand in the region and as we're able to buy are more effectively with <unk>.

Harry J. Sommer: So, as you know, we bundle air in the Oceania region and Seattle on anywhere between 35% and 60% of our guests, depending on the brand and the region, and as we're able to buy air more effectively, we pass on the savings to the guests, which results in lower gross revenue and lower air costs, so to speak, which show up in commission transportation and other lines, yet better net revenue because we believe our air program is a competitive advantage in driving So therefore, for us, having higher net revenue and lower gross revenue is actually a huge benefit, which I think that the analyst community misunderstands. They think we miss out on gross. It's actually a benefit.

Mark Kempa: And as we're able to buy air more effectively, we pass on the savings to the guests, which results in lower gross revenue and lower air costs that they could show up in the commission, transportation, and other line, yet better net revenue because we believe our air program is an advantage in driving demand. So, therefore, for us having higher net revenue and lower gross revenue is actually a huge benefit, which I think the analyst community understands. They think we've just done gross. It's actually a benefit. It means we're buying air more effectively again, passing on those cities to the guests, which allow us to have a more robust demand environment.

Speaker Change #108: Pass on the savings the guests, which results in lower gross revenue and lower.

Speaker Change #108: Air cost so to speak would show up in the Commission transportation and other line get better net revenue because we believe our air program. That's a competitive advantage in driving demand. So therefore for us having higher net revenue and lower gross revenue is actually huge benefit, which I think that in the analyst community.

Harry J. Sommer: This understands they think we missed on growth, it's actually a benefit it needs. We're buying are more effectively again, passing on those savings to the guests, which allow us to have a more robust demand environment.

Harry J. Sommer: It means we're buying air more effectively, again, passing on those savings to the guests, which allows us to have a more robust demand environment. In terms of how much more leverage there may be on buying air better, listen; we have a team. This is what they do. We continue to do our best to contract with new carriers, especially on the domestic and international fronts. That gives us more choices to offer our guests.

Mark Kempa: In terms of how much more leverage there may be on buying air better, listen, we have a team. This is what they do. We continue to do our best to contract with new carriers, especially both on the domestic and international front, that gives us more choices to offer our guests. So I do not think we have run the entire course. I could sort of, although it doesn't necessarily show up in cost.

Mark A. Kempa: In terms of how much more leverage there may be on buying are better.

Speaker Change #107: We haven't seen this is what they do they date, we continue to do our best to contract with new carriers, especially both on the domestic and international fronts.

Harry J. Sommer: So I do not think we have run the entire course. I could, sort of, although it doesn't necessarily show up in cost, so it isn't officially part of a transformation office or the $300 million that Mark mentioned. Clearly, buying air better and providing that benefit to the guests is a long-term benefit for the company.

Harry J. Sommer: It gives us more choices to offer our guests. So I do not think we have run the entire course.

Harry J. Sommer: It's sort of although it doesn't necessarily show up in cost. So it is it officially part of the transformation office or the 300 million that Mark mentioned clearly find are better and providing that benefit to the guest is a long term benefit for the company.

Mark Kempa: So it is an officially part of a transformation office for the 300 million that Mark mentioned. Clearly, buying air better and providing that benefit to the guests is a long-term benefit for the guests. Thank you, that's helpful.

Harry J. Sommer: Awesome. Thank you. That's helpful. I think I think we have operator time for one more question.

Speaker Change: Awesome. Thank you that's helpful. I think I think we have operator time for one more question.

Donna: I think we have operator time for one more question.

Dan Politzer: Thank you.

Operator: Thank you. Our next question is coming from Dan Politzer of Wells Fargo. Please go ahead. Hey, good morning, everyone.

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

Mark Kempa: Our next question is coming from Dan Politzer of Wells Fargo. Please go ahead. Hey, good morning everyone. Thanks for taking my question. I just wanted to follow up on that. The difference between gross and net as we think about kind of the remainder of the year and obviously given that net yield guidance. You know, should we think about that that transportation and airfare cost continuing to be down year of year? Or, you know, should kind of gross and net be, you know, changing at a similar pace for the rest of the year? I think Dan, generally speaking, you know, to the extent we can continue to improve on that line item, we're going to continue to improve on it.

Operator: And thanks for taking my question. I just wanted to follow up on that. The difference between gross and net as we think about kind of the remainder of the year, and obviously, given that net yield guidance, you know, should we think about that, that transportation and airfare costs continuing to be down year over year? Or, you know, should gross and net be changing at a similar pace for the rest of the year?

Daniel Brian Politzer: Hey, good morning, everyone and thanks for taking my question I just wanted to follow up on that.

Operator: The difference between gross and net as we think about kind of the remainder of the year and obviously, you've given that net yield guidance.

Harry: Should we think about that transportation and airfare costs, continuing to be down year over year or should it should kind of gross and net be changing at a similar pace for the rest of the year.

Operator: I think, Dan, generally speaking, you know, to the extent we can continue to improve on that line item, we're going to continue to improve on it. Obviously, you know, we are at the mercy of some of the market volatility in terms of whatever AIR does.

Dan: I think Dan generally speaking.

Operator: The extent, we can continue to improve on that line item, we're going to we're going to continue to prove on it obviously we are.

Mark Kempa: Obviously, you know, we're at the mercy of some of the market volatility in terms of whatever air does. But I think it's a good assumption to assume that we're going to continue to work hard on that and see improvement.

Speaker Change: At the Mercy of <unk>.

Speaker Change: Some of the market volatility in terms of whatever air does but I think it's a good assumption.

Mark A. Kempa: But I think it's a good assumption to assume that we're going to continue to work hard on that and see improvements. So a bit of a not exact answer, because I think there is some variability there, but I think we're going to continue to see improvements there. Got it. And then obviously, you reach your year-end target for leverage, you know, pretty much in this quarter. How should we think about the year-end net leverage target at this point?

Dan: <unk>.

Mark A. Kempa: To assume that we're going to continue to work hard on that and see improvement so.

Mark Kempa: So a bit of a not exact answer, because I think there is some variability there, but I think we're going to continue to improve it there. Got it.

Speaker Change: Bit of a not exact answer because I think there is some variability there, but I think we're going to continue to see improvements there.

Mark A. Kempa: If there's any way to just kind of help us as we think about the, you know, working capital and those other moving pieces in terms of your balance sheet and cash flow? Yeah, I think the way to think about it is it provides us another solid milestone toward our 2026 target of mid fours. You know, I think generally the models out there know what our debt is, net debt is.

Mark A. Kempa: Got it and then obviously you reach your year end target for leverage pretty much in this quarter and how should we think about the year.

Mark Kempa: And then obviously you reach your year-end target for leverage, you know, pretty much in the quarter. How should we think about the year-end net leverage target at this point? If there's any way to just kind of help us as we think about the, you know, working capital on those other moving pieces in terms of your balancing cash flow. Yeah, I think the way to think about it is it provides us with another solid milestone toward our 2026 target of mid fours. You know, I think generally the models out there know what our debt is, net debt is.

Speaker Change: Year end net leverage target at this point.

Mark A. Kempa: If theres any way to just kind of help us as we think about that.

Speaker Change #115: Working capital on those other moving pieces in terms of your balance sheet and cash flow.

Mark A. Kempa: And I think you have a good handle on where our EBITDA is. So we are making progress, and we think by year end, we're going to see significant improvements in that quarter after quarter.

Speaker Change: I think the way to think about it as it provides us another solid milestone toward our 2026 target of mid fours.

Mark A. Kempa: I think generally the models out there no what our debt is net debt is and I think you have a good handle on obviously, where our EBITDA is so we are making progress and we think by year end, we're going to see significant improvements in that quarter after quarter.

Mark Kempa: And I think you have a good handle on obviously where our EBITDA is. So we are making progress. And we think by year end, we're going to see significant improvements in that quarter after quarter. Got it. Thanks so much.

Speaker Change: Got it thanks, so much.

Mark Kempa: Okay.

Mark A. Kempa: Got it. Thanks so much. Okay, so once again, I want to thank everyone for joining us today. We'll be around to answer any questions you may have. Have a great day, and we look forward to seeing you on our next call. Thanks, everyone. Thank you. This concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy your day.

Harry Sommer: So once again, I want to thank everyone for joining us today. We'll be around to answer any questions you may have.

Speaker Change: Okay. So once again I want to thank everyone for joining us today will be around to answer any questions. You may have have a great day, and we look forward to see in our next call. Thanks, everyone.

Harry Sommer: Have a great day. And we look forward to seeing our next call. Thanks everyone.

Donna: Thank you.

Mark A. Kempa: Thank you. This concludes today's event you may disconnect your lines or log off the webcast at this time and enjoy your day.

Donna: This concludes today's event. You may disconnect your lunch or log off the webcast at this time and enjoy your day.

Lindsay: Yes.

Mark A. Kempa: [music].

Mark A. Kempa: Okay.