Q2 2024 Viking Holdings Ltd Earnings Call
Paul: thank good morning my name is paul and i will be your conference operator today at this time i would like to welcome everyone two viking's second quarter two thousand and twenty four earnings conference call
At this time, I would like to welcome everyone to Viking's 2nd Quarter 2024 Earnings Conference Call. As a reminder, this call is being recorded.
Paul: All lines have been placed on mute to prevent, any background noise.
Paul: Thank you.
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Speaker Change: as a reminder this call is being recorded all lines have been placed on mutute to prevent any background noise
Speaker Change: After the speaker's remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question at that time, please press star 1 on your telephone keypad.
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corlla malini: i would now like to turn the program to your host for today's conference vice president of investor relations corlla malini
corlla malini: Thank
corlla malini: Okay, so it's $445,757,520.
corlla malini: Thank you for your participation.
corlla malini: good morning everyone and welcome to viking's second quarter twotwenty and twenty four earnings school i am joined by tor haygen chairman and chtf executive officer allitoaca chief financial officer
Speaker Change: also available during the qa session is leanvan executive byice president of finance before we get started please note our cautionary statement regarding forward-looking information
Speaker Change: during the call management may discuss information that is forward-looking and involves known and unknown risks uncertainties and other factors which may cause the actual results to be different than those expressed or implied
Speaker Change: please evaluate the forward-looking information in the context of these factors which are detailed in today's press release as well as in our filings with the sec
Speaker Change: the forward-looking statements are as of today and we assume no obligation to update our supplement these statements
Speaker Change: we may also refer to certain noniffs financial metrics which are reconciled and described in our press release bosted on our investor relations website at ir dot viking com
Speaker Change: toourallia will provide a strategic overview of the company our recap of our second quarter results and an update of the current booking environment
Speaker Change: we will then open the call for your questions
tour: the supplement today's call we have also prepared an earnings presentation that will also be available on our investor relations website following this call with that i'm pleased to turn the call over to tour
tour: you.
tour: But again, because of the weighting, that's not what we use on, the EPS calc.
toourallia: thank you corola good morning everyone and thank you for joining us
toourallia: I would now like to turn the program to your host for today's conference, Vice
toourallia: Understood.
tour: i'll start today's call highlighting a few key performance indator i will then take a produun to touch on demand sharing with some of the charteristics and qualities of our target customer
tour: Thank you.
tour: President of Investor Relations, Carola Mengolini.
tour: Thank you.
Speaker Change: as you can see on slide three this morning we reported successful second quarter results with our consulidated net yield up six point six percent from the prior year
Speaker Change: Good morning, everyone, and welcome to Viking's 2nd Quarter 2024 Earnings Call.
Speaker Change: The next question is coming from Robin Farley from UBS.
Speaker Change: I am joined, by Tor Hagen, Chairman and Chief Executive Officer, and Leah Talactac, Chief Financial Officer.
Speaker Change: Robin, your line is
Speaker Change: additionally we continue to experience robust demand for our core products with ninety-five percent and fifty five percent of our two thousand and twenty-four and two thousand and twenty-five capacity already solld as of august eleventh
Speaker Change: Also available during the Q&A session is Linh Banh, Executive Vice President of, Finance.
Speaker Change: Great, thank you.
Speaker Change: Before we get started, please note our cautionary statement regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors, which may cause the actual results to be different than those expressed or implied.
Speaker Change: I wanted to ask about the booking curve that you mentioned.
Speaker Change: our momentum was strong throughout the second quarter culminating with two sales milestones at the end of july
Speaker Change: first the week end july thirty-one was a company's highest growing ever and it included the highest growing do sales
Speaker Change: these results speak to the strength of our ben brand and give us confidence that our core consumer demogrcraphic continues to show financial resiliency prioritizing travel and actively seeking and richher memorable experiences
Speaker Change: When you say it's in line with your expectations, just to help us understand what that would be.
Speaker Change: and these results also speaks effectveness of our sales and marketing teams and strategy
Speaker Change: Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release as well as in our filings with the SEC.
Speaker Change: Looking at the revenue per booked cruise day, the increase is sort of down a percentage point for the current year and down two points for next year.
Speaker Change: now if you look at the next slide i mentioned in the paast that ourapproach sales and marketing is different
Speaker Change: Is that kind of what we should think of as a typical quarterly pace as you approach 2025?
Speaker Change: we have a markein platform that direct engages will consumers supported by a database that includes more than fifty-six million north american households
Speaker Change: this has it enabled us to develop deep relationships with our guest through strity that leverages robust digital capabilities and data-driven decision-making
Speaker Change: as you see we can generate demand and to this end we will continue to invest in sales and marketing during the second half of the year to support our growth plans and to keep momentum grow
Speaker Change: Is that sort of two points per quarter?
Speaker Change: i reform me on slide five
Speaker Change: last quarter i discussed our identity and unique differentiators one of which is our dedicated focus on a specific target demographic today will bel deeper enter this
As a reminder, this call is being recorded.
Unknown Executive: As a reminder, this call is being recorded. All lines have been placed on mute to prevent any background noise.
Speaker Change: All lines have been placed on mute to prevent any background noise.
Speaker Change: The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements.
Speaker Change: What would be expected?
Speaker Change: We may also refer to certain non-IFRS financial metrics, which are reconciled and described in our press release posted on our Investor Relations website at ir.viking.com.
Speaker Change: Thanks.
Speaker Change: How pricing trends will always be dependent on what sells, the deployment, of course, and our yield management.
Speaker Change: After the speaker's remarks, there will be a question and answer session.
Unknown Executive: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, please press star one on your telephone keypad. If you wish to remove yourself from the queue, please press star two. Thank you.
Speaker Change: you can see that we ated to curious afflllent english speaking travelers and fifty-five and over
Speaker Change: If you would like to ask a question at that time, please press star one on your telephone keypad.
Speaker Change: Tor and Leah will provide a strategic overview of the company, a recap of our 2nd Quarter results, and an update of the current booking environment.
Speaker Change: So we can't really say there's a set percentage of what changes as we continue to sell, but I think we can say right now, sitting here with 55% sold for 2025, we are in a good position.
Speaker Change: If you wish to remove yourself from the queue, please press star two.
Speaker Change: since our inception we have focused on themataterurered travelers we not only seek to explore the history and culture of the destinations but also possess the time and financial flexibble did a travel
Carola Mengolini: I would now like to turn the program to your host for today's conference, Vice President of Investor Relations, Carola Mengolini. Good morning everyone and welcome to Vikings' second quarter, 2024, Erning's call. I am joined by Tor Hagen, Chairman and Chief Executive Officer, and Leah Talactac, Chief Financial Officer. Also available during the Q&A session is Linh Banh, Executive Vice President of Finance. Before we get started, please note our cautionary statement regarding forward-looking information.
Speaker Change: Okay, great.
Speaker Change: on slide six we are sharing a few graphs that visualize the strength of target demographic more precisely the u s demographic which currentlylater presents most our guests
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: as you can see on the left side of the slide the population age fifty five and over is the fastest growing segment expected to increase by thirteen percent to and ten million by two thousand and thirty
Speaker Change: Maybe just one clarification on that.
Carola Mengolini: During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties and other factors, which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release, as well as in our filings with the SEC. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements.
Speaker Change: morever the segment is not only growing fast but their spending power is also increasing
Speaker Change: adults over a fifty-five at the largest spending power of any demographic holding seventy-three percent u s wealth and that metric has been on the rise with the networ of this group current app forty-one percent since two thousand and nineteen
Speaker Change: to give you some perspective on metrics relate to our current customers this quarter be carried about two hundred thousand guests we spent an average of almost eight thousand dollars each on their holiday
Speaker Change: We will then open the call for your questions.
Speaker Change: When we think about that seasonality, would the change over the course of Q3 and Q4, as you're approaching the year ahead, tend to move more than Q2 did?
Speaker Change: To supplement today's call, we have also prepared an earnings presentation that will also be available on our Investor
Speaker Change: It seems potentially that's what we should expect, just as you're saying that the things that sell closer in.
Speaker Change: So is that likely to change more in sort of a Q3, Q4 than it did in maybe in Q1, Q2 when we think about approaching 2025?
Speaker Change: now moving to slide seven
Speaker Change: it is one thing to have a clear profile of the consumer we re targeting and is another to align our product and deliver a great experience
Carola Mengolini: We may also refer to certain non-IFRS financial metrics, which are reconciled and described in our press release, posted on our Investor Relations website at ir.viking.com. Tor and Leah will provide a strategic overview of the company, a recap of our second quarter results, and an update of the current booking environment. We will then open the call for your questions.
Speaker Change: Thanks.
Speaker Change: I mean, I think as we look to just, you know, selling out the rest of 2025, we do anticipate that, you know, the price we get will come down, mainly because of the mix of what's selling, which is the shoulder season.
Speaker Change: You know, the things that, you know, generally are lower pricing.
Speaker Change: i would believe we are winning on bothth pronance
Speaker Change: our guest share passion for travel and a keen interest in the destination
Speaker Change: Relations website following this call.
Speaker Change: But at the end of the day, I think we have to step back.
Speaker Change: i' wr can we have a manter about tailoring experiences to this group we do not try to be all things to all people we understand that our guests are thinking people who are traveling to learn and engage with a destination
Speaker Change: With that, I'm pleased to turn the call over to Tor.
Speaker Change: We're sitting here in August for 2025.
Speaker Change: We're well sold at good pricing.
Speaker Change: We have a lot of time to sell the rest of the inventory.
Speaker Change: So we are really quite pleased with where we are on the curve.
Speaker Change: Thank you, Carola.
Speaker Change: Okay, great.
Unknown Executive: To supplement today's call, we have also prepared an earnings presentation that will also be available on our Investor Relations website following this call.
Speaker Change: Good morning, everyone, and thank you for joining us.
Speaker Change: Thank you.
Speaker Change: to this end when guas book with us we provide destination specific content from reading list to language classes
Speaker Change: Thank you.
Torstein Hagen: With that, I am pleased to turn the call over to Tor. Thank you, Corolla. Good morning, everyone, and thank you for joining us.
Speaker Change: once on board our comprehensive programs cover the past present and future of the destinations through lecturess performances and local demonstrations
Speaker Change: I would now like to turn the program to your host for today's conference, Vice President of Investor Relations, Carola Mengolini.
Carola Mengolini: Good morning everyone and welcome to Vikings' second quarter, 2024, Erning's call.
Torstein Hagen: I'll start today's call highlighting a few key performance indicators, and we'll then take a opportunity to touch on demand, sharing with us some of the characteristics and qualities of our target customer. As you can see on slide three, this morning we reported successful second quarter results with a consolidated net yield up 6.6% from the prior year. Additionally, we continued to experience robust demand for our core products, with 95% and 55% of our 2024 and 2025 capacity already sold as of August 11th.
Speaker Change: we offer these experiences on their tenorris across all seven continents interestingly our two thousand and twenty five by tenhundreds include over five hundred unique destinations significantly more than the de hundred fifty visited in two thousand and eighteen
Carola Mengolini: I am joined by Tor Hagen, Chairman and Chief Executive Officer, and Leah Talactac, Chief Financial Officer.
Speaker Change: I'll start today's, call highlighting a few key performance indicators, and we'll then take the opportunity to touch on demand, sharing with you some of the characteristics and qualities of our target customer.
Speaker Change: The next question will be from Dan Pulitzer from Wells Fargo.
Speaker Change: Dan, your line is live.
Speaker Change: now ' tal about how we believe our offering restonites with our targeted customers is' always encouraging to see this being publicly recognized
Carola Mengolini: Also available during the Q&A session is Linh Banh, Executive Vice President of Finance.
Speaker Change: Hey, good morning, everyone.
Speaker Change: on slide number eight we are highlighting that this summer we receiveved top owners from travellling leaser and travelledage west for our river ocean and explanation voyages
Speaker Change: Thanks for taking my question.
Speaker Change: Before we get started, please note our cautionary statement regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties and other factors, which may cause the actual results to be different than those expressed or implied.
Torstein Hagen: Our momentum was strong throughout the second quarter, culminating with two sales milestones at the end of July. First, the week ending July 31 was a company highest-grossing ever, and it included the highest-grossing day of sales. These results speak to the strength of our one Viking brand and give us confidence that our core consumer demographic continues to show financial resiliency, prioritizing travel, and actively seeking enriching memorable experiences. And these results also speak to the effectiveness of our sales and marketing teams and strategy.
Speaker Change: travel the leader readers once again recognized as as the worldbest for all these three categories
Speaker Change: Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release, as well as in our filings with the SEC.
Speaker Change: additionally we also earned five category wins in the two thousand and twenty-four travelge west wave awards and these are words voted by travel advisers and showcases success we have had with these important stakeholders over the years
Speaker Change: The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements.
Speaker Change: th october we were also right number one by coin as traveller across rivers oceans and expedations
Speaker Change: no other travel company simultaneously been onored for rivers oceans and expeditions by both rain leiser and calledanas traveler something viking as achieved for two years in a row this is very special for us
Torstein Hagen: Now, if you look at the next slide, I mentioned in the past that our approach to sales and marketing is different. We have a marketing platform that directly engages with consumers supported by database that includes more than 56 million North American households. This has enabled us to develop deeper relationships with our guests through a strategy that leverages robust digital capabilities and data-driven decision-making. As you see, we can generate demand, and to this end, we will continue to invest in sales and marketing during the second half of the year to support our growth plans and to keep momentum going.
Speaker Change: in summary we will continue to obsess of our guest by providing excellent travel experience at good value catering our offering to what we know they deside and enjoy
Speaker Change: we believe that our clear focus on our core consumer demographic and our product is the essence of our brand promise and the cornerstone of our success
Speaker Change: As you can see on slide 3, this morning we reported successful 2nd Quarter results with our consolidated net yield up 6.6% from the prior year. Additionally, we continue to experience robust demand for our core products with 95% and 55% of our 2024 and 2025 capacity already sold as of August 11th. Our momentum was strong throughout the 2nd Quarter, culminating with two sales milestones at the end of July. And these results also speak to the effectiveness of our sales and marketing teams and strategy.
Speaker Change: Now, if you look at the next slide, I mentioned in the past that our approach to sales and marketing is different. We have a marketing platform that directly engages with consumers, supported by a database that includes more than 56 million North American households. This has enabled us to develop deep relationships with our guests through a strategy that leverages robust digital capabilities and data-driven decision-making.
L: i will now turn to l to discuss the financials
L: As you see, we can generate demand, and to this end, we will continue to invest in sales and marketing during the second half of the year to support our growth plans and to keep momentum going.
L: Now, if you follow me on slide 5, last quarter, I discussed our identity and unique differentiators, one of which is our dedicated focus on a specific target demographic. Today, we'll delve deeper into this. You can see that we cater to curious, affluent English-speaking travelers age 55 and over. Since our inception, we have focused on mature travelers who not only seek to explore the history and culture of the destinations, but also possess the time and financial flexibility to travel.
L: thank you t and good morning everyone
L: On slide 6, we are sharing a few graphs that visualize the strength of our target demographic, more precisely the U.S. demographic, which currently represents most of our guests.
Torstein Hagen: Now, if you follow me on slide five, last quarter I discussed our identity and unique differentiators, one of which is our dedicated focus on the specific target demographic. Today, we'll delve deeper into this. You can see that we cater to curious, affluent, English-speaking travelers, age 55 and over. Since our inception, we have focused on mature travelers who not only seek to explore the history and culture of the destinations, but also possess the time and financial flexibility to travel.
L: As you can see on the left side of the slide, the population age 55 and over is the fastest-growing segment, expected to increase by 13% to 110 million by 2030.
L: Moreover, the segment is not only growing fast, but their spending power is also increasing. Adults over 55 have the largest spending power of any demographic, holding 73% of U.S. wealth, and that metric has been on the rise, with the net worth of this group currently up 41% since 2019.
L: we are very pleased to have reported a strong second quarter on a consolidated basis total revenue in the quarter grew nine point one percent year-over-year to almost one point six billion mainly due to higher revenue per pcd and an increase in the year over-year size of the company's fleet
L: To give you some perspective on metrics related to our current customers, this quarter we carried about 200,000 guests who spent an average of almost $8,000 each on their holiday.
L: Now, moving to slide 7.
L: during the second quarter of two thousand and twenty four capacity pc d's increased by three point one percent and occupancy was ninety four point three percent adjusted gross margin in the quarter increased nine point five percent year -over-year to one billion
Torstein Hagen: On slide six, we are sharing a few graphs that visualize the strength of our target demographic, more precisely the US demographic, which currently represents most our guests. As you can see, on the left side of the slide, the population age 55 and over is the fastest growing segment expected to increase by 13% to 110 million by 2030. Moreover, the segment is not only growing fast, but their spending power is also increasing. I'd also be 55. Have the largest spending power of any demographic, holding 73% to US and that metric has been on the rise, with a net worth of this group currently up 41% since 2019.
L: our net yield was five hundred sixty two six point six percent higher than the second quarter of two thousand and twenty three which is remarkable since as i mentioned quarter two thousand and twenty three was already a very good year for us
L: vesessel expenses excluding fuel for capacity pcdss were down one point nine percent year over-year this positive cost performance compared to last year was mostly driven by favorable timing of expenses
L: It is one thing to have a clear profile of the consumer we are targeting, and it's another to align our product and deliver a great experience.
L: And we believe we are winning on both fronts.
L: it is important to note that we do not manage our expenses quarterly for example our repairing maintenance expenses are tied to specific projects and purchase orders which can shift between quarters
L: net income for the second quarter of two thousand and twenty four was one hundred and fifty six million compared to one hundred and ninety million for the same period in two thousand and twenty-three
Torstein Hagen: To give us some perspective on metrics related to our current customers, this quarter we carried about 200,000 guests, spent an average of almost $8,000 each on their holiday.
L: the net income for the second quarter of two thousand and twenty-four includes a loss of one hundred and twenty-three million from the revaluation of warrants issued by the company due to stock price appreciation
Torstein Hagen: Now moving to slide seven, it is one thing to have a clear profile of the consumer we are targeting, and it's another to align our product and deliver a great experience. And we believe we are winning on both fronts. Our guests share passion for travel and a key in interest in the destination. I'd like you to wear a mantra about tailoring experiences to this We do not try to be all things to all people.
L: it also includes a loss of sixty-six million related to the net impact of the private placement derivative loss
L: and interest expense related to the company's series c preference shares
L: in comparison the second quarter of two thousand and twenty-three includes a gain of three million from the impact of the series c preference shares the company series c preference shares converted into ordinary shares immediately prior to the consumation of the company's ippo
Torstein Hagen: We understand that our guests are thinking people who are traveling to learn and engage with the destination. To this end, when guests book with us, we provide destination specific content from reading lists to language classes. Once on board, our comprehensive programs cover the past, present, and future of the destinations through lectures, performances, and local demonstrations. We offer these experiences on the tenderis across all seven continents. Interestingly, our 2025-by-tenderis include over 500 unique destinations significantly more than 350 visited in 2018.
L: the second quarter of two thousand and twenty-four is the final quarterly period for which the financial results will include private placement derifatative gains or losses and interest expense related to the series c preference shares
L: excluding the impact of these items the majority of which are noncash net income for the period with three hundred and forty-five million
L: adjusted ebitda for the second quarter total four hundred and ninety-three million improving more than fifty million when compared to the same time last year
L: this significant year-over-year improvement was driven by our top line which was bolstered by a higher net yield compared to last year and increased capacity
Torstein Hagen: Now we are talking about how we believe our offering resonates with our target customers is always encouraging to see this being publicly recognized. On slide number eight, we are highlighting that this summer, we received top honors from Travel and Leader and TravelAge West for Azure River, Ocean and Expedition Voyages. Travel and Leader readers, once again, recognize as the world best for all these three categories. Additionally, we also earned five category wins in the 2024 TravelAge West Wave Awards.
L: the adjusted ebitda margin was forty-seven point five percent for the second quarter and thirty-six point seven percent for the last trailing twelve months
L: i will briefly address our net interest expense in the quarter which decreased by seventy-seven million compared to the same time last year
L: this decrease mainly reflects a onetime charge incurred in the second quarter of two thousand and twenty three related to the early financing of a senior secured note originally maturing in two thousand and twenty-five
L: now before moving to our our reportable segments i would like to highlight that rather than managing the company on ac quarterly basis we focus on the long term and manage the business profitability on an annual basis
Torstein Hagen: And these awards are voted by Travel Advisors and showcases success we have had with these important stakeholders over the years. Last October, we were also ranked number one by called the NAS Traveler across rivers, oceans, and expeditions. No other travel company has simultaneously been honored for rivers, oceans, and expeditions by both Travel and Leader and called the NAS Traveler, something Viking has achieved for two years in a row. This is very special for us.
L: to this end adjusted gross margin for the first half of the year increased by twelve point five percent year-over-year to one point five billion an ourhour net yield was five hundred and forty three five point two percent higher than the first half of two thousand and twenty three
L: now moving to our two reportable segments river and ocean
L: for the river segment adjusted gross margin greed twelve point six percent to six hundred sixty four million for the first half of two thousand and twenty four and net yield grew to five hundred sixty eight compared to five o six in the same period last year
Torstein Hagen: In summary, we will continue to obsess our guests by providing excellent travel experience at good value, catering our offering to what we know they desire and enjoy. We believe that our clear focus on our core consumer demographic and our product is the essence of our brand promise and the cornerstone of our success.
L: up more than twelve percent year-over-year driven by strong demand for our european itoneraries occupancy was ninety-four point seven percent as a reminder the bookulk of our river business begins in the second quarter
Speaker Change: We may also refer to certain non-IFRS financial metrics, which are reconciled and described in our press release, posted on our Investor Relations website at ir.viking.com.
Leah Talactac: I will now turn to Leah to discuss the financials.
L: corocean capacity pcdds s increased by nearly ten percent year-over-year mainly due to the addition of the viking saturn which was delivered by the end of april of two thousand and twenty three and the occupancy was ninety four point nine percent
Speaker Change: Tor and Leah will provide a strategic overview of the company, a recap of our second quarter results, and an update of the current booking environment.
Leah Talactac: Thank you, Tor, and good morning, everyone. We are very pleased to have reported a strong second quarter. On a consolidated basis, total revenue in the quarter grew 9.1% year-over-year to almost 1.6 billion, mainly due to higher revenue per PCD, and an increase in the year-over-year size of the company's fleet. During the second quarter of 2024, capacity PCDs increased by 3.1%, and occupancy was 94.3%. Adjusted gross margin in the quarter increased 9.5% year-over-year to 1 billion.
Speaker Change: We will then open the call for your questions.
Speaker Change: To supplement today's call, we have also prepared an earnings presentation that will also be available on our Investor Relations website following this call.
L: First, in terms of the yield in the quarter, I believe Ocean was around flat. And I know, Leah, you mentioned that there was some impact from world cruises.
L: adjusted gross margin grew eleven point four percent to seven hundred andeleven million
L: net yield for the ocean segment grew by one percent compared to the previous year primarily due to the regional mix and specifically because a larger portion of the capacity was related to the world crcreuise itinary
Speaker Change: With that, I am pleased to turn the call over to Tor.
L: Is there any way for the second quarter to give kind of an ex-world cruise type yield?
L: in two thousand and twenty four we had two world cruises versus one in two thousand and twenty three
Speaker Change: Thank you, Corolla.
L: And then similarly, I think for the full year of 2024, based on the booking curves, Ocean pricing is track is indicated up seven, which would, I believe, assume a pretty big acceleration in the back half the year.
L: excluding these cruises our net yield for the first half of two thousand and twenty-four increased by mid-single digits compared to two thousand and twenty-three
Tor Hagen: Good morning, everyone, and thank you for joining us.
Leah Talactac: Our net yield was 562, 6.6% higher than the second quarter of 2023, which is remarkable, since as I mentioned last quarter, 2023 was already a very good year, for us. Bessel expenses, excluding fuel per capacity PCDs, were down 1.9% year over year. This positive cost performance, compared to last year, was mostly driven by favorable timing of expenses. It is important to note that we do not manage our expenses quarterly. For example, our repairing maintenance expenses are tied to specific projects and purchase orders, which can shift between quarters.
L: So I just want to make sure we're thinking about that the right way as it relates to kind of the disclosures and the curves and kind of the one offs.
L: it's worth noting that the world cruises which went on sale in two thousand and twenty one were met with exceptional demand although the world crews iitinerary typically has lower than average net yields it's garne overhauling support from our pas guests and required less sales and marketing spent
Tor Hagen: I'll start today's call highlighting a few key performance indicators, and we'll then take a opportunity to touch on demand, sharing with us some of the characteristics and qualities of our target customer.
L: Yeah, so, I mean, you can see from the Ocean Bookings update that Tor spoke about, that, for the 2024 season, we expect yields, you know, as of today, they're 7% up, so if you consider that we're 1% up as of the first half, and we expect to be 7%, around 7% for the full year, I think that kind of will guide you as to the second half expectations.
Speaker Change: while i've given some details on our reportable segments i'd like to emphasize that we view our business as one entity whether our guests choose to travel by ocean or river our focus is on providing a best-in-class travel experience prioritizing the destination
Speaker Change: Our guests share a passion for travel and a keen interest in the destination.
Speaker Change: Okay, and then just for my follow-up, in terms of costs, I know you mentioned that a bit, but, were there any specific ways to quantify any benefits from timing or cost shifts in the quarter that will shift into the back end of the year?
Speaker Change: At Viking, we have a mantra about tailoring experiences to this group.
Speaker Change: As you're aware, you know, we don't provide guidance, and so what we can say is, you know, costs did trend favorably to the same quarter last year, which is great.
Speaker Change: We do not try to be all things to all people.
Speaker Change: It's something that we will look to.
Speaker Change: We understand that our guests are thinking people, who are traveling to learn and engage with the destination. To this end, when guests book with us, we provide destination-specific content, from reading lists to language classes. Once on board, our comprehensive programs cover the past, present, and future of the destinations through lectures, performances, and local demonstrations. We offer these experiences on itineraries across all seven continents.
Speaker Change: Interestingly, our 2025 itineraries include over 500 unique destinations, significantly more than the 350 visited in 2018.
Speaker Change: Now we're talking about how we believe our offering resonates with our target customers.
Speaker Change: now let's move to the balance sheet
Speaker Change: as of june thirty two thousand and twenty-four we had total cash and cash equivalent of one point eight billion and net debt of three point six billion
Leah Talactac: Net income for the second quarter of 2024 was 156 million, compared to 190 million for the same period in 2023. The net income for the second quarter of 2024 includes a loss of 123 million from the revaluation of warrants issued by the company due to stock price appreciation. It also includes a loss of 66 million related to the net impact of the private placement derivative loss, and interest expense related to the company's CREC preference shares.
Speaker Change: to this end our net leverage improved to three times at the end of q two compared to three point four times on march thirty first two thousand and twenty four as of june thirty deferred revenue was three point eight billion
Speaker Change: also on slide twelve you can see our current bond maturity outlook which has not changed since we lastst reported with one bond maturity d in may two thousand and twenty five in all other maturities in two thousand and twenty seven and beyond
Leah Talactac: In comparison, the second quarter of 2023 includes a gain of 3 million from the impact of the CREC preference shares. The company's CREC preference shares converted into ordinary shares immediately prior to the consummation of the company's IPO. The second quarter of 2024 is the final quarterly period for which the financial results will include private placement derivative gains or losses and interest expense related to the CREC preference shares. Excluding the impact of these items, the majority of which are non-cash, net income for the period was 345 million.
Speaker Change: with this i'd like to confirm our debt amortization for two thousand and twenty-four and two thousand and twenty-five
Speaker Change: as of june thirty two thousand and twenty four the scheduled princial payments for the remainder of two thousand and twenty four are one hundred and one million and four hundred and fifteen nine million for thefull year two thousand and twenty five
Speaker Change: from a committed capital expenditure perspective and for full year two thousand and twenty four the total expected committed ship capex is about eight hundred thirty million net a financing four hundred and fifty million
Speaker Change: and for the full year two and twenty-five the tol expected committed ship capex is about seven hundred ten million net of financing ninety million
Leah Talactac: Adjusted EBITDA for the second quarter totaled 493 million, improving more than 50 million when compared to the same time last year. This significant year over year improvement was driven by our top line, which was bolstered by a higher net yield compared to last year and increased capacity. The adjusted EBITDA margin was 47.5 percent for the second quarter and 36.7 percent for the last trailing 12 months. I will briefly address our net interest expense in the quarter, which decreased by 77 million compared to the same time last year. This decreased mainly reflects a one-time charge incurred in the second quarter of 2023 related to the early financing of the senior secured note originally maturing in 2025.
Speaker Change: the primary driver of the quarterly change in committedship capex for both two thousandand twenty-four in thousand and twenty-five
Speaker Change: As you can see on slide three, this morning we reported successful second quarter results with a consolidated net yield up 6.6% from the prior year. Additionally, we continued to experience robust demand for our core products, with 95% and 55% of our 2024 and 2025 capacity already sold as of August 11th. Our momentum was strong throughout the second quarter, culminating with two sales milestones at the end of July.
Tor: is a signing of the options for ocean ship seventeen and eighteen which are scheduled for delivery in two thousand and twenty eight and twenty twenty nine respectively and remain subject to certain financing conditions with that i'll turn it back to tour to review our business outlook including our booking curps
Speaker Change: First, the week ending July 31 was a company highest-grossing ever, and it included the highest-grossing day of sales.
Tor: It's always encouraging to see this being publicly recognized.
Tor: Some of this is timing at the end of the day.
Tor: On slide number eight, we are highlighting that this summer we received top honors from Travel and Leisure and Travel Age West for our river, ocean, and expedition voyages.
Tor: I think we can, you know, we'll reiterate again, we do look at the business on a long-term basis, and so from that perspective, we don't really manage by the quarter, but I think, you know, the trend in how operating costs are, it's, you know, for us, it's positive.
Tor: Travel and Leisure readers once again recognize us as the world best for all these three categories. Additionally, we also earned five category wins in the 2024 Travel Age West Wave Awards, and these awards are voted by travel advisors and showcases success we have had with these important stakeholders over the years.
Tor: Last October, we were also ranked number one by Continental Traveler across rivers, oceans, and expeditions. No other travel company has, simultaneously been honored for rivers, oceans, and expeditions by both Travel and Leisure and, Continental Traveler, something Viking has achieved for two years in a row.
Tor: This is very special for us.
Tor: In summary, we will continue to obsess over our guests by providing an excellent travel, experience at good value, catering our offering to what we know they desire and enjoy. We believe that our clear focus on our core consumer demographic and our product is the
tour: well thank you l before we get started on the curves i'd like to remind everyone that advanced bookings include bookings for cruises landdon air for our core products
tour: essence of our brand promise and the cornerstone of our success.
tour: i also want to note that advanced booking per pity has historically decreased as we gogot those to the forward year
tour: this is not indicative of a price reduction but rather a reflection of complex into play of several factors which include variations in deployment mixes the timing and types of tender is open for sale for example most popular and newuorite ar will usually sell first
Leah Talactac: Now, before moving to our reportable segments, I would like to highlight that rather than managing the company on a quarterly basis, we focus on the long term and manage the business profitability on an annual basis. To this end, adjusted gross margin for the first half of the year increased by 12.5 percent year over year to 1.5 billion and our net yield was 543. 5.2 percent higher than the first half of 2023.
tour: also the cabin categories as typically better cabin categories bookfirst
tour: and the timing and price increases
tour: and finally our internal revenue planning decisions as you managage pricing and pacing based on market conditions
tour: Okay, and just, I guess, one other kind of related one on the cost side, the new flooding, is that, has that been a headwind, or is that something that should be on investors' radar as we think about the costs in the rest of the year?
Leah Talactac: Now, moving to our two reportable segments, river and ocean, for the river segment, adjusted gross margin grew 12.6 percent to 664 million for the first half of 2024 and net yield grew to 568 compared to 506 in the same period last year. Up more than 12 percent year over year, driven by strong demand for our European Icon. Authorities, Occupancy was 94.7%. As a reminder, the bulk of our river business begins in the second quarter.
Speaker Change: let us now dive into the curves which are evolving accordanddoor expectations
Speaker Change: You know, I think that we handled that exceptionally well.
Speaker Change: on slide fourteen we see our consolidative metrx
Speaker Change: as you can see our two thousand and twentyfour capacity is almost completely sold with ninety five percent of our capacity pc booked for a core product and four point six billion dollars of advanced booking sold as of august eleven
Speaker Change: As you know, our identical, long shifts allow us to do shift swaps, so that we minimize canceled cruises, and, you know, I personally went on the Danube this summer, and everything is back to normal.
Speaker Change: It's great.
Speaker Change: It was very encouraging to see all of the long shifts operating along the Danube.
Speaker Change: this is fourteen percent higher than the two thousand and twenty-three season at the same point in time
Speaker Change: So, you know, I think our operators are very good at what they do, and this is just part of the, course for them.
Leah Talactac: For ocean, capacity PCBs increased by nearly 10% year over year, mainly due to the addition of the Viking Saturn, which was delivered by the end of April of 2023. And the occupancy was 94.9%. Adjusted gross margin grew 11.4% to 711 million. Met yield for the ocean segment grew by 1% compared to the previous year, primarily due to the regional mix and specifically because a larger portion of the capacity was related to the world cruise itinerary.
Speaker Change: and two thousand and twenty five looks encouraging to we have fifty-five percent booked with three point four billion dollars of advanced bookings
Speaker Change: So, as far as managing costs, you know, shift swaps really go a long way, and to the extent that we do have to, you know, do a little bit more deviations, our operators are also very cost-conscious and make the best efforts to minimize them.
Speaker Change: All right, thanks so much.
Speaker Change: this is twenty percent ti on the two thousand and twenty four season at the same point in time in two thousand and twenty- three
Speaker Change: please keep in mind that our operating capacity quort thousand and twenty-five is twelve percent highre
Speaker Change: Thank you.
Speaker Change: so all this looks good but i will highlight that depending on the marin conditions we might not want to be a book too far out as we also looked optimized pricing
Speaker Change: The next question is coming from Brant Montour from Park Lease.
Speaker Change: Brant, your line is live.
Leah Talactac: In 2024, we had two world cruises versus one in 2023. Excluding these cruises, our net yield for the first half of 2024 increased by mid-single digits compared to 2023. It's worth noting that the world cruises, which went on sale in 2021, were met with exceptional demand. Although the world cruise itinerary typically has lower than average net yields, it garnered overvoying support from our past guests and required less sales and marketing spend.
Speaker Change: we might want to slow down the pacing if wethink that it will benefit the overall year it is important to unless occurs with these things in mind
Speaker Change: Good morning, everybody.
Speaker Change: Thanks for taking my question.
Speaker Change: So, starting off on Egypt, you know, I know you guys have a decent amount of your deliveries coming to the Egypt market over the next couple of years, and so the question is maybe for Tor or for anyone, how do you manage And so the question is maybe for Tor or for anyone, you know, is there any sensitivity around, that region for Americans traveling to the Middle East because of geopolitical events?
Speaker Change: on the next slide you will see our curves for ocean crscess
Speaker Change: this is slide fifteen
Speaker Change: And even if you're doing well, do you think perhaps you'd be doing better if not for those, and how do you think about that oncoming inventory through that lens?
Speaker Change: i will start with greenline which shows a bookings for two thousand and twenty four
Speaker Change: Thank you.
Speaker Change: No, so I think, I think the Americans have been surprisingly willing to go to Egypt.
Speaker Change: if you look at the box on the upper left side of the slide
Speaker Change: you will read that for two thousand and twenty four we are sold one point nine billion dollars in advanced bookings
Speaker Change: Of course, it has been a little bit hard on the occupancy, but the economics of those ships are so phenomenal that that has been okay.
Speaker Change: These results speak to the strength of our one Viking brand and give us confidence that our core consumer demographic continues to show financial resiliency, prioritizing travel, and actively seeking enriching memorable experiences.
Leah Talactac: While I've given some details on our reportable segments, I'd like to emphasize that we view our business as one entity. Whether our guests choose to travel by ocean or river, our focus is on providing a best in cost travel experience prioritizing the destination.
Speaker Change: which is fiftyteen percent higher than last year at the same point in time
Speaker Change: It's been picking up again.
Speaker Change: i will also note that our operating capacity is up six percent year-over-year
Speaker Change: And these results also speak to the effectiveness of our sales and marketing teams and strategy.
Speaker Change: moreover ninety- four percent of the two thousand and twenty-four capacities already sold as of augustly eleven over this year so we have a very little to sell for two thousand and twenty four and our sales ofand marketing teams are are really foccus on two thousand and twenty-five and beyond
Speaker Change: Now, if you look at the next slide, I mentioned in the past that our approach to sales and marketing is different. We have a marketing platform that directly engages with consumers supported by database that includes more than 56 million North American households.
Leah Talactac: Now let's move to the balance sheet. As of June 30, 2024, we had total cash and cash equivalence of 1.8 billion and net debt of 3.6 billion. To this end, our net leverage improved to three times at the end of Q2 compared to 3.4 times on March 31, 2024.
Speaker Change: This has enabled us to develop deeper relationships with our guests through a strategy that leverages robust digital capabilities and data-driven decision-making.
Speaker Change: And as you know, we are contrarians.
Speaker Change: So I think this brought the time to even think about more capacity, as we have indicated that we are.
Speaker Change: i will note that we are pleased with the two thousand and twentyfour rates which are up to six hundred sixty five dollars compared to six hundred and twenty-one dollars last year
Speaker Change: So I think Egypt is very profitable for us.
Leah Talactac: As of June 30, the third revenue was 3.8 billion. Also on slide 12, you can see our current bond maturity outlook, which has not changed since we last reported, with one bond maturity due in May 2025 and all other maturities in 2027 and beyond.
Speaker Change: if you now look at the blue line you will see how the bookcings for the two thousand and twentyfive seasons are during for the two thousand and twenty five season we also one point seven billion dollars in advanceced bookings
Speaker Change: So I think we are not concerned at all.
Speaker Change: And Americans are welcome to come and, have a naming ceremony in November, December, which I think will have a lot of attendance.
Speaker Change: Okay, thanks for that.
Speaker Change: That's really helpful.
Speaker Change: which is twenty- four percent higher than last year at this time for the comparable period
Speaker Change: our operating capacity is up eighteen percent year-over-year and sixty percent of the two thousand and twenty capacity is already sold as of august eleven of this year
Leah Talactac: With this, I'd like to confirm our debt amortization for 2024 and 2025. As of June 30, 2024, the scheduled principal payments for the remainder of 2024 are 101 million and 450 million for the full year 2025. From a committed capital expenditure perspective and for full year 2024, the total expected committed ship cat-backs is about 830 million net of financing 450 million. And for the full year 2025, the total expected committed ship cat-backs is about 710 million net of financing 90 million.
Speaker Change: regarding the rates they up to seven hundred and fifty five dollars compared to six hundred seventy two dollars for the two thousand and twenty four it's at the same point in time
Speaker Change: now i ve removed to slide sixteen
Speaker Change: And then a second question on capital allocation, a question I think you've probably gotten before, but you'll probably get again is, we have you building a fair amount of excess cash from operations over the next couple of years.
Speaker Change: you will see the curves of the river crversses
Speaker Change: i was start by the advanced bookings for two thousand and twenty four which is a green line
Speaker Change: And obviously, most of your growth is financed at attractive levels.
Speaker Change: as you can say we are sold more than two point three billion dollars in advanced bookings
Speaker Change: Maybe you can remind us, outside of growth, to the extent that you can't find places to put that cash to work in operations, what is your plan with the excess capital?
Speaker Change: which is fourteen percent higher than last year and i remind you that our operating capacity is up four percent year-over-year
Leah Talactac: The primary driver of the quarterly change in committed ship cat-backs for both 2024 and 2025 is the signing of the options for Oceanship 17 and 18, which are scheduled for delivery in 2028 and 2029 respectively and remain subject to certain financing conditions.
Speaker Change: so ninety- six percent of the two thousand and twenty-four capacity is already solldved as of augustly eleventh of this year
Speaker Change: like ocean we are very little ll for thousand and twenty-four and our teams are now focused on two thousand and twenty-five and beyond
Speaker Change: As you see, we can generate demand, and to this end, we will continue to invest in sales and marketing during the second half of the year to support our growth plans and to keep momentum going.
Torstein Hagen: With that, I'll turn it back to tour to review our business outlook, including our booking curve. Well, thank you, Leah. Before we get started on the curves, I'd like to remind everyone that advanced bookings include bookings for cruises, land and air for our core products. I also want to note that advanced booking per PCD has historically decreased as we got close to the forwardier. This is not indicative of a price reduction, but rather a reflection of complex interplay of several factors, which include variations in deployment mixes, the timing and types of itineraries open for sale, for example, our most popular and newer itineraries will usually sell first. Also, the cabin categories, as typically better cabin categories, book firsts, and the timing and pricing increases. And, finally, our internal revenue planning decisions as we manage pricing and pacing based on market conditions.
Speaker Change: the two thousand and twenty-four rates forerivers are up to seven hundred and sixty one dollars compared to six hundred nineinety dollars last year
Speaker Change: are looking at the blue line these other advanced bookings for the two thousand and twenty-five season
Speaker Change: and for the twenty-five sees we are sold about one point five billion dollars in the advanced bookings
Speaker Change: which is thirteen percent higher than the twenty and four season at the same point in time
Speaker Change: our operating capacity is up eight percent or year-over-year and forty-nine percent of the two thousand and twenty-five capacity is ready sold as of august eleventh of this year
Speaker Change: so these trends are very good for two thousand and twenty five with rates up to eight hundred eighty seven dollars compared to eight hundred and twenty nine dollars for the two thousand and twenty four season
Speaker Change: I think it's probably a question that comes to me often, but I think we should focus first on, making sure we have adequate financing, which we do. And then I think we have many opportunities.
Torstein Hagen: Let us now dive into the curves, which are evolving according to our expectations. On slide 14, we see our consolidated metrics. As you can see, our 2024 capacity is almost completely sold with 95% of our capacity PCD's booked for our core product and $4.6 billion of advanced booking sold as of August 11. This is 14% higher than the 2023 season at the same point in time. And, 2025 looks encouraging too. We have 55% booked with $3.4 billion of advanced bookings.
Speaker Change: as i mentioned before we are pleased with all these metrics which are progressing a corn dup plants
Speaker Change: I will now turn to Leah to discuss the financials.
Speaker Change: now i will add some color to our order book and capacity
Speaker Change: Thank you, Tor, and good morning, everyone.
Speaker Change: Of course, if we run out of ideas and opportunities, we may have to consider alternatives.
Speaker Change: thank you tour moving to our order book and capacity updates
Speaker Change: But for the time being, I think we have, you have seen our order book.
Speaker Change: And I think that's, a sign of our belief in this business. And I think it's comfortable to have cash on hand also, in case some bad things happen.
Speaker Change: during the month of august we took delivery of the viking hath or a state of the ar vessel specifically built to cruise the ialile which will start sailing with guest by the end of the months
Speaker Change: and lastly as it relates to the two options exercise in june two thousand and twentyfour for ocean ship seventeen and eighteen these are now scheduled for delivery in two thousand and twenty eight and two thousand and twenty nine
Speaker Change: We are very pleased to have reported a strong second quarter. On a consolidated basis, total revenue in the quarter grew 9.1 percent year-over-year to almost $1.6 billion, mainly due to higher revenue per PCD and an increase in the year-over-year size of the company's fleet.
Speaker Change: But for the time being, we concentrate on getting the cash in.
Speaker Change: During the second quarter of 2024, capacity PCDs increased by 3.1 percent and occupancy was 94.3 percent.
Speaker Change: Adjusted gross margin in the quarter, increased 9.5 percent year-over-year to $1 billion.
Speaker Change: Our net yield was $562, 6.6 percent higher than the second quarter of 2023, which is remarkable since, as I mentioned, last quarter, 2023 was already a very good year.
Speaker Change: Vessel expenses, excluding fuel per capacity PCDs, were down 1.9% year-over-year. This positive cost performance compared to last year was mostly driven by favorable timing, of expenses.
Speaker Change: And then we'll worry about a little bit later about how to divvy it out.
Speaker Change: in summary we are pleased with our results for the quarter and we are encouraged by the strong demandtrends we are seeing for two thousand and twenty five and beyond
Speaker Change: It is important to note that we do not manage our expenses quarterly.
Speaker Change: For example, our repair and maintenance expenses are tied to specific projects and purchase, orders, which can shift between quarters.
Speaker Change: Net income for the second quarter of 2024 was $156 million, compared to $190 million, for the same period in 2023. The net income for the second quarter of 2024 includes a loss of $123 million from the revaluation, of warrants issued by the company due to stock price appreciation. It also includes a loss of $66 million related to the net impact of the private placement, derivative loss and interest expense related to the company's Series C preference shares.
Speaker Change: In comparison, the second quarter of 2023 includes a gain of $3 million from the impact, of the Series C preference shares. The company's Series C preference shares converted into ordinary shares immediately, prior to the consummation of the company's IPO.
Speaker Change: Thanks, everyone.
Torstein Hagen: This is 20% higher than the 2024 season at the same point in time in 2023. Please keep in mind that our operating capacity for 2025 is 12% higher. So, all this looks good, but I will highlight that depending on the market conditions, we might not want to be booked too far out as we also looked to optimize pricing. We might want to slow down the pacing if we think that it will benefit the overall year. It is important to analyze the curves with these things in mind.
Speaker Change: The second quarter of 2024 is the final quarterly period for which the financial results will, include private placement derivative gains or losses and interest expense related to the Series C preference shares.
Speaker Change: Excluding the impact of these items, the majority of which are non-cash, net income for the, period was $345 million. Adjusted EBITDA for the second quarter totaled $493 million, improving more than $50 million, when compared to the same time last year. This significant year-over-year improvement was driven by our top line, which was bolstered, by a higher net yield compared to last year and increased capacity.
Speaker Change: moreover we feel that we are well positioned to continue to grow in this environment due to our clear focus on our target demographic which is financially resilient and growing and our great product and value proposition
Speaker Change: Thank you.
Speaker Change: The adjusted EBITDA margin was 47.5% for the second quarter and 36.7% for the last trailing, 12 months.
Speaker Change: The next question will be from Meredith Jensen from HSBC.
Speaker Change: I will briefly address our net interest expense in the quarter, which decreased by $77 million, compared to the same time last year. This decrease mainly reflects a one-time charge incurred in the second quarter of 2023 related, to the early financing of a senior secured note originally maturing in 2025.
Speaker Change: Now before moving to our reportable segments, I would like to highlight that rather than, managing the company on a quarterly basis, we focus on the long-term and manage the business profitability on an annual basis. To this end, adjusted gross margin for the first half of the year increased by 12.5% year-over-year to $1.5 billion and our net yield was $543 million, 5.2% higher than the first half of 2023.
Speaker Change: this concludes our prepared remarks and i'll now turn it back to the operator to take questions
Speaker Change: Now moving to our two reportable segments, river and ocean. For the river segment, adjusted gross margin grew 12.6% to $664 million for the first half, of 2024 and net yield grew to $568 compared to $506 in the same period last year, up more than 12% year-over-year, driven by strong demand for our European itinerary. Adjusted gross margin grew 11.4% to $711 million.
Speaker Change: Net yield for the Ocean segment grew by 1% compared to the previous year, primarily due to the regional mix and specifically because a larger portion of the capacity was related to the World Cruise itinerary. In 2024, we had two World Cruises versus one in 2023. Excluding these cruises, our net yield for the first half of 2024 increased by mid-single digits, compared to 2023. It's worth noting that the World Cruises, which went on sale in 2021, were met with exceptional demand.
Speaker Change: Meredith, your line is live.
Speaker Change: thank you at this time we will be conducting a question-and answer session in the interest of time we ask that participants limit themselves to one question and one follow up on today's call
Speaker Change: Although the World Cruise itinerary typically has lower than average net yields, it garnered overwhelming support from our past guests and required less sales and marketing spend.
Speaker Change: While I've given some details on our reportable segments, I'd like to emphasize that we view our business as one entity.
Speaker Change: As of June 30, deferred revenue was $3.8 billion.
Speaker Change: Hi, good morning.
Speaker Change: Whether our guests choose to travel by Ocean or, River, our focus is on providing a best-in-class travel experience, prioritizing the destination.
Speaker Change: Also on slide 12, you can see our current bond maturity outlook, which has not changed since we last reported, with one bond maturity due in May 2025 and all other maturities in 2027 and beyond.
Speaker Change: Now let's move to the balance sheet. As of June 30, 2024, we had total cash and cash, equivalents of $1.8 billion and net debt of $3.6 billion. To this end, our net leverage improved to three times at the end of Q2, compared to 3.4 times on March 31, 2024.
Torstein Hagen: On the next slide, you will see our curves for ocean cruises. This is slide 15. I will start with a green line, which shows the bookings for 2024. If you look at the box on the upper left side of the slide, you will read that for 2024, they are sold $1.9 billion in advanced bookings, which is 15% higher than last year at the same point in time. I will also note that our operating capacity is up 6% year over year. Moreover, 94% of the 2024 capacity is already sold as of August 11 over this year.
Speaker Change: Just a quick follow up on that last question, to think if you could speak a little bit about just sort of the longer term view of the order book.
Speaker Change: if you would like to ask a question please press star one on your telephone keypad a confirmation tonone will indicate your line is in the question q you may press startar to if you would like to remove your question from the que
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Speaker Change: With this, I'd like to confirm our debt amortization for 2024 and 2025. As of June 30, 2024, the scheduled principal payments for the remainder of 2024 are $101 million, and $415 million for the full year 2025.
Speaker Change: Obviously, we do have a vision quite a bit out.
Speaker Change: From a committed capital expenditure perspective and for full year 2024, the total expected committed SHIP CapEx is about $830 million, net of financing $450 million. And for the full year 2025, the total expected committed SHIP CapEx is about $710 million, net of financing $90 million.
Speaker Change: The primary driver of the quarterly change in committed SHIP CapEx for both 2024 and 2025 is the signing of the options for Ocean SHIP 17 and 18, which are scheduled for delivery in 2028 and 2029, respectively, and remain subject, to certain financing conditions.
Speaker Change: With that, I'll turn it back to Tor to review our business outlook,
Speaker Change: But given competitors have sort of moved into the future quite a bit with their order book, I was wondering if you just might speak to, given your history, how you think about the positioning within the shipbuilding facilities and how you think about that for the future?
Speaker Change: one normal please why we pull for questions
Steve White: and the first question today is coming from steve white chinky from stevele steve your lineiner's life
Steve White: including our booking curve.
Steve White: Thank you.
Steve White: they guys good morning
Steve White: so so want to start want to ask about the remaining inventory that's out there for for two thousand and twenty five and then you know look i guess the question is how you guys are thinking about pricing you know for that remaining forty five percent of inventory you know given look y probably have now sold your most
Steve White: Well, thank you, Leah.
Steve White: As I said before, I think we think we are contrarians.
Torstein Hagen: So, we have a very little to sell for 2024, and our sales and marketing teams are now really focused on 2025 and beyond. I will note that we are pleased with the 2024 rates, which are up to $665 compared to $621 last year. If you now look at the blue line, you will see how the bookings for the 2025 seasons are doing. Season, we have sold 1.7 billion dollars in advance bookings, which is 24% higher than last year at this time for the comparable period.
Steve White: Before we get started on the curves, I'd like to remind everyone, that advanced bookings include bookings for cruises, land and air for our core products.
Steve White: So that means that we have been, able to place orders when other people did not. So you can say, oh, our order book has been obtained at what we considered being quite favorable prices.
Steve White: I also want to note that advanced booking per PCD has historically decreased as we got, close to the forward year. This is not indicative of a price reduction, but rather a reflection of complex interplay of several factors, which include variations in deployment mixes, the timing and types of itineraries open for sale. For example, our most popular and newer itineraries will usually sell first. Also, the cabin categories, as typically better cabin categories, book first. And the timing and price increases.
Steve White: And finally, our internal revenue planning decisions as we manage pricing and pacing based on market conditions.
Speaker Change: desirable inventory cabins and what not so to move that remaining forty five percent of inventory you as think it'
Speaker Change: Let us now dive into the curves, which are evolving according to our expectations.
Speaker Change: On, slide 14, we see our consolidated metrics.
Speaker Change: As you can see, our 2024 capacity is almost completely sold, with 95% of our capacity PCDs booked for our core product and $4.6 billion of advanced bookings sold as of August 11. This is 14% higher than the 2023 season at the same point in time.
Speaker Change: possible to take price action here or do you think there there might have to be some discounting or promotional work in order to get that inventory sold moving forward so just kind of looking for high level thoughts there
Speaker Change: And 2025 looks encouraging too. We have 55% booked with $3.4 billion of advanced bookings. This is 20% higher than the 2024 season at the same point in time in 2023. Please keep in mind that our operating capacity for 2025 is 12% higher.
Torstein Hagen: Our operating capacity is up 18% year of year and 60% of the 2025 capacity is already sold as of August 11th of this year. As you can see, we have sold more than 2.3 billion dollars in advance bookings, which is 14% higher than last year, and I remind you that our operating capacity is up 4% year of year. So, 96% of the 2024 capacity is already sold as of August 11th of this year.
Bernie: i think it's storier i think bbernie good smallap for about one hundred and twenty five
Bernie: And of course, we now have an order book on the ocean side of ships.
Bernie: So we're going to double the capacity from 10 to 20 ships, if we include our options.
Bernie: And according to the rule of 72, that means over 7 years, that means 10% growth per year, which I think is a reasonable thing to have.
Bernie: We feel we have the relationships for the arts that's needed.
Bernie: We must be among the largest customers in terms of number of ships that the country has ever had.
Speaker Change: if you look up for example the coken courts so the rivers you see that's you maybe sometimes we even feed where wewell that ado ourselves so i think there'is opportunity for but are no need for and the negative price action of that
Speaker Change: get to add to that you know the remaining inventory point point five would be the leaders seasonsinss of twent twenty five so we do have some time so at this stage
Speaker Change: So all this looks good, but I will highlight that depending on the market conditions, we, might not want to be booked too far out as we also look to optimize pricing.
Speaker Change: We might want to slow down the pacing if we think that it will benefit the overall year. It is important to analyze the curves with these things in mind.
Speaker Change: On the next slide, you will see our curves for ocean cruises.
Speaker Change: This is slide 15.
Speaker Change: I will start with the green line, which shows the bookings for 2024. If you look at the box on the upper left side of the slide, you will read that for 2024, we have sold $1.9 billion in advanced bookings, which is 15% higher than last year at the same point in time.
Speaker Change: I will also note that our operating capacity is up 6% year over year.
Speaker Change: It's what they said.
Speaker Change: And I think we also have a relationship with the river ship builders.
Speaker Change: There are not so many versions available any longer.
Speaker Change: the demand looks pretty good as to mentioned during the call we are able to generate demand or a sales and marketing so i think we have a variety of levers to use such that pricing would not be our first lover in terms of moving that demand
Speaker Change: I think we're in a very good spot that that order book has value.
Speaker Change: Moreover, 94% of the 2024 capacity is already sold as of August 11 of this year. So we have very little to sell for 2024, and our sales and marketing teams are now really focused on 2025 and beyond.
Speaker Change: Thanks.
Speaker Change: I will note that we are pleased with the 2024 rates, which are up to $665 compared to $621 last year.
Speaker Change: That makes a lot of sense.
Speaker Change: If you now look at the blue line, you will see how the bookings for the 2025 seasons, are doing.
Torstein Hagen: Like Ocean, we are very little to sell for 2024, and our teams are now focused on 2025 and beyond. The 2024 rates for rivers are up to $761 compared to $690 last year. I am looking at the blue line. These are the advance bookings for the 2025 season. And for the 25 season, we have sold about $1.5 billion in advance bookings, which is 13% higher than the 24 season at the same point in time.
Speaker Change: For the 2025 season, we have sold $1.9 billion in advanced bookings, which is 15% higher than last year at the same point in time.
Speaker Change: And just one quick additional.
Speaker Change: ok that's great colller s for that in the second question is around the cadence of your your customer you know deposits and we've actually got a ouple questionsabout this this morning in ter ofyou know you had a decrease in customer deposits from the first quarter to the second quarter and you know obviously given the fact that ure a new public company just you know just maybe wonder if you can give us a refreshher course of of how that cadence of your deposit line kind of looks
Speaker Change: I realize you have a lot of direct business from your loyal customers, such that marketing has been sort of a network effect.
Speaker Change: But I was wondering if you could speak to some of the interesting targeted marketing I've seen around, for example, the Olympics and sort of tying in event-based ship capacity around the Seine and the Olympics and what kind of ROI you might have seen from that as one example, how we can think about your marketing and advertising strategy.
Speaker Change: through you know through the year thanks
Speaker Change: this is when hope well the decrease and she wwanted you too is really just
Torstein Hagen: Our operating capacity is up 8% of year of year, and 49% of the 2025 capacity is already sold as of August 11th of this year. So, these trends are very good for 2025, which rates up to $887 compared to $829 for the 2024 season. As I mentioned before, we are pleased with all these metrics, which are progressing according to our plans.
Speaker Change: because operations really pick up in the second quarter it's not necessary a reflection of the decrease deposits you'll see that throughout the year you know q two q three is our highest season and as that you know you'll see the depositits kind of steady
Speaker Change: but then q four q one which we know our riverseason starts to dry off you'll see customer deposits bills so it's really just the cadence of how our business run
Speaker Change: And thanks.
Speaker Change: As you may know, we are very proud of many of the docking places we have.
Speaker Change: We fought for seven years to have the docking place we have in Paris by the Eiffel Tower, which we had to evacuate for a few days while the events took place.
Speaker Change: But I think that's one of our key threats.
Speaker Change: okay perfect thanks guys really appreciate it
Speaker Change: I think it's clear that we did place some ads on NBC during the Olympics.
Leah Talactac: Now, Leah will add some color to our order book and capacity. Thank you, Tor, moving to our order book and capacity updates.
Matthew Boss: thank you the next question will be from matthew boss from jp morgan matthew your line as eyes
Matthew Boss: Moreover, 94% of the 2024 capacity, is already sold as of August 11 of this year at the same point in time.
Matthew Boss: And I think we have seen spikes in bookings for Paris, obviously, as a result of that.
Matthew Boss: But these things don't last forever.
Matthew Boss: So I think it adds to who we are.
Matthew Boss: great banks so to you cited encouraging demand trends that support bookings for next year
Leah Talactac: During the month of August, we took delivery of the Viking Hathor, a state-of-the-art vessel specifically built to cruise the Nile, which will start sailing with guests by the end of the month.
Matthew Boss: So we have very little to sell for 2025.
Matthew Boss: could you elaborate on what you're seeing in terms of health health of the consumer maybe any key differences that you're seeing across regions or or product segments
Leah Talactac: And lastly, as it relates to the two options exercised in June 2024, for Oceanship 17 and 18, these are now scheduled for delivery in 2028 and 2029. In summary, we are pleased with our results for the quarter, and we are encouraged by the strong demand trends we are seeing for 2025 and beyond. Moreover, we feel that we are well positioned to continue to grow in this environment due to our clear focus on our target demographic, which is financially resilient and growing, in our great product and value proposition.
Matthew Boss: If you now look at the blue line, you will see how the bookings for the Regarding the rates, they are up to $755 compared to $672 for the 2024 season at the, same point in time.
Matthew Boss: Now if we move to slide 16, you will see the curves of the river cruises.
Speaker Change: and then on the twenty five booking curve at fifty five percent book ten percent pricing i guess how best to think about opportunity for next year relative to that multiyear baseline three percent yield growth versus the midsingle digit performance historically that you've seen
Speaker Change: Now, if you follow me on slide five, last quarter I discussed our identity and unique differentiators, one of which is our dedicated focus on the specific target demographic. Today, we'll delve deeper into this. You can see that we cater to curious, affluent, English-speaking travelers, age 55 and over. Since our inception, we have focused on mature travelers who not only seek to explore the history and culture of the destinations, but also possess the time and financial flexibility to travel.
Speaker Change: And, yes, I think that was good.
Speaker Change: that may be on on on the first part of lot of part of the question
Speaker Change: But I think we are using our marketing to enhance our standing.
Speaker Change: i read tapers and i see looked other people's report that must say
Unknown Executive: This concludes our prepared remarks, and I'll now turn it back to the operator to take questions. Thank you.
Speaker Change: As you know, we have these special relationships with the Downton Abbey and so forth, which helps enhance our position.
Speaker Change: We have a lot of privilege access, which really matters.
Speaker Change: And we focus a lot on that.
Speaker Change: we have to see anything that gives us an course for concern for two thousand and twentyfive as matter by ulie was extremely strong important up for us
Speaker Change: I will start with advance bookings for 2024, which is the green line. As you can see, we have sold more than $2.3 billion in advance bookings, which is 14% higher than last year, and I remind you that our operating capacity is up 4% year-over-year. So 96% of the 2024 capacity is already sold as of August 11 of this year.
Speaker Change: Wonderful.
Speaker Change: Like Ocean, we have very little to sell for 2024, and our teams are now focused on 2025, and beyond.
Unknown Executive: At this time, we'll be conducting a question-and-answer session. In the interest of time, we ask that participants limit themselves to one question and one follow-up on today's call. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions.
Speaker Change: The 2024 rates for rivers are up to $761 compared to $690 last year.
Speaker Change: Now looking at the blue line, these are the advance bookings for the 2025 season. And for the 2025 season, we have sold about $1.5 billion in advance bookings, which is, 13% higher than the 2024 season at the same point in time. Our operating capacity is up 8% year-over-year, and 49% of the 2025 capacity is already sold, as of August 11 of this year.
Speaker Change: So these trends are very good for 2025, with rates up to $887 compared to $829 for the, 2024 season.
Speaker Change: i think one of the weeks was a strongest book weak forever ever seen i mean that's one week took very wrong but it there's been underlying a very strong trend indoor offust is also a strong so i don't think i don't think we's see in
Speaker Change: seen that there' sign the weakness it may come look revance in this
Speaker Change: and as far as the bookings are concerned you know we ve said before that
Speaker Change: you typically the what cells first are the high season and also you know the better cabin categories
Steven Wieczynski: And the first question today is coming from Steve Wieczynski from Steve. Steve, your line is live. Hey guys, good morning. So, want to ask about the remaining inventory that's out there for 2025. And look, I guess the question is how you guys are thinking about pricing for that remaining 45% of inventory. Given, look, you probably have now sold your most desirable inventory cabins and whatnot. So, to move that remaining 45% of inventory, do you think it's possible to take price action here or do you think there might have to be some discounting or promotional work in order to get that inventory sold moving forward.
Speaker Change: at the end of the day we're really a value we want to make sure that our guests feel that they're getting a good value as you could de from our ear ear plants we have
Speaker Change: As I mentioned before, we are pleased with all these metrics, which are progressing according, to our plans.
Speaker Change: Now Leah will add some color to our order book and capacity.
Speaker Change: a large order book coming online and we want our guests
Speaker Change: to repeat and so it's a balance between
Speaker Change: you know they experience getting strong ys but also making sure that our gaps feel like they're getting something meaningful from us and also you know we have historically said you know mid to high single digits
Speaker Change: i think that's a pretty good clip for us in terms of our pricing and at the end of the day you know i would just keep in mind that early in the early inventory that sold as higher prices they're better ituneraries or high season
Speaker Change: and then as we've finished out the year it's going to be a little bit marof the rereserour ses in lower cvenin categories
Torstein Hagen: So for here, I think we're in a good spot for 2025. And if you look at, for example, the booking course for the rivers, you see that maybe sometimes we even feel a little bit of add on ourselves. So, I think there's an opportunity for there no need for any negative price action. Yeah, to add to that, you know, the remaining inventory 2025 would be the later seasons of 2025. So, we do have some time.
Speaker Change: Thank you, Tor.
Speaker Change: a color best block
Speaker Change: Moving to our order book and capacity updates.
Speaker Change: thank you the next question is coming from andrew dora from bank of america andrew your line is life
Speaker Change: During the month of August, we took delivery of the Viking Hathor, a state-of-the-art vessel, specifically built to cruise the Nile, which will start sailing with guests by the end of the month.
Speaker Change: And lastly, as it relates to the two options exercised in June 2024 for Ocean Ships 17, and 18, these are now scheduled for delivery in 2028 and 2029.
Speaker Change: Thanks a lot.
Speaker Change: In summary, we are pleased with our results for the quarter, and we are encouraged by, the strong demand trends we are seeing for 2025 and beyond. Moreover, we feel that we are well positioned to continue to grow in this environment due, to our clear focus on our target demographic, which is financially resilient and growing, and our great product and value proposition.
Speaker Change: This concludes our prepared remarks, and I will now turn it back to the operator to take questions.
Speaker Change: Thank you.
Andrew Dora: good morning everyone maybe shifting a little bit to costs here
Andrew Dora: just in the second quarter costs were better than we thought obviously was that any shift in spend that we should think about in q q relativeor to the back half of the year and i guess bigger picture here there any color you can provide just on how did to think about
Torstein Hagen: So, at this stage, you know, the demand looks pretty good. As you mentioned during the call, we are able to generate demand for sales and marketing. So, I think we have a variety of levers to use, such that pricing would not be our first lever in terms of moving that demand. Okay, that's great, Collar. Thanks for that.
Speaker Change: that's the operating costs can trend here maybe on abcd basis particularly as you grow the ocean segment
Speaker Change: Thank you.
Speaker Change: The next question will be from Stephen Grambling from Morgan Stanley.
Speaker Change: At this time, we will be conducting a question and answer session.
Speaker Change: andrew yeah you know we could notice the positive a
Speaker Change: In the interest of time, we ask that participants limit themselves to one question and one follow-up, on today's call.
Speaker Change: Stephen, your line is live.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: Thank you.
Speaker Change: Perhaps asking about demand trends from a different angle.
Speaker Change: Just given the increased consternation on the back of airlines, hotel and parks commentary in the second half, I guess what would you be focused on in your business as a leading indicator to assess whether trends are potentially deteriorating and would it be occupancy or any types of add-ons before or after cruises or other factors?
Speaker Change: cost performance i think we have mentioned it earlier on the call this was mainly driven by timining
Speaker Change: And then how should investors think about the levers that you have to pull should things decelerate that may differentiate you from other cruise peers?
Unknown Executive: And the second question is around the cadence of your customer deposits. And we've actually got a couple of questions about this morning in terms of, you know, you had a decrease in customer deposits from the first quarter to the second quarter. And, you know, obviously given the fact that you're in a new public company, just, you know, just maybe wondering if you can give us a refresher course of how that cadence of your deposit line kind of looks through, you know, through the year. Thanks. Thank you.
Speaker Change: and
Speaker Change: i think you i noticed by now we a long term we don't match by quarter
Speaker Change: we tend to look at things on an annual long-term basis so things can shts between quarters
Speaker Change: andincluding operating expenses our manle of course is to prudently manage expenses without compromising equality and so that's what our team does and that's something that you know as thea foccus area for us
Speaker Change: no i understand i guess any know any color that you can vide on how how to think about that cost friendrend over the next few years you have particularly as you have outsiz growth on the the ocean side
Linh Banh: This is Lynn. Hope you're well. The decrease in Q2 is really just because operations really pick up in the second quarter. It's not necessarily a reflection of a decrease in deposit. You'll see that throughout the year, you know, Q2, Q2, Q3 is our highest season. And as that, you know, you'll see the deposits kind of steady. But then Q4, Q1, which we know our river season starts to dry dock, you'll see customer deposits build. So, it's really just the cadence of how our business runs.
Unknown Executive: Okay, perfect. Thanks guys, really appreciate it. Thank you.
Speaker Change: I think, you know, this is where our booking curves are a huge advantage for us.
Speaker Change: and i mean i think are from our perspective from expense profile you know worst object to everything else everyone else is a lot couple years we've managed through and as we look forward hopefully inflation kind of settles and you know cost increase
Speaker Change: And, you, know, we said it from the get-go, we would be transparent and we would provide the curves to, you know, our investor base as well, which, you know, we have done.
Speaker Change: And so from that perspective, I think that is our number one biggest indicator as to what is happening for demand for our, consumer group.
Speaker Change: And I think, you know, Tor mentioned this earlier, we had a great July, where we are for 24 and 25 is a good place to be.
Speaker Change: We will continue to focus on marketing and sales to keep this momentum going in the second half of the year and to continue to, you know, sell.
Speaker Change: to settle bit more and that's really you we don't provide guidance as you're aware but we will say you know we do look at expensive that'ssomething that's very important to the company and something that we will continue to manage
Matthew Boss: The next question will be from Matthew Boss from JP Morgan. Matthew, your line is live. Great, thanks. So, Tor, you cited encouraging demand trends that support bookings for next year. Could you elaborate on what you're seeing in terms of health of the consumer? Maybe any key differences that you're seeing across regions or product segments? And then Leah, on the 25 booking curve at 55% book, 10% pricing, I guess, how best to think about opportunity for next year relative to that multi-year baseline 3% yield growth versus the mid single digit performance historically that you've seen?
Speaker Change: On slide six, we are sharing a few graphs that visualize the strength of our target demographic, more precisely the US demographic, which currently represents most our guests.
Speaker Change: okay got and just lastly just for modeling purposes you know i know the share count in the release was youknow inuenced by averaging to you have the current that we basic diluted share count available thank you
Speaker Change: As you can see, on the left side of the slide, the population age 55 and over is the fastest growing segment expected to increase by 13% to 110 million by 2030. Moreover, the segment is not only growing fast, but their spending power is also increasing.
Speaker Change: I'd also be 55.
Speaker Change: Have the largest spending power of any demographic, holding 73% to US and that metric has been on the rise, with a net worth of this group currently up 41% since 2019.
Speaker Change: yeah i didn't want to add here that you know this quarter is of the
Speaker Change: the eps calculation is a little bit strange
Speaker Change: because we went public
Speaker Change: is those in the second sho in second third or the first class third of the quorter
Speaker Change: and so the calculation of eps is more
Speaker Change: To give us some perspective on metrics related to our current customers, this quarter we carried about 200,000 guests, spent an average of almost $8,000 each on their holiday.
Matthew Boss: Maybe on the first part of the question. I read tape first, and I see what other people's report. But I'm going to say, we have seen a thing that gives us any course for concern for 2025, as a matter of fact, July was extremely strong bookings for us. I think one of the weeks was the strongest booking week we've ever ever seen. I mean, that's one week, okay, if you're wrong, but it's been underlying a very strong trend and do all this is also very strong.
Speaker Change: if there's like a waiting so you can't just do a straight division of the diluted into in net income but when excluding these non and cash impacts on that income you really have to use three hundred and forty five million which adds back the series c and the warrant
Speaker Change: Now moving to slide seven, it is one thing to have a clear profile of the consumer we are targeting, and it's another to align our product and deliver a great experience.
Speaker Change: And we believe we are winning on both fronts.
Matthew Boss: So I don't think, I don't think we're seeing a scene and a sign of weakness. It may come, but we haven't seen any. Yeah, and as far as the bookings are concerned, you know, we've said before that you typically the what sells first are the high season and also, you know, the better cabin categories. At the end of the day, we're really a value, you know, we want to make sure that our guests feel that they're getting a good value.
Speaker Change: and as to your question can you remind you partial was again what number were you asking for much the because of the tim of the ippo just what's the basic dilut share t at the end of the quarter
Speaker Change: Our guests share passion for travel and a key in interest in the destination.
Speaker Change: I'd like you to wear a mantra about tailoring experiences to this We do not try to be all things to all people.
Speaker Change: yeah so our um are diluted is
Speaker Change: We understand that our guests are thinking people who are traveling to learn and engage with the destination. To this end, when guests book with us, we provide destination specific content from reading lists to language classes. Once on board, our comprehensive programs cover the past, present, and future of the destinations through lectures, performances, and local demonstrations. We offer these experiences on the tenderis across all seven continents.
Speaker Change: Interestingly, our 2025-by-tenderis include over 500 unique destinations significantly more than 350 visited in 2018.
Speaker Change: Now we are talking about how we believe our offering resonates with our target customers is always encouraging to see this being publicly recognized.
Speaker Change: so what we're using for the calcllulation right val for the thirty seventh off
Speaker Change: no just what your current diluted share countedes thank you
Speaker Change: okay so it's four forty-five seven five seven five twenty
Speaker Change: On slide number eight, we are highlighting that this summer, we received top honors from Travel and Leader and TravelAge West for Azure River, Ocean and Expedition Voyages. Travel and Leader readers, once again, recognize as the world best for all these three categories.
Speaker Change: but again because of the weing it that's not what we use on the eps
Speaker Change: Additionally, we also earned five category wins in the 2024 TravelAge West Wave Awards. And these awards are voted by Travel Advisors and showcases success we have had with these important stakeholders over the years.
Matthew Boss: As you can see from our growth plans, we have a large order of coming online and we want our guests to repeat. And so it's a balance between, you know, the experience, getting strong yields, but also making sure that our guests feel like they're getting something meaningful from us. And also, you know, we have historically said, you know, mid to high single digits. I think that's a pretty good clip for us in terms of our pricing.
Speaker Change: understood thank you
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Robin Farley: thank you the next question is coming from robin farley from ubs robin your line as ive
Speaker Change: Last October, we were also ranked number one by called the NAS Traveler across rivers, oceans, and expeditions. No other travel company has simultaneously been honored for rivers, oceans, and expeditions by both Travel and Leader and called the NAS Traveler, something Viking has achieved for two years in a row.
Robin Farley: Maybe I could add, maybe I shouldn't, but when you look at the booking curves for the rivers, for 24 and 25, you see they are quite further advanced than they were.
Robin Farley: great thank you i want to ask about the book cur that you mentioned when you say mind your expectations just to help us understand what that would be
Speaker Change: This is very special for us.
Robin Farley: looking at you know the revenue per booked creuz day the increase is sort of down a percentage point for the current year and down two point for next year is that kind of what we should think of as a typical quarterly pace as a you approach two thousand andtwenty five is that sort of
Speaker Change: In summary, we will continue to obsess our guests by providing excellent travel experience at good value, catering our offering to what we know they desire and enjoy.
Robin Farley: And I wouldn't be surprised if we say it would be reasonable to slow that down a bit in the future.
Robin Farley: You know, sometimes we feel that if we have election years, this is an election year in the U.S.
Robin Farley: I've been told.
Speaker Change: We believe that our clear focus on our core consumer demographic and our product is the essence of our brand promise and the cornerstone of our success.
Matthew Boss: And at the end of the day, you know, I would just keep in mind that early in the early inventory that sold as higher prices, their better itineraries or high season. And then as we finish out the year, it's going to be, you know, a little bit more of the shorter seasons and lower cabin categories.
Robin Farley: But then we like, we then typically like to be a little bit ahead.
Robin Farley: We probably go a little bit further ahead than we need it to be, if I should be honest.
Speaker Change: two points per quarter what would what would be expected thanks
Speaker Change: and hope you're well i think wease discuss this and just does a reminder for oceans we operate year round and for rivers we have seasonality right so the river season is nameamly
Matthew Boss: Great color. Best of luck. Thank you.
Speaker Change: I will now turn to Leah to discuss the financials.
Andrew Didora: The next question is coming from Andrew Dedora from Bank of America. Andrew, your line is live. Hi, good morning, everyone.
Leah Talactac: Thank you, Tor, and good morning, everyone.
Speaker Change: let's say march april through october we do have ships that saale into the winter but that's like the bulk of this
Leah: We are very pleased to have reported a strong second quarter. On a consolidated basis, total revenue in the quarter grew 9.1% year-over-year to almost 1.6 billion, mainly due to higher revenue per PCD, and an increase in the year-over-year size of the company's fleet.
Unknown Executive: Maybe shifting a little bit to costs here. Yeah, just in the second quarter costs were better than we thought. And was that any shift in spend that we should think about in 2Q relative to the back half of the year. And I guess bigger picture here, there are any color you can provide just on how to think about that's a lot of operating costs, you know, can trend here, you know, maybe on an APCD basis, particularly as you grow the ocean segment.
Leah: During the second quarter of 2024, capacity PCDs increased by 3.1%, and occupancy was 94.3%.
Speaker Change: and so when we're selling oceanans you will see pricing kind of
Speaker Change: be pretty consistent as we sell of our rivers you will see that q two two three no high season high kevin categoryies that will soll first
Speaker Change: how pricing trends will always be dependent on whatso the deployment of course
Leah: Adjusted gross margin in the quarter increased 9.5% year-over-year to 1 billion.
Unknown Executive: Andrew, yeah, you know, we could notice the positive cost performance. I think Leah mentioned it earlier on the call. This was mainly driven by timing. And I think you might have noticed, by now, we're long-term, we don't manage by quarter. We tend to look at things on an annual long-term basis. So things catch shifts between quarters, including operating expenses. Our main goal, of course, is to prudently manage expenses without compromising quality. And so that's what our team does. And that's something that, you know, is a focused area for us.
Speaker Change: Our net yield was 562, 6.6% higher than the second quarter of 2023, which is remarkable, since as I mentioned last quarter, 2023 was already a very good year, for us.
Speaker Change: and you know our yield management so we can't really say there'is a step percentage of what
Speaker Change: Bessel expenses, excluding fuel per capacity PCDs, were down 1.9% year over year. This positive cost performance, compared to last year, was mostly driven by favorable timing of expenses.
Speaker Change: It is important to note that we do not manage our expenses quarterly. For example, our repairing maintenance expenses are tied to specific projects and purchase orders, which can shift between quarters.
Speaker Change: changes as we continue to sell but i think we can say you know right now sitting here with fifty five percent sold for two thousand and twenty five we are in a good position
Speaker Change: Net income for the second quarter of 2024 was 156 million, compared to 190 million for the same period in 2023. The net income for the second quarter of 2024 includes a loss of 123 million from the revaluation of warrants issued by the company due to stock price appreciation.
Speaker Change: okay great thank you and maybe just one clarification on that when we think about that that seasonality would the change over the course of q three and q four as you're approaching the year ahead
Unknown Executive: No, I understand. I guess any color that you can provide on how to think about that cost-friend over the next few years, particularly as you have outsized growth on the ocean side. So I think from our perspective, from expense profile, we're subject to everything else. Everyone else is the last couple of years we've managed through. And as we look forward, hopefully, inflation kind of settles and cost increases settle a bit more.
Speaker Change: tend to move more than q two did it seems po potentially that's what we should expect just as you're saying that the things that sell closer in so will that is that likely to change more in sort of a q three q four
Speaker Change: than it did and maybe in q one q two when we think about approaching two thousand and twenty-five thanks
Speaker Change: i mean i think if me look to just you know selling out the rest of two thousand and twenty five we do anticipate that you know the price the get will come down namely because of the mx of what's selling
Unknown Executive: And that's really, you know, we don't provide guidance as you're aware. But we will say, you know, we do look at expenses. That's something that's very important to the company. And something that we will continue to manage.
Speaker Change: which is a shoulder season you know the things that you know generally are a lot of crristine but at the end of the day i think we have to step back we're sitting here in august for t and twenty five werere well sold that good pricing we have a lot of time to sell the rest of the inventoryal
Unknown Executive: Okay, got it. And just lastly, just for modeling purposes, you know, I know the share count in the release was, you know, influenced by averaging. Do you have the current dilute basic and diluted share count available? Thank you. Yeah, I didn't want to add here that, you know, this quarter is the, the, the EPS calculation is a little bit strange because we went public in the second, second, third are the last third of the quarter.
Speaker Change: so we are really quite pleased with where we are on the curve
Speaker Change: You may press star 2 if you would like to remove your question from the queue.
Speaker Change: That's helpful.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: okay great thank you
Speaker Change: It also includes a loss of 66 million related to the net impact of the private placement derivative loss, and interest expense related to the company's CREC preference shares.
Unknown Executive: And so the calculation of EPS is more, it does like a waiting so you can't just do a straight division of the diluted into in that income. But when excluding these non and cash impact on that income, you really have to use 345 million, which adds back the 3C and the current. And that's your question. Well, can you remind me what your question was, again, what number were you asking for? The cause of the time of the IPO, just what the diluted basic and diluted share count at the end of the quarter.
Speaker Change: thank you the next question will be from dan poitzer from wells fargo down your line is life
Speaker Change: One moment please while we poll for questions.
Speaker Change: Thanks so much.
Dan Poitzer: hey good morning everyone things were take my question
Dan Poitzer: first in terms of the yield in the quarter i believe ocean was was around flat and i know i know you mentioned that there are some impact from world cru is is there anyway for the second quarter to give kind of an ex world crwise type yield and then similarly i think for the full year of twenty four
Speaker Change: In comparison, the second quarter of 2023 includes a gain of 3 million from the impact of the CREC preference shares. The company's CREC preference shares converted into ordinary shares immediately prior to the consummation of the company's IPO.
Dan Poitzer: And the first question today is coming from Steve Wieczynski from Stifel.
Speaker Change: The second quarter of 2024 is the final quarterly period for which the financial results will include private placement derivative gains or losses and interest expense related to the CREC preference shares.
Speaker Change: based on the booking curves ocean pricing is track indicated up seven which would i leave assume a pretty big acceleration the back halfof the year so i just want to make sure we're thin about that the right way at the relates that kind of the disclosures in the curves and kind of the one else there
Speaker Change: Steve, your line is live.
Speaker Change: Hey, guys.
Speaker Change: Thank you.
Speaker Change: so i mean you can see from the ocean bookings update off that torre spoke about
Unknown Executive: Yeah, so our diluted is. So what we're using for the calculation, right diluted for the 37%. No, just what your current diluted share count is, thank you. Okay, so it's 445, 757520. But again, because of the waiting, that's not what we use on the EPS scale.
Speaker Change: upfor the two thousand and twenty four season we expect feelals you know as what
Speaker Change: as of today there's seven percent of so it consider
Unknown Executive: Understood. Thank you.
Speaker Change: that we're one percent of out of the second the first half and we expect to be the
Speaker Change: seven percent around seven percent for the full year i think that kind of guide you as to the second half expectations
Speaker Change: okay and then just for my fault in terms of cost you know you mentioned a bit of were there any specific ways the quantified any benefits from timing or cost shifts in the quarter that will shshipt the back end of the year
Speaker Change: Excluding the impact of these items, the majority of which are non-cash, net income for the period was 345 million. Adjusted EBITDA for the second quarter totaled 493 million, improving more than 50 million when compared to the same time last year. This significant year over year improvement was driven by our top line, which was bolstered by a higher net yield compared to last year and increased capacity. The adjusted EBITDA margin was 47.5 percent for the second quarter and 36.7 percent for the last trailing 12 months.
Robin Farley: The next question is coming from Robin Farley from UBS. Robin, your line is. Live. Great. Thank you. I wanted to ask about the booking curve that you mentioned. When you say it's in line with your expectations, just to help us understand what that would be looking at, you know, the revenue per booked cruise day, the increase is the sort of down a percentage point for the current year and down two points for next year. Is that kind of what we should think of as a typical quarterly pace as you approach 2025? Is that sort of two points per quarter, you know, what would what would be expected? Thanks.
Speaker Change: I will briefly address our net interest expense in the quarter, which decreased by 77 million compared to the same time last year. This decreased mainly reflects a one-time charge incurred in the second quarter of 2023 related to the early financing of the senior secured note originally maturing in 2025.
Speaker Change: Now, before moving to our reportable segments, I would like to highlight that rather than managing the company on a quarterly basis, we focus on the long term and manage the business profitability on an annual basis. To this end, adjusted gross margin for the first half of the year increased by 12.5 percent year over year to 1.5 billion and our net yield was 543.
Speaker Change: 5.2 percent higher than the first half of 2023.
Speaker Change: awwhere you know we don't provide guidance and so what we can't say is you have caught did trend they really to the same quarter last year which is great
Speaker Change #100: it'iss something that we will look to some of this is timing at the end of the day
Speaker Change #101: i think we canc you know we ll reiterate again we do look at the business on long-term basis and so from that perspective we don't really manage by the quarter byi think feelields the trend and howbr costs are it's
Torstein Hagen: Robin, hope you're well. I think we discussed this and just as a reminder for oceans, we operate year-round and for rivers, we have seasonally, right? So the river season is mainly let's say March April through October. We do have ships that sail into the winter, but that's like the bulk of this season. And so when we're selling oceans, you will see pricing kind of be pretty consistent as we sell or for rivers.
Speaker Change: Now, moving to our two reportable segments, river and ocean, for the river segment, adjusted gross margin grew 12.6 percent to 664 million for the first half of 2024 and net yield grew to 568 compared to 506 in the same period last year. Up more than 12 percent year over year, driven by strong demand for our European Icon.
Speaker Change #102: perha 's positive
Speaker Change #103: ok just i guess one other kind of related one on the cost side the the new flooding is that has that been a headwind there is that something that should be on investors radararsas we think about the costs the rest of the year
Speaker Change: Authorities, Occupancy was 94.7%.
Speaker Change #104: you know i think that we handle that exceptionally well as you know our ident oamshps allow it to blue shps
Speaker Change: As a reminder, the bulk of our river business begins in the second quarter.
Torstein Hagen: You will see that Q2, Q3, you know, high season, high cabin categories that will sell first. How pricing trends will always be dependent on what so? The deployment, of course. And, you know, our yield management. So we can't really say there's a set percentage of what changes as we continue to sell, but I think we can say, you know, right now sitting here with 55% sold for 2025, we are in a good position.
Speaker Change #104: so that we minimize capceled crues
Speaker Change #105: and you know i personally went on the dan the summer and everything is back to normal
Speaker Change #105: a great
Speaker Change #105: who was very encouraging to see all of the longships operating ong the danue so you know i think our operators are very good at what they do and this is just part the force for them so as far as managing cos you know sh swlops really go a long way
Speaker Change #105: and so the extent that we do have to you know do a little bit more deviations our operators are also very costconscious and make that stuff efforts to minimize them
Speaker Change #105: The next question will come from Alex Brignull
Torstein Hagen: Okay, great. Thank you. And maybe just one clarification on that. When we think about that that seasonality, would the change over the course of Q3 and Q4 as you're approaching the year ahead and to move more than Q2 did? It seems potentially that's what we should expect just as you're saying that the things that sell closer in. So will that, is that likely to change more in sort of a Q3, Q4 than it did in maybe in Q1, Q2 when we think about approaching 2025?
Speaker Change #106: it thanks so much
Speaker Change #106: Good morning.
Speaker Change #106: from Redburn Atlantic.
Speaker Change #106: So I want to start, I want to ask about the remaining inventory that's out there for 2025.
Speaker Change #106: Alex, your line is live.
Speaker Change #107: good morning everybody thanks for taking my question is starting off on on egypt i know you guys have a decent than on of your deliveries coming to beeachach of mark the next
Speaker Change #107: Hi, thank you for taking the question.
Speaker Change #107: I actually just have one that they've been asked already.
Speaker Change #108: acouple of years and answerso the question is any for tour or for anyone is there any there any sensitivity around that region for americans trling into the middle east because political events
Speaker Change #108: But just on China, obviously, a little while ago, you reduced your planned capacity source from that market, sailing in Europe in terms of the ships you were going to have, the boats you're going to have available.
Speaker Change #109: and even if you're doing well do you think perhaps you'd be doing better if not for those and how do you think about that that oncoming an inventory through those that lens thank you
Torstein Hagen: Thanks. I mean, I think as we look to just, you know, selling out the rest of 2025, we do anticipate that, you know, the price we get will come down mainly because of the mix of what's selling, which is the shoulder season, you know, the things that, you know, generally are lower pricing, but at the end of the day, I think we have to step back. We're sitting here in August for 2025. We're well sold at good pricey. We have a lot of time to sell the rest of the inventory. So we are really quite pleased with where we are on the curve.
Speaker Change #110: notso i think
Speaker Change #111: i think the americans have been surprising their willing to go to er ofcourse it 've beena little bit hur on the occupan said but economic of llowships are so phenomenal but that i've been ok has been picking up again and as you know we are contrarance
Dan Politzer: Okay, great. Thank you.
Speaker Change #111: so i think this's problebabmly time to even think about more capacity as we have indicated that we are so i think each what egypt is very profitable for us
Dan Politzer: The next question will be from Dan Politzer from Wells Fargo. Dan, your line of life. Hey, good morning, everyone.
Speaker Change #111: so i think we are not concerned lot and americans are welcome to come and have a nameed ceremon and november december which i think we' a lot of attempts
Unknown Executive: Thanks for taking my question. First, in terms of the yield in the quarter, I believe ocean was the, around flat. And I know, I know, Leah, you mentioned that there was some impact from world cruises. Is there any way for the second quarter to give kind of an ex-world cruise type yield? And then similarly, I think for the full year of 24, based on the booking curves, ocean pricing is, track is indicated of seven, which would, I believe, assume a pretty big acceleration in the back half of the year.
Speaker Change: For ocean, capacity PCBs increased by nearly 10% year over year, mainly due to the addition of the Viking Saturn, which was delivered by the end of April of 2023. And the occupancy was 94.9%.
Speaker Change #111: And, you know, look, I guess the question is how you guys are thinking about pricing, you know, for that remaining 45 percent of inventory.
Speaker Change #112: okay thanks for that that's really helpful and then a second question on capital allocation a question i think you've probably gotten before but you'll probably get again is you know we have you building a fair amount of excess cash
Speaker Change #112: You know, given like you probably have now sold your most desirable inventory, cabins and whatnot.
Speaker Change #113: from operations over the next couple of years and obviously most of your growth is finced to attractive levels many of you can remind us
Unknown Executive: So I just want to make sure we're thinking about the right way as it relates to kind of the disclosures in the curves and kind of the one-off, there. Thanks. Yeah, so I mean, you can see from the ocean bookings update off that source spoke about that for the 2024 season, we expect yield, you know, as what as of today, there's 7% up. So if you consider that we're, you know, 1% up as of second, the first half, and we expect to be 7% around 7% for the whole year, I think that kind of will guide you us to the second half expectations.
Speaker Change #114: outside of growth to the extent that you can't find places to put that cash to work in operations what is your plan with the excess capital
Speaker Change #114: think
Speaker Change #115: the probably question that comes to be often but i think i think we have foccus stores are making sure we have adequate financing which we doand
Speaker Change #116: and then i think we have many opportunities of course if we run out of ideas and opportun as we may to consider dees so the time being i think we have you seen order booki think that's the the sign of our belief in this business
Unknown Executive: Okay, and then just for my follow, in terms of cost, I know you mentioned that bit, were there any specific ways to quantify any benefits from timing or cost shifts in the quarter that will shift into the back end of the year? As you're aware, you know, we don't provide guidance. And so what we can say is, you know, cost did turn favorally to the same quarter last year, which is great.
Speaker Change #117: i think is comfortable to have cash cash on h alsoss case some that thingss up that so the time being we concentrate on getting the cashion and they will' worry about bit later about how to di it up
Speaker Change: Adjusted gross margin grew 11.4% to 711 million.
Speaker Change #118: thank that everyone thank you the next question will be from meredith jentson from hspc marredith your line is life
Speaker Change #118: So to move that remaining 45 percent of inventory, do you think it's possible to take price action here?
Speaker Change: Met yield for the ocean segment grew by 1% compared to the previous year, primarily due to the regional mix and specifically because a larger portion of the capacity was related to the world cruise itinerary. In 2024, we had two world cruises versus one in 2023.
Unknown Executive: It's something that we will look to, some of this is timing at the end of the day. I think we can't, you know, reiterate again, we do look at the business on a long-term basis. And so from that perspective, we don't trend in how offering costs are, for us, it's positive. Okay, I guess one other kind of related one on the cost side, the new flooding, is that has that been a headwind or is that something that should be on investors' radar as we think about the cost in the rest of the year?
Meredith Jentson: hi good morning just a quick follow up um on that last question
Speaker Change: Excluding these cruises, our net yield for the first half of 2024 increased by mid-single digits compared to 2023. It's worth noting that the world cruises, which went on sale in 2021, were met with exceptional demand.
Meredith Jentson: to st if you could speak a little bit about just sort of a longer-term view of the order burke obviously we do have a vision quite a bit out
Meredith Jentson: Or, you know, do you think there might have to be some discounting or promotional work in order to get that inventory sold, you know, moving forward?
Speaker Change: Although the world cruise itinerary typically has lower than average net yields, it garnered overvoying support from our past guests and required less sales and marketing spend.
Speaker Change #120: but given competitors have sort of moved into the future quite a bit with her order book i was wondering if you just might speak to giving your history how you think about de positioning within you know the ship building
Speaker Change: While I've given some details on our reportable segments, I'd like to emphasize that we view our business as one entity.
Speaker Change #121: facilities and how you think about that for the future thank you
Speaker Change #121: So just kind of looking for high level thoughts there.
Speaker Change #121: No, I think it's for here.
Speaker Change #122: said before i think we think we re contrarians
Speaker Change: Whether our guests choose to travel by ocean or river, our focus is on providing a best in cost travel experience prioritizing the destination.
Unknown Executive: You know, I think that we handled that exceptionally well. As you know, our identical long shifts allow us to do shift slots so that we minimize cancelled cruises. And, you know, I personally went on the Danube this summer and everything is back to normal. It's great. It's was very encouraging to see all of the long-ships operating among the Danube. So, you know, I think our operators are very good at what they do and this is just proper of course for them.
Speaker Change: Now let's move to the balance sheet. As of June 30, 2024, we had total cash and cash equivalence of 1.8 billion and net debt of 3.6 billion. To this end, our net leverage improved to three times at the end of Q2 compared to 3.4 times on March 31, 2024.
Speaker Change #122: but that mean that we have been able to place orders when other people did not so you can say our orderfo has' been obtained what be consider being as we considerative being quite favorable prices
Speaker Change: As of June 30, the third revenue was 3.8 billion.
Speaker Change: Also on slide 12, you can see our current bond maturity outlook, which has not changed since we last reported, with one bond maturity due in May 2025 and all other maturities in 2027 and beyond.
Speaker Change #124: i 't bor we now have a moreal book on the ocean side offriendships
Speaker Change: With this, I'd like to confirm our debt amortization for 2024 and 2025. As of June 30, 2024, the scheduled principal payments for the remainder of 2024 are 101 million and 450 million for the full year 2025.
Speaker Change: From a committed capital expenditure perspective and for full year 2024, the total expected committed ship cat-backs is about 830 million net of financing 450 million. And for the full year 2025, the total expected committed ship cat-backs is about 710 million net of financing 90 million.
Speaker Change #125: so if we we're going to double the double little capacity on ten to twenty ships when we include our options
Speaker Change: The primary driver of the quarterly change in committed ship cat-backs for both 2024 and 2025 is the signing of the options for Oceanship 17 and 18, which are scheduled for delivery in 2028 and 2029 respectively and remain subject to certain financing conditions.
Unknown Executive: So, as far as managing costs, you know, shift slots really go a long way and to the extent that we do have to, you know, do a little bit more deviations. Our operators are also very cost conscious and make best efforts to minimize them.
Speaker Change #125: oh
Speaker Change #125: andaccord to the rule of sub the two that means over over seven years have been sentten percent proth pri year which
Speaker Change: With that, I'll turn it back to tour to review our business outlook, including our booking curve.
Speaker Change #126: which i think there's recentably but out we have we seen we have the relationshshipps to the arts that's needitherthat and we must be the ong the largest customer and terms of numbererships have income areod ever had is said the less
Speaker Change: Well, thank you, Leah.
Unknown Executive: Thanks so much.
Speaker Change: Before we get started on the curves, I'd like to remind everyone that advanced bookings include bookings for cruises, land and air for our core products.
Brandt Montour: Thank you.
Speaker Change: I also want to note that advanced booking per PCD has historically decreased as we got close to the forwardier. This is not indicative of a price reduction, but rather a reflection of complex interplay of several factors, which include variations in deployment mixes, the timing and types of itineraries open for sale, for example, our most popular and newer itineraries will usually sell first. Also, the cabin categories, as typically better cabin categories, book firsts, and the timing and pricing increases.
Brandt Montour: The next question is coming from Brandt Montour from Partles. Brandt, your line of advice.
Speaker Change: And, finally, our internal revenue planning decisions as we manage pricing and pacing based on market conditions.
Speaker Change: Let us now dive into the curves, which are evolving according to our expectations.
Torstein Hagen: Good morning everybody. Thanks for taking my question. So, starting off on Egypt, you know, I know you guys have a decent amount of your deliveries coming to the Egypt market of the next couple of years. And so, the question is maybe for tour or for anyone. You know, is there any sensitivity around that region for Americans traveling to the Middle East because it's a geopolitical event? And even if you're doing well, do you think perhaps you'd be doing better if not for those?
Speaker Change: On slide 14, we see our consolidated metrics.
Speaker Change #127: and i think girills have a relationship pleof the versship buildup are not so many our surviable and ' longer i think we going to very good spou that that order look has b
Speaker Change: As you can see, our 2024 capacity is almost completely sold with 95% of our capacity PCD's booked for our core product and $4.6 billion of advanced booking sold as of August 11. This is 14% higher than the 2023 season at the same point in time.
Speaker Change #127: I think we're in a good spot for 2025.
Speaker Change #128: thinks that makes a lot of sense and just one quick additional i realize you have a lot of direct business from your loyal customers such that marketing has been sort of a network effect but i was wondering if you could speak to some of the interesting targeted marketing i've seen around for example the olympics and sort of tying in event based
Torstein Hagen: And how do you think about that that that oncoming inventory through those through that lens? Thank you. So, I think I think the Americans have been surprisingly willing to go to Egypt. Of course, it has been a little bit hurt on the occupancy, but the economics of those ships are so phenomenal that that has been okay. It's been picking up again. And, you know, we are contrarians. So I think this is probably the time to even think about more capacity as we have indicated that we are.
Speaker Change #128: ship ship capacity around the ane and the olympics and and what kind of roi you might have seen from that as one example how we can think about your marketing and advertising strategy and thinks
Speaker Change #129: as i been we are very proud of men knowof the docking places where have before for seven years to have the docken place
Torstein Hagen: So I think Egypt is very powerful for us. So I think we are not concerned at all. And Americans are welcome to come and have a name ceremony November December, which I think will have a lot of attendance.
Speaker Change #130: have entis by the ifuld our which we had to evacuate for a few days like by the by the month surfacebut i think that's one of our key threats
Speaker Change #131: i think it's clear that the we did play someas on and procedure d the ompics
Unknown Executive: Okay, thanks for that. That's really helpful.
Torstein Hagen: And then the second question on capital allocation, a question I think you've probably gotten before, but you'll probably get again is, you know, we have you building a fair amount of excess cash. And from operations over the next couple of years. And obviously most of your growth is a finance to the tractive levels. You know, maybe you can remind us outside of growth to the extent that you, you know, you can't find places to put that cash to work in operations.
Speaker Change #132: and i think we' see spikes and bookings for workparis obious as a result of
Speaker Change #133: but these things selves else wherever it's don't think it add to the two who we are and yes so i think that's could
Speaker Change #133: ithink b
Speaker Change #133: vales know marketing into enhanceour standing
Speaker Change #134: as you know we have able we have the special relationships inknow
Torstein Hagen: What is your plan with the excess capital? I think it's probably a question that comes to me often, but I think I think we should focus first on making sure we have adequate financing, which we do. And then I think we have many opportunities. Of course, if we run out of ideas and opportunities, we may have to consider alternatives. But for the time being, I think we have seen our order book.
Speaker Change #134: but the doubt now be and and so forth which houseps and enh position we have a lot of privilege access which really which really matters and we talk is it often
Speaker Change #135: a wonderful thanks to line
Speaker Change #136: thank you the next question will be from stephen grambling for morganley stephen your line life
Speaker Change: And, 2025 looks encouraging too. We have 55% booked with $3.4 billion of advanced bookings. This is 20% higher than the 2024 season at the same point in time in 2023. Please keep in mind that our operating capacity for 2025 is 12% higher.
Stephen Grambling: thank you perhaps asking about demand trends from a different angle just given the increased concereration on the back of airllineines so ho tel and parks commentary in the second half i guess what would you be focused on in your business as a leading indicator to assess whether trends
Torstein Hagen: And I think that's the sign of our belief in this business. And I think we it's comfortable to have a cash cash on hand also in case some bad things happen. But that over the time being, we, we concentrate on guessing the cash in and we'll worry about a little bit later about how to give it out.
Speaker Change #138: are potentially deteriorating and with be occupancy or any types of addons before after cruis' other factors and then how should investors think about the levers that you have to poll should things decelerate that may differentiate you from from other cruise peers
Unknown Executive: Thanks, everyone.
Meredith Jensen: Thank you. The next question will be from Meredith Jensen from HSBC. Meredith, your line is live. Hi. Good morning. Just a quick follow up on that last question to think if you could speak a little bit about just sort of the longer term view of the order book. Obviously, we do have a vision quite a bit out, but given competitors have sort of moved into the future quite a bit with their order book. I was wondering if you just might speak to given your history how you think about the positioning within, you know, the shipbuilding facilities and and how you think about that for the future. Thank you.
Speaker Change #139: i think you know this is where our booking curbves are a huge edge for us and we said it from the gicgoo we would be transpparent and we would provide the coururds to know investor bas as well which you know we have done and so from that perspective i think that is our number one biggest ic
Speaker Change: So, all this looks good, but I will highlight that depending on the market conditions, we might not want to be booked too far out as we also looked to optimize pricing.
Speaker Change: We might want to slow down the pacing if we think that it will benefit the overall year. It is important to analyze the curves with these things in mind.
Speaker Change #139: hereas to what is happening in for demand for our consuper group
Speaker Change: On the next slide, you will see our curves for ocean cruises.
Speaker Change #139: i think you know to mentioned this earlier we had a great july
Speaker Change #141: where we are for twenty four and twenty five it is a good place to be we will continue to to focus on marketing and faal to keep this momentum going in the second half of the year and to continue to you know so
Speaker Change: This is slide 15.
Speaker Change #141: And if you look at, for example, the booking cards for the rivers, you see that maybe sometimes we even feel a little bit ahead of ourselves.
Speaker Change: I will start with a green line, which shows the bookings for 2024. If you look at the box on the upper left side of the slide, you will read that for 2024, they are sold $1.9 billion in advanced bookings, which is 15% higher than last year at the same point in time.
Torstein Hagen: As I said before, I think we, we think we are contrarians, so that means that we have been able to place orders when other people did not. So you can say, our order book has been obtained as what we consider being, as we consider it being quite favorable prices. And we now have a more book on the other side of the ship. So if we're going to double the capacity from platinum to 20 ships, when we think through our options and according to the rule of 72, that means over 7 years, that means 10% per year, which I think is a reasonable thing to have.
Speaker Change #141: So I think there is opportunity for there are no need for any negative price action.
Speaker Change #141: Yeah, to add to that, you know, the remaining inventory 2025 would be the later seasons of 2025.
Speaker Change #141: So we do have some time.
Speaker Change #142: i acted that maybei'are certain but but when you look at the book and curs so the river for twenty four and twenty five you see that quite quite further advance than they were you
Speaker Change #142: So at this stage, you know, the demand looks pretty good.
Speaker Change: I will also note that our operating capacity is up 6% year over year.
Speaker Change: Moreover, 94% of the 2024 capacity is already sold as of August 11 over this year. So, we have a very little to sell for 2024, and our sales and marketing teams are now really focused on 2025 and beyond. I will note that we are pleased with the 2024 rates, which are up to $665 compared to $621 last year.
Speaker Change #143: and i wouldn't besurpriseed every say it will be reasonable to slow that down that
Speaker Change #144: and end the future you know sometimes we feel that that we have an election here this lectioner in the us up until so then we like with then typically' like to be a little bit to have we' probably got little bit further i have them they needed to pay part b
Speaker Change #144: As mentioned during the call, we are able to generate demand for sales and marketing. So I think we have a variety of levers to use such that pricing would not be our first lever in terms of moving that demand.
Speaker Change #145: that's helpful thanks much
Torstein Hagen: We feel we have the relationships for the regards that needed. We must be the moment largest customer in terms of partnerships that can come to any of you have ever had. He said, Melissa, and I think we all have a relationship for the leadership builders. There are not so many parts of my hope and it all there. I think we're under very good spot that that order will have value. Thanks. That makes a lot of sense.
Speaker Change #145: OK, that's great, Keller.
alex brgneal: thank you the next question wewill come from alex brgneal from redbberurn atlantic alex your line of life
Speaker Change #146: a bit
Speaker Change #146: Thanks for that.
Speaker Change #146: Could you just talk about any evolution that has been in that in terms of air capacity or demand or the way that things are opening up or appetite that you're seeing for outbound China into European river sailing?
Torstein Hagen: And just a one quick additional, I really hope you have a lot of direct business from your loyal customers, such that marketing has been sort of a network effect. But I was wondering if you could speak to some of the interesting targeted marketing I've seen around, for example, the Olympics and sort of tying in event-based ship capacity around the sane and the Olympics. And what kind of ROI you might have seen from that, as one example, how we can think about your marketing and advertising strategy.
Speaker Change #146: And then I guess if you could expand and talk about the kind of closer to home sailing, then that would be helpful as well.
Speaker Change #146: Thank you so much.
Speaker Change #146: Yeah, so we are, you know, as you said before, we're taking a measured approach with respect to China.
Speaker Change #146: We have four ships operating in Europe, as far as long ships are concerned.
Torstein Hagen: And thanks. Well, as many of we are very proud of many of the docking places we have before for seven years to have the docking place. We have empires by the I full power, which we had to evacuate for a few days, one of the events of this. But I think that's one of our key strengths. I think it's clear that we did place some ads on NBC during the Olympics. And I think we're seeing spikes in docking for various obviously as a result of these things don't last forever.
Speaker Change #148: I mentioned earlier in this call that I went on a cruise on the Dan you've been actually went on it right now boundaries and I'm happy to report that the guests are they're very well rated there hey, they have high net promoter scores and so I think from that perspective, we do have we've got the product right for that.
Speaker Change #148: And, you know, I mentioned earlier in this call that I went on a river cruise on the Danube, and I actually went on a China outbound cruise.
Speaker Change #148: And I'm happy to report that, you know, the guests are, you know, they're very well rated. They have, high net promoter scores.
Speaker Change #148: And so I think from that perspective, we do have, we've got the product right for that, for that consumer.
Speaker Change #148: But there are challenges in terms of, you know, visas or airlifts, I think those are going to eventually work themselves out.
Speaker Change #148: That consumer.
Speaker Change #148: But there are challenges in terms of.
Speaker Change #148: Our airlift I think those are going to eventually work themselves out.
But again this is a small part of our business. We do have a very strong core product business and as far as China. We will continue to invest but we will take it in a very measured approach men.
Speaker Change #148: But again, you know, this is a small part of our business, you know, we do have a very strong core product business.
Speaker Change #148: And as far as China, you know, we will continue to invest, but we will take it in a very measured approach manner.
Torstein Hagen: So I think it adds to the two who we are. And so I think that was good. I think we're very using our marketing to enhance our standing. We have these special relationships, but the doubt not be and so forth, which helps us enhance our position. We have a lot of privilege access, which really matters.
Speaker Change #148: And I guess just as an extension of that, are there any new kind of customer source, markets, clearly that kind of lend themselves in English speaking ships that you think are opportunities for you to expand the distribution and that can obviously give you yields comparable to those from Americans, which have historically been the highest when coming to Europe?
Speaker Change #148: Okay.
Speaker Change #149: And I guess, just as an extension of that at that any.
Speaker Change #150: New kind of customer source markets, clearly kind of lend themselves to an English speaking.
Perhaps that you'd think opportunities for you to expand that.
Speaker Change #151: Distributions and that can obviously give you yields comparable to those from Americans, which have historically been the highest when coming to Europe.
Speaker Change #151: Well, you know, we have been very strong proponents of having one brand and one customer, and, of course, we have been for the English speaking market.
Unknown Executive: Let me focus it off on that. Wonderful. Thanks a lot. Thank you.
Speaker Change #151: Hi.
Speaker Change #152: We have been very strong.
Speaker Change #153: So I'm having.
And Brian and then one customer risks unfortunate events for the English speaking markets.
Stephen Grambling: The next question will be from Stephen Grambling from Morgan Stanley. Stephen, your line of life. Thank you. Perhaps asking about demand trends from a different angle. Just given the increased consternation on the back of airlines hotel and parks commentary in the second half, I guess what would you be focused on in your business as a leading indicator to assess whether trends are potentially deteriorating and would be occupancy or any types of add-ons before after cruises or other factors.
Speaker Change #153: So of course, if we could over time get a crack on the Chinese market, of course, that'd, be great.
Speaker Change #153: So of course.
Speaker Change #153: Good.
Speaker Change #153: Overtime got it correct.
Speaker Change #153: Correct on the Chinese market of course that'd be great.
Speaker Change #154: But as I said, we'll take a very measured approach to it.
Speaker Change #154: Well, thank you very much for the approach.
Yes.
Speaker Change #156: There are, as I can say, other large markets in Asia and we know which way Asia is going.
Speaker Change #155: They are.
Speaker Change #156: No other large markets in Asia.
Sure.
Speaker Change #156: So it wouldn't be surprising to do a little bit more there.
Speaker Change #156: It wouldn't be surprising, but do a little bit more of their visit.
Speaker Change #156: But this is again, just getting a small foothold, it wouldn't be a thing that really will have, an impact on our, a significant impact on P&L, one way or the other.
Speaker Change #156: Yes.
Speaker Change #156: Small.
Speaker Change #156: It wasn't data center will have an impact on our.
Stephen Grambling: And then how should investors think about the levers that you have to pull should things decelerate that may differentiate you from other cruise peers. I think this is where our booking curves are a huge advantage for us, and we said it from the get go, we would be transparent and we would provide the courage to our investor base as well, which we have done. And so from that perspective, I think that is our number one biggest indicator as to what is happening for demand for our consumer group.
Speaker Change #156: Significantly impact.
Speaker Change #156: No.
Speaker Change #156: So over time, of course, you could see that these markets should be developed, because, these are people who have money, and increasingly they also have demographics that gives them time.
Speaker Change #156: Okay.
Speaker Change #156: You could see is as these markets develop.
Speaker Change #156: These are people who go out of it.
Speaker Change #156: Brian.
Speaker Change #157: And increasingly they are.
Speaker Change: If you now look at the blue line, you will see how the bookings for the 2025 seasons are doing. Season, we have sold 1.7 billion dollars in advance bookings, which is 24% higher than last year at this time for the comparable period. Our operating capacity is up 18% year of year and 60% of the 2025 capacity is already sold as of August 11th of this year. As you can see, we have sold more than 2.3 billion dollars in advance bookings, which is 14% higher than last year, and I remind you that our operating capacity is up 4% year of year.
Brian: Demographics that gives them time.
Brian: So there could be something, but for the time being, we remain mainly focused on the English, speaking markets.
Brian: For the time being.
Brian: We remain.
Brian: The.
Brian: English speaking markets.
Speaker Change #159: Brilliant.
Speaker Change #159: Thank you very much.
Speaker Change #160: Again, if I could add one, but then we make a very strong point that we have one brand, and the more we have looked and thought about others and how they do and so forth, I think the fact that we have this one brand, four product lines or three product lines is really a very huge advantage.
Speaker Change #159: And then thank you very much.
Speaker Change #160: If I could add one.
Speaker Change #161: It makes you very strong point.
Speaker Change #161: Rob.
Speaker Change #161: The more we looked at.
Speaker Change: So, 96% of the 2024 capacity is already sold as of August 11th of this year.
Stephen Grambling: And I think, you know, Tor mentioned this earlier, we had a great July where we are for 24 and 25 is a good place to be. We will continue to focus on marketing and sales, to keep this momentum going in a second half of the year, and to continue to, you know, sell. I mean, I could add, maybe I shouldn't, but when you look at the booking curves for the universe, for 24 and 25, you see they're quite, quite further advanced than they were youths.
Speaker Change #161: Unfolds folks.
Speaker Change #161: Others on how that data and so forth I think that's fine.
Speaker Change #161: Once.
Speaker Change #161: Brian.
Speaker Change #161: Four product lines with three broad guidance.
Sure got it.
Speaker Change #162: So that guests, when they come to Viking, they get exactly, they know exactly what they, get.
Speaker Change #162: So that guests when they come to Viking.
Speaker Change #162: They know exactly what it will take us.
Speaker Change #163: I think it's wrong.
Speaker Change #162: I think it's a very strong point of ours.
Speaker Change: Like Ocean, we are very little to sell for 2024, and our teams are now focused on 2025 and beyond.
Speaker Change #162: <unk>.
Speaker Change #162: Thank you.
Speaker Change #162: Thank you.
Speaker Change #162: Thank you. The next question will be from Patrick Scholes from <unk> Securities.
Speaker Change #162: And the second question is around the cadence of your customer deposits.
Speaker Change #162: The next question will be from Patrick Scholes from Truist Securities.
Speaker Change #162: And we've actually got a couple of questions about this this morning in terms of, you know, you had a decrease in customer deposits from the first quarter to the second quarter.
Speaker Change #162: Patrick, your line is live.
Speaker Change #162: Patrick Your line is open.
Speaker Change: The 2024 rates for rivers are up to $761 compared to $690 last year.
Stephen Grambling: And I wouldn't be surprised if we say it would be reasonable to sell that down a bit in the future. You know, sometimes we feel that if we have an action here, this is an action here in the US, I've been told, but then we like, we then typically like to be a little bit of Adam. We probably go a little bit further, I think we need it to be a part of it. That's helpful. Thanks so much.
Patrick Scholes: Thank you.
Patrick Scholes: Thank you good morning.
Patrick Scholes: And, you know, obviously, given the fact that you're a new public company, just, you know, just maybe wondering if you can give us a refresher course of how that cadence of your deposit line kind of looks through, you know, through the year.
Patrick Scholes: Good morning.
Patrick Scholes: Thanks.
Patrick Scholes: Another way of asking the cash flow balance sheet question here, in a long-term stable, environment, what would you ideally want or target your net leverage to be?
Patrick Scholes: Another way of asking the cash flow balance sheet question here.
Speaker Change: I am looking at the blue line.
Patrick Scholes: Okay.
Speaker Change #165: And our long term.
Patrick Scholes: Stable.
Patrick Scholes: Environment.
Patrick Scholes: What would you ideally want or target your net leverage to be let's say in five years the world continues to be.
Speaker Change: These are the advance bookings for the 2025 season.
Patrick Scholes: Let's say in five years, the world continues to be stable.
Speaker Change: And for the 25 season, we have sold about $1.5 billion in advance bookings, which is 13% higher than the 24 season at the same point in time. Our operating capacity is up 8% of year of year, and 49% of the 2025 capacity is already sold as of August 11th of this year.
Speaker Change: So, these trends are very good for 2025, which rates up to $887 compared to $829 for the 2024 season.
Patrick Scholes: Stable.
Speaker Change #166: Where would you want it?
Speaker Change: As I mentioned before, we are pleased with all these metrics, which are progressing according to our plans.
Speaker Change #166: Would you want it thank you.
Speaker Change: Now, Leah will add some color to our order book and capacity.
Alex Brignol: Thank you. The next question will come from Alex Brignol from Redburn Atlantic, Alex, your line is live. Hi, thank you for taking the question. I actually just have one, so there's been asked ready, but just on China, obviously, a little while ago you reduced your planned capacity source from that market, sailing in Europe, in terms of the ships you're going to have the boats you're going to have available. Could you just talk about any evolution that has been in that in terms of air capacity or demand or the way that things are opening up or appetite that you're seeing, for outbound China into European river sailing, and then I guess you could, if you could expand and talk about the kind of closer to home sailing, then that would be helpful, so thank you so much.
Speaker Change #166: Thank you.
Speaker Change #166: Thank you.
Speaker Change #166: This is Lynn.
Speaker Change #166: As you know, we've been asked this question several times.
Speaker Change #166: Right.
Speaker Change #167: As you know.
Speaker Change #168: Austin's question several sites.
Speaker Change #168: Some of us have become experts at dodging it several times, but we don't really want, to give a commitment to anything like that in the future.
Leah: Thank you, Tor, moving to our order book and capacity updates. During the month of August, we took delivery of the Viking Hathor, a state-of-the-art vessel specifically built to cruise the Nile, which will start sailing with guests by the end of the month.
Speaker Change #168: Some of them.
Speaker Change #168: Okay.
Speaker Change: And lastly, as it relates to the two options exercised in June 2024, for Oceanship 17 and 18, these are now scheduled for delivery in 2028 and 2029.
Speaker Change #168: Some of them become experts at <unk>.
Speaker Change #168: Several times.
Speaker Change #169: Really want to give a comment.
Speaker Change #168: Got it.
Speaker Change #169: Sure.
Speaker Change #169: There can come opportunities when we say, okay, maybe it's time to act back a little, bit leverage. Our leverage has gone from 3.8 to 3.0 in a year, or less than a year.
Speaker Change #169: Just wondering as I look at my stock.
Speaker Change #169: Thank you.
Speaker Change #169: But because of the leverage I don't know I'd.
Speaker Change #170: Leverage has gone from three eight to three.
Speaker Change: In summary, we are pleased with our results for the quarter, and we are encouraged by the strong demand trends we are seeing for 2025 and beyond. Moreover, we feel that we are well positioned to continue to grow in this environment due to our clear focus on our target demographic, which is financially resilient and growing, in our great product and value proposition.
Zero.
Speaker Change #170: And the year are less than a year.
Speaker Change #171: So the trend is good.
Speaker Change #170: So the trend is good.
Speaker Change #171: So it should give opportunities.
Speaker Change #171: We can give up our justice.
Speaker Change #172: But there may become opportunities when we'd like to.
Speaker Change #172: What we are doing just that we'd like to.
Speaker Change #173: We don't have an ambition of being investment-grade as a bond.
Speaker Change #173: Little bit more we're talking about are we.
Speaker Change #174: I don't have an ambition of being investment grade.
Speaker Change #173: Bob.
Speaker Change #175: Uh huh.
Bob: We are in the business of making money for our shareholders, and then I think it's better, to be in the WPO range.
Bob: We are in our business.
Bob: On the for our shareholders.
Speaker Change: This concludes our prepared remarks, and I'll now turn it back to the operator to take questions.
Alex Brignol: Yeah, so we are, you know, as we said before, we're taking a measured approach with respect to China. We have warships operating in Europe as far as warships are concerned. And I mentioned earlier in this call that I went on a river cruise on the Danube and I actually went on a China outbound cruise. And I'm happy to report that the guests are very well rated, they're, hey, they have high net promoter scores.
Bob: I think it's better to be in the double b.
Bob: But we are very comfortable where we are now, of course, and there are things we can do, but I don't think we can make any, either commitments or forecasts.
Bob: Thanks.
Bob: We're very comfortable where we are no worse.
Speaker Change: Thank you.
Bob: The.
Bob: Hi.
Speaker Change #177: There are things, we can do but I don't think we got it.
Speaker Change: At this time, we'll be conducting a question-and-answer session.
Speaker Change #177: So for us.
Speaker Change #177: Okay I appreciate it probably won't be the last time, you'll have to take.
Speaker Change #177: Okay.
Speaker Change #177: I appreciate it.
Speaker Change #178: This probably won't be the last time you'll have to take that question.
Speaker Change: In the interest of time, we ask that participants limit themselves to one question and one follow-up on today's call.
Speaker Change #178: I'll take that question.
Scott: You'll get the same answer next time.
Scott: Thanks Scott.
Scott: I appreciate the answer.
Scott: I appreciate I appreciate the answer thank you.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Alex Brignol: And so I think from that perspective, we do have, we've got the product right for that consumer, but there are challenges in terms of, you know, visas or airlifts, I think those are going to eventually work themselves out. But again, you know, this is a small part of our business, you know, we do have a very strong core product business. And as far as China, you know, we will continue to invest, but we will take it in a very measured approach.
Scott: Thank you.
Speaker Change #180: And the next question will be from Connor Cunningham from Mellius Research.
Speaker Change #180: Thank you and the next question will be from Connor Cunningham from Melius Research. Your line is live.
Speaker Change #180: Connor, your line is live.
Connor Cunningham: Hope you're well.
Connor Cunningham: Hi, everyone.
Connor Cunningham: Hi, everyone. Thank you on the potential decision to hold back inventory closer in.
Connor Cunningham: The decrease in Q1 to Q2 is really just because operations really pick up in the second quarter. It's not necessarily a reflection of a decrease in deposits. You'll see that throughout the year. You know, Q2, Q3 is our highest season.
Connor Cunningham: Thank you.
Connor Cunningham: And as such, you know, you'll see the deposits kind of steady.
Connor Cunningham: Thank you.
Connor Cunningham: Given the potential decision to hold back inventory closer in, what might drive that, decision?
Connor Cunningham: But then Q4, Q1, which we know our river season starts to dry dock, you'll see customer deposits build. So it's really just the cadence of how our business runs.
Connor Cunningham: Okay, perfect.
Connor Cunningham: Thanks, guys.
Connor Cunningham: Really appreciate it.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Connor Cunningham: Might drive that decision and if you do hold back higher demanding inventory does that potentially benefit some of the off peak.
Connor Cunningham: The next question will be from Matthew Boss from J.P. Morgan.
Connor Cunningham: Matthew, your line is live.
Connor Cunningham: And if you do hold back, you know, higher-demanding inventory, does that potentially benefit some, of the off-peak inventory that you sell closer in?
Speaker Change: You may press star 2 if you would like to remove your question from the queue.
Speaker Change #182: Inventory that you sell closer in thank you.
Speaker Change #182: Thank you.
Speaker Change #182: Great.
Speaker Change #182: I think from our perspective, you know, Leah, I think, mentioned this earlier, our priority, is to deliver a great experience at a good value.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Alex Brignol: And I guess just as an extension of that, are there any new kind of customer source markets, clearly that kind of lend themselves in English speaking, ships that you think are opportunities for you to expand the distribution and that can obviously give you yields comparable to those from Americans which are historically being the highest from coming to Europe? Well, you know, we have been very strong proponents of having one brand and one customer was, and of course we have been for the English speaking market.
Speaker Change #183: I think from our perspective.
Speaker Change #183: Lee I think mentioned this earlier our priority is to deliver a great experience at a great value. So in terms of yield management, we wanted to ensure our guests have opportunity.
Speaker Change #183: Thanks.
Speaker Change #183: So, Tor, you cited encouraging demand trends that support bookings for next year.
Speaker Change #183: So, in terms of yield management, you know, we want to ensure our guests have the opportunity, to book what they want to book.
Lee: Could you elaborate on what you're seeing in terms of health of the consumer, maybe any key differences that you're seeing across regions or product segments?
Lee: And so, as of this point, we have not necessarily held back inventory.
Lee: And so as of this point, we have not necessarily held back inventory.
Speaker Change #185: The back half of the year or shoulder seasons, I think many of us are aware, that's just, something that books closer in. Generally speaking, whether you hold back, you know, high-season inventory or not, the, shoulder seasons just book closer in.
Speaker Change #185: The back half of the year or shoulder seasons, I think many of US are aware that just something that books cluster in generally speaking whether you hold back.
Speaker Change: One moment please while we pull for questions.
Speaker Change #186: I see the inventory or not.
Speaker Change #185: Shoulder seasons, just cluster in that.
Speaker Change: And the first question today is coming from Steve Wieczynski from Steve.
Alex Brignol: So of course, if we could, it would try and get together, crack on the Chinese market, of course that'd be great. As they have said, we'll take a very much reproach approach. There are, I can say, you know, other dog markets in Asia. And we know which way Asia is going. So it wouldn't be surprising if we do a little bit more there. But there's a game just getting a small foot out of it.
Speaker Change #185: That being said, obviously, for biking, our curbs, you know, are generally more well-advanced, than others, including the shoulder season.
Speaker Change #185: That being said RBC for Viking our curves are generally more well advanced and others include initial order season.
Speaker Change: Steve, your line is live.
Speaker Change #185: But at the end of the day, that's not something we necessarily done yet.
Speaker Change #185: But at the end of the day, that's not something we've necessarily done yet.
Speaker Change: Hey guys, good morning.
Speaker Change #185: But, you know, when we look at our curbs, we're sitting here in August, like, you know, we mentioned earlier, we're 55% sold for 2025 at good pricing, so we're quite pleased with where we are.
Speaker Change #185: Right.
Speaker Change #185: When we look at our curve, we're sitting here in August like we mentioned earlier or 55% sold for 2025 at good pricing. So we're quite pleased with where we are.
Speaker Change: So, want to ask about the remaining inventory that's out there for 2025.
Speaker Change #185: And then, Leah, on the 25 booking curve at 55 percent book, 10 percent pricing, I guess how best to think about opportunity for next year relative to that multi-year baseline, 3 percent yield growth versus the mid-single-digit performance historically that you've seen?
Speaker Change: And look, I guess the question is how you guys are thinking about pricing for that remaining 45% of inventory.
Speaker Change: Given, look, you probably have now sold your most desirable inventory cabins and whatnot.
Matt: Yes.
Alex Brignol: It wouldn't be the thing that really will have a name back on our significant impact on VNL one way or the other. There were time, of course, you could see that these markets should be developed. Of course, these are people that have an increase in the levels of demographics that gives them time. So that could be something. But for the time being, we remain mainly focused on the English speaking markets. Brilliant.
Matt: Maybe on the first part of the question, I read papers and I see what other people's report.
Matt: Maybe I could add, you used the word hold back, but I guess we all know, biking is a, direct marketing company, and that means that we generate demand ourselves.
Matt: I must say, we haven't seen anything that gives us any pause for concern for 2025.
Matt: Hey, Matt good ads.
Matt: As a matter of fact, July was extremely strong booking month for us. I think one of the weeks was the strongest booking week we have ever seen.
Use of <unk> to hold back.
Matt: I guess, we all know.
Matt: As a direct marketing company.
Matt: Okay.
Matt: We generate demand ourselves.
Speaker Change #189: So you can say, marketing is not an expense as such, it's a revenue generator.
Speaker Change #188: So you can say marketing.
Speaker Change #189: It is not.
Speaker Change #189: Expenses, such as a revenue generator.
Speaker Change #189: So if we should, the action we take is to market less, and we would market less when, things are good.
Speaker Change #189: So I appreciate it.
Mark: Thanks Mark.
Mark: Mark is less.
Speaker Change #191: Market less when things are good.
Alex Brignol: Thank you very much. Again, I mean, we make a very strong point that we have one brand. And the more we have looked and thought about others and how they do it and so forth. I think the fact that we have it once one brand and four product times or three product times. It's really a very huge advantage. So that guess when they come to writing, they get exactly that they know exactly what they get. I think it's very strong point for us.
Mark: Got it.
Speaker Change #192: The amount of people market by market.
Speaker Change #192: Many people market, you know, because that's how demand would be generated.
Speaker Change #192: That's helpful.
Torstein Hagen: Thank you.
Speaker Change #192: Martin.
That's right.
Speaker Change #192: So that's a mechanism we've used.
Speaker Change #192: That said that's the mechanism.
Speaker Change #192: Yeah, I think when you, when you, I guess the question might have arisen from our comment, that we said that we would slow down the cooking curve, but it's, we're not holding back, but it's really, our demand was so high, that the curbs were accelerating in a way that may not quite optimize how we would like our yields to look.
Speaker Change #192: Sure.
Speaker Change #192: Yes.
Speaker Change #192: Thank you.
Speaker Change #194: When you got it I guess.
Speaker Change #195: The question might have arisen from our comment that we said that we would slow down the booking curve, but it's we're not holding back but it's really our demand was so high that the curves.
Speaker Change #195: Accelerating in a way that may not quite optimized Hollywood like are yet and so that was just an indication that.
Speaker Change: So, to move that remaining 45% of inventory, do you think it's possible to take price action here or do you think there might have to be some discounting or promotional work in order to get that inventory sold moving forward.
Patrick Schools: The next question will be from Patrick schools from truest securities. Patrick, you're right. Thank you.
Speaker Change #195: And so that was just an indication that, you know, the curbs, like, we may not want to, be 55% sold out by the same time next year, to optimize pricing.
Speaker Change #195: <unk>.
Speaker Change: So for here, I think we're in a good spot for 2025.
Speaker Change: And if you look at, for example, the booking course for the rivers, you see that maybe sometimes we even feel a little bit of add on ourselves.
Speaker Change #195: We may not want to be 55% sold out by by the same time next year to optimize pricing that was what that was what that statement Lasalle.
Speaker Change: So, I think there's an opportunity for there no need for any negative price action.
Torstein Hagen: Good morning. Another way of asking the cash well balance sheet question here. In a long term, stable environment, what would you ideally want or target your net leverage to be? Let's say in five years, the world continues to be stable. Where would you want it? Thank you. We have, as you know, we've been asked this question several times. And some of us have become experts and don't drink it several times. Well, we don't really want to give a commitment to anything like that in the future.
Speaker Change: Yeah, to add to that, you know, the remaining inventory 2025 would be the later seasons of 2025.
Speaker Change #195: That was what that, that was what that statement was about.
Speaker Change #195: Got it.
Speaker Change: So, we do have some time.
Speaker Change #195: And then, just on the marketing, leaning into marketing, are you being more pointed outside of the U.S.?
Speaker Change #195: Got it and then just on the marketing leaning into marketing.
Speaker Change #196: Are you being more pointed outside of the U S like I understand that the U S.
Speaker Change #196: Like, I understand that the U.S. is your biggest source market, but is it being more targeted towards the other English-speaking, source markets that you're focused on in general?
Speaker Change #197: Is your biggest source market, but is it being more targeted towards the other English speaking.
Speaker Change: So, at this stage, you know, the demand looks pretty good.
Speaker Change #198: Thank you.
Speaker Change #198: Okay.
Speaker Change #198: Source markets that you're focused on in general Thank you.
Speaker Change #198: Thank you.
Speaker Change #198: Oh.
Speaker Change #198: Sure.
Speaker Change: As you mentioned during the call, we are able to generate demand for sales and marketing.
Speaker Change #198: Okay.
Speaker Change #199: Thank you.
Speaker Change #200: I mean, that's one week.
Speaker Change #200: Thank you.
Speaker Change #200: Thank you. This does conclude today's Q&A session I will now turn the conference back over to Tom Hagen Vikings, Chairman and CEO for closing remarks.
Torstein Hagen: But there can come up for this one. In any year or less than a year. So the trend is good. So it shouldn't give opportunities. But there may be some opportunities when we like to. We don't have an ambition of being an investment-grade as a bond. We are in business of making money for our shareholders, and I think it's better to be in the double-dealer range. But we are very comfortable where we are now, of course, and there are things we can do, but I don't think we can either go make money and so forth.
Speaker Change #201: Don't get me wrong.
Speaker Change #201: This does conclude today's Q&A session.
Speaker Change #199: Yes.
Speaker Change #201: But it's been underlying a very strong trend.
Speaker Change #201: I will now turn the conference back over to Tor Hagen, Viking's Chairman and CEO, for closing remarks.
Speaker Change #201: And August is also very strong.
Speaker Change #201: Yes, I'd like to thank everyone for joining us on today's call.
Speaker Change #201: Thank you everyone for joining us.
Speaker Change #202: So, I don't think we've seen any sign of weakness.
Speaker Change #202: It may come, but we haven't seen any.
Speaker Change #203: And as far as the bookings are concerned, we've said before that typically what sells first are the high season. And also, the better cabin categories.
Speaker Change #202: On today's call.
Speaker Change #203: At the end of the day, we're really a value.
Speaker Change #203: Thank you.
Speaker Change #203: Thank you for your support and for your interest in Viking.
Speaker Change #203: We want to make sure that our guests feel that they're getting a good value.
Speaker Change #203: The next question is coming from Andrew DeDora from Bank of America.
Speaker Change #203: It's been good so far, and we wish you a great day.
Speaker Change #203: Thank you for you as a barge I'm very interested in.
Speaker Change #204: As you can see from our growth plans, we have a large order book coming online.
Speaker Change #204: Andrew, your line is live.
Speaker Change #204: And we want our guests to repeat.
Speaker Change #204: Hi.
Speaker Change #204: And so, it's a balance between the experience, getting strong yields, but also making sure that our guests feel like they're getting something meaningful from us.
Speaker Change #204: Good morning, everyone.
Unknown Executive: Okay, I appreciate it. This fact probably won't be the last time you'll ask to take that question. You will get the same answer next time. I appreciate the answer.
Speaker Change #204: It's been good so far and we wish you a great day.
Speaker Change #204: And also, we have historically said mid to high single digits.
Speaker Change #204: Maybe shifting a little bit to costs here. Just in the second quarter, costs were better than we thought.
Speaker Change #204: I think that's a pretty good clip for us in terms of our pricing.
Speaker Change #204: Any shift in spend that we should think about in QQ relative to the back half of the year?
Speaker Change #204: And at the end of the day, I would just keep in mind that the early inventory that sold is higher prices.
Speaker Change #204: And I guess bigger picture here.
Speaker Change #204: They're better itineraries.
Speaker Change #204: Is there any color you can provide just on how to think about vessel operating costs?
Unknown Executive: Thank you.
Speaker Change #205: They're high season.
Speaker Change #205: Can trend here maybe on an ABCD basis, particularly as you grow the ocean segment?
Speaker Change #205: And then as we finish out the year, it's going to be a little bit more of the shoulder season and lower cabin categories.
Speaker Change #205: Hey, Andrew.
Speaker Change #205: Thank you.
Speaker Change #205: Thank you.
Speaker Change #205: Great color.
Speaker Change #205: Yeah, you know, we did notice the positive cost performance.
Speaker Change #205: Yeah, I did want to add here that, you know, this quarter, the EPS calculation is a little, bit strange, because we went public in the in the second, second, second third, or the last third of the quarter.
Speaker Change #205: This does conclude today's conference.
Speaker Change #205: Thank you. This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change #205: Best of luck.
Speaker Change #205: I think Leah, mentioned it earlier on the call.
Speaker Change #205: And so the calculation of EPS is more, there's like a weighting, so you can't just do a straight division of the diluted into the net income.
Speaker Change #205: This was mainly driven by timing.
Speaker Change #205: But when excluding these non-cash impacts on that income, you really have to use $345 million, which adds back the Series C and the warrants.
Speaker Change #205: And I think you guys noticed by now, we're long term, we don't manage by quarter.
Speaker Change #205: And as to your question, well, can you remind me what your question was again?
Speaker Change #205: We tend to look at things on an annual long term basis. So things can shift between quarters, including operating expenses.
Speaker Change #205: What number were you asking for?
Speaker Change #205: Our main goal, of course, is to prudently manage expenses without compromising quality.
Speaker Change #205: Just the, because of the timing of the IPO, just the what's the dilute basic and diluted, share count at the end of the quarter?
Speaker Change #205: And so that's what our team does.
Speaker Change #205: Yeah, so our, our diluted is, so what we're using for the calculation, our diluted for the 37 cents?
Speaker Change #205: And that's something that you know, is a focus area for us.
Speaker Change #205: No, just what your current diluted share count is.
Speaker Change #205: No, I understand.
Speaker Change #205: I guess any, you know, any color that you can provide on how to think, about that cost trend over the next few years, particularly as you're you're you have outsized growth on the on the ocean side.
Speaker Change #205: So I mean, I think our from our perspective from expense profile, you know, we're subject, to everything else everyone else is the last couple years we've managed through.
Speaker Change #205: And as we look forward, hopefully inflation kind of settles and you know, cost increases settle a bit more.
Speaker Change #205: And that's really, you know, we don't provide guidance as you're aware, but we will say, you know, we do look at expenses.
Speaker Change #205: That's something that's very important to the company, and something that we will continue to manage.
Speaker Change #205: Okay, got it.
Speaker Change #205: And just lastly, just for modeling purposes, you know, I know the share count, in the release was, you know, influenced by averaging.
Speaker Change #205: Do you have the current dilute basic and diluted share count available?
Conor Cunningham: And the next question will be from Conor Cunningham, from Melius Research.
Conor Cunningham: Conor, your line is live.
Torstein Hagen: Everyone, thank you. I'm the potential decision to hold back inventory closer in. What might drive that decision? And if you do hold back, you know, higher demanding inventory, does that potentially benefit some of the off-peak inventory that you sell closer in? Thank you. I think from our perspective, you know, I think mentioned this earlier, our priority is to deliver a great experience that a good value. So in terms of yield management, you know, we want to ensure our guests have the opportunity to book what they want to book.
Speaker Change: So, I think we have a variety of levers to use, such that pricing would not be our first lever in terms of moving that demand.
Speaker Change: Okay, that's great, Collar.
Speaker Change: Thanks for that.
Torstein Hagen: And so as at this point, we have not necessarily held back inventory. The back of the year or shoulder seasons, I think many of us are aware that's just something that books closer in. Generally speaking, whether you hold back, you know, I see the inventory or not, the shoulder seasons just book closer in. That being said, obviously for biking are occurred, you know, are generally more well advanced than others, including the shoulder seasons.
Speaker Change: And the second question is around the cadence of your customer deposits.
Speaker Change: And we've actually got a couple of questions about this morning in terms of, you know, you had a decrease in customer deposits from the first quarter to the second quarter.
Torstein Hagen: But at the end of the day, that's not something we've necessarily done yet. But, you know, when we look at our curve, we're sitting here in August, like, you know, we mentioned earlier, we're 55% sold for 2025 at good pricing. So we're quite pleased with where we are. Maybe I could add, you use a word to hold back, but I guess we all know why it is a direct marketing company. And that means that we generate demand ourselves.
Speaker Change: And, you know, obviously given the fact that you're in a new public company, just, you know, just maybe wondering if you can give us a refresher course of how that cadence of your deposit line kind of looks through, you know, through the year.
Speaker Change: Thanks.
Speaker Change: Thank you.
Speaker Change: This is Lynn.
Speaker Change: Hope you're well.
Torstein Hagen: So you can say, marketing is not an expensive such as a revenue generator. So, so if we, if we should, the action we take is to market less. We would market less than things are good. Many, many people market market market, you know, because that's how the market be generated. So that's that's that's the mechanism. Yeah, I think when you when you, I guess the question might have arisen from our comment that we said that we would slow down the booking.
Speaker Change: The decrease in Q2 is really just because operations really pick up in the second quarter. It's not necessarily a reflection of a decrease in deposit. You'll see that throughout the year, you know, Q2, Q2, Q3 is our highest season.
Speaker Change: And as that, you know, you'll see the deposits kind of steady.
Torstein Hagen: But it's we're not holding back, but it's really our demand was so high that the curves were accelerating in a way that may not quite optimize how we would like our yields to that. And so that was just an indication that, you know, the current like we may not want to be 55% sold out by in by the same time next year to optimize pricing. That was what that, that was what that statement was about.
Speaker Change: But then Q4, Q1, which we know our river season starts to dry dock, you'll see customer deposits build. So, it's really just the cadence of how our business runs.
Speaker Change: Okay, perfect.
Speaker Change: Thanks guys, really appreciate it.
Torstein Hagen: And then just on the marketing, leaning in the marketing, are you being more pointed outside of the US? Like I understand that the US is your biggest source market, but is it being more targeted towards the other English speaking source markets that you're focused on in general? Thank you. Oh, OK. Thank you.
Speaker Change: Thank you.
Speaker Change: The next question will be from Matthew Boss from JP Morgan.
Matthew Boss: Matthew, your line is live.
Unknown Executive: This does conclude today's Q&A session.
Speaker Change: Great, thanks.
Torstein Hagen: I will now turn the conference back over to Tor Hagen, Vikings, Chairman and CEO for closing remarks. Yes, I'd like to thank everyone for joining us today, on today's call. Thank you for your support. I'm very interested in Viking been this so far and we wish you a great day. Thank you.
Speaker Change: So, Tor, you cited encouraging demand trends that support bookings for next year.
Matthew Boss: Could you elaborate on what you're seeing in terms of health of the consumer?
Speaker Change: Maybe any key differences that you're seeing across regions or product segments?
Speaker Change: And then Leah, on the 25 booking curve at 55% book, 10% pricing, I guess, how best to think about opportunity for next year relative to that multi-year baseline 3% yield growth versus the mid single digit performance historically that you've seen?
Speaker Change: Maybe on the first part of the question.
Unknown Executive: This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: I read tape first, and I see what other people's report.
Speaker Change: But I'm going to say, we have seen a thing that gives us any course for concern for 2025, as a matter of fact, July was extremely strong bookings for us.
Speaker Change: I think one of the weeks was the strongest booking week we've ever ever seen.
Speaker Change: I mean, that's one week, okay, if you're wrong, but it's been underlying a very strong trend and do all this is also very strong.
Speaker Change: So I don't think, I don't think we're seeing a scene and a sign of weakness.
Speaker Change: It may come, but we haven't seen any.
Speaker Change: Yeah, and as far as the bookings are concerned, you know, we've said before that you typically the what sells first are the high season and also, you know, the better cabin categories.
Speaker Change: At the end of the day, we're really a value, you know, we want to make sure that our guests feel that they're getting a good value.
Speaker Change: As you can see from our growth plans, we have a large order of coming online and we want our guests to repeat.
Speaker Change: And so it's a balance between, you know, the experience, getting strong yields, but also making sure that our guests feel like they're getting something meaningful from us.
Speaker Change: And also, you know, we have historically said, you know, mid to high single digits.
Speaker Change: I think that's a pretty good clip for us in terms of our pricing.
Speaker Change: And at the end of the day, you know, I would just keep in mind that early in the early inventory that sold as higher prices, their better itineraries or high season.
Speaker Change: And then as we finish out the year, it's going to be, you know, a little bit more of the shorter seasons and lower cabin categories.
Speaker Change: Great color.
Speaker Change: Best of luck.
Speaker Change: Thank you.
Speaker Change: The next question is coming from Andrew Dedora from Bank of America.
Speaker Change: Andrew, your line is live.
Speaker Change: Hi, good morning, everyone.
Speaker Change: Maybe shifting a little bit to costs here. Yeah, just in the second quarter costs were better than we thought.
Speaker Change: And was that any shift in spend that we should think about in 2Q relative to the back half of the year.
Speaker Change: And I guess bigger picture here, there are any color you can provide just on how to think about that's a lot of operating costs, you know, can trend here, you know, maybe on an APCD basis, particularly as you grow the ocean segment.
Speaker Change: Andrew, yeah, you know, we could notice the positive cost performance.
Speaker Change: I think Leah mentioned it earlier on the call.
Speaker Change: This was mainly driven by timing.
Speaker Change: And I think you might have noticed, by now, we're long-term, we don't manage by quarter.
Speaker Change: We tend to look at things on an annual long-term basis. So things catch shifts between quarters, including operating expenses.
Speaker Change: Our main goal, of course, is to prudently manage expenses without compromising quality.
Speaker Change: And so that's what our team does.
Speaker Change: And that's something that, you know, is a focused area for us.
Speaker Change: No, I understand.
Speaker Change: I guess any color that you can provide on how to think about that cost-friend over the next few years, particularly as you have outsized growth on the ocean side.
Speaker Change: So I think from our perspective, from expense profile, we're subject to everything else.
Speaker Change: Everyone else is the last couple of years we've managed through.
Speaker Change: And as we look forward, hopefully, inflation kind of settles and cost increases settle a bit more.
Speaker Change: And that's really, you know, we don't provide guidance as you're aware.
Speaker Change: But we will say, you know, we do look at expenses.
Speaker Change: That's something that's very important to the company.
Speaker Change: And something that we will continue to manage.
Speaker Change: Okay, got it.
Speaker Change: And just lastly, just for modeling purposes, you know, I know the share count in the release was, you know, influenced by averaging.
Speaker Change: Do you have the current dilute basic and diluted share count available?
Speaker Change: Thank you.
Speaker Change: Yeah, I didn't want to add here that, you know, this quarter is the, the, the EPS calculation is a little bit strange because we went public in the second, second, third are the last third of the quarter.
Speaker Change: And so the calculation of EPS is more, it does like a waiting so you can't just do a straight division of the diluted into in that income.
Speaker Change: But when excluding these non and cash impact on that income, you really have to use 345 million, which adds back the 3C and the current.
Speaker Change: And that's your question.
Speaker Change: Well, can you remind me what your question was, again, what number were you asking for?
Speaker Change: The cause of the time of the IPO, just what the diluted basic and diluted share count at the end of the quarter.
Speaker Change #100: Yeah, so our diluted is.
Speaker Change #100: So what we're using for the calculation, right diluted for the 37%.
Speaker Change #101: No, just what your current diluted share count is, thank you.
Speaker Change #102: Okay, so it's 445, 757520.
Speaker Change #103: But again, because of the waiting, that's not what we use on the EPS scale.
Speaker Change #103: Understood.
Speaker Change #103: Thank you.
Speaker Change #104: The next question is coming from Robin Farley from UBS.
Speaker Change #105: Robin, your line is.
Speaker Change #105: Live.
Speaker Change #105: Great.
Speaker Change #106: Thank you.
Robin Farley: I wanted to ask about the booking curve that you mentioned.
Speaker Change #108: When you say it's in line with your expectations, just to help us understand what that would be looking at, you know, the revenue per booked cruise day, the increase is the sort of down a percentage point for the current year and down two points for next year.
Speaker Change #108: Is that kind of what we should think of as a typical quarterly pace as you approach 2025?
Speaker Change #109: Is that sort of two points per quarter, you know, what would what would be expected?
Speaker Change #109: Thanks.
Speaker Change #109: Robin, hope you're well.
Speaker Change #110: I think we discussed this and just as a reminder for oceans, we operate year-round and for rivers, we have seasonally, right? So the river season is mainly let's say March April through October.
Speaker Change #111: We do have ships that sail into the winter, but that's like the bulk of this season.
Speaker Change #111: And so when we're selling oceans, you will see pricing kind of be pretty consistent as we sell or for rivers.
Speaker Change #111: You will see that Q2, Q3, you know, high season, high cabin categories that will sell first.
Speaker Change #111: How pricing trends will always be dependent on what so?
Speaker Change #111: The deployment, of course.
Speaker Change #111: And, you know, our yield management.
Speaker Change #112: So we can't really say there's a set percentage of what changes as we continue to sell, but I think we can say, you know, right now sitting here with 55% sold for 2025, we are in a good position.
Speaker Change #112: Okay, great.
Speaker Change #112: Thank you.
Speaker Change #112: And maybe just one clarification on that.
Speaker Change #112: When we think about that that seasonality, would the change over the course of Q3 and Q4 as you're approaching the year ahead and to move more than Q2 did?
Speaker Change #113: It seems potentially that's what we should expect just as you're saying that the things that sell closer in.
Speaker Change #114: So will that, is that likely to change more in sort of a Q3, Q4 than it did in maybe in Q1, Q2 when we think about approaching 2025?
Speaker Change #114: Thanks.
Speaker Change #115: I mean, I think as we look to just, you know, selling out the rest of 2025, we do anticipate that, you know, the price we get will come down mainly because of the mix of what's selling, which is the shoulder season, you know, the things that, you know, generally are lower pricing, but at the end of the day, I think we have to step back.
Speaker Change #115: We're sitting here in August for 2025.
Speaker Change #116: We're well sold at good pricey.
Speaker Change #116: We have a lot of time to sell the rest of the inventory.
Speaker Change #116: So we are really quite pleased with where we are on the curve.
Speaker Change #116: Okay, great.
Speaker Change #116: Thank you.
Speaker Change #116: The next question will be from Dan Politzer from Wells Fargo.
Dan Politzer: Dan, your line of life.
Speaker Change #118: Hey, good morning, everyone.
Speaker Change #119: Thanks for taking my question.
Speaker Change #120: First, in terms of the yield in the quarter, I believe ocean was the, around flat. And I know, I know, Leah, you mentioned that there was some impact from world cruises.
Speaker Change #121: Is there any way for the second quarter to give kind of an ex-world cruise type yield?
Speaker Change #122: And then similarly, I think for the full year of 24, based on the booking curves, ocean pricing is, track is indicated of seven, which would, I believe, assume a pretty big acceleration in the back half of the year.
Speaker Change #122: So I just want to make sure we're thinking about the right way as it relates to kind of the disclosures in the curves and kind of the one-off, there.
Speaker Change #122: Thanks.
Speaker Change #123: Yeah, so I mean, you can see from the ocean bookings update off that source spoke about that for the 2024 season, we expect yield, you know, as what as of today, there's 7% up.
Speaker Change #123: So if you consider that we're, you know, 1% up as of second, the first half, and we expect to be 7% around 7% for the whole year, I think that kind of will guide you us to the second half expectations.
Speaker Change #124: Okay, and then just for my follow, in terms of cost, I know you mentioned that bit, were there any specific ways to quantify any benefits from timing or cost shifts in the quarter that will shift into the back end of the year?
Speaker Change #125: As you're aware, you know, we don't provide guidance.
Speaker Change #125: And so what we can say is, you know, cost did turn favorally to the same quarter last year, which is great.
Speaker Change #126: It's something that we will look to, some of this is timing at the end of the day.
Speaker Change #127: I think we can't, you know, reiterate again, we do look at the business on a long-term basis.
Speaker Change #127: And so from that perspective, we don't trend in how offering costs are, for us, it's positive.
Speaker Change #128: Okay, I guess one other kind of related one on the cost side, the new flooding, is that has that been a headwind or is that something that should be on investors' radar as we think about the cost in the rest of the year?
Speaker Change #128: You know, I think that we handled that exceptionally well.
Speaker Change #129: As you know, our identical long shifts allow us to do shift slots so that we minimize cancelled cruises.
Speaker Change #130: And, you know, I personally went on the Danube this summer and everything is back to normal.
Speaker Change #131: It's great.
Speaker Change #132: It's was very encouraging to see all of the long-ships operating among the Danube.
Speaker Change #132: So, you know, I think our operators are very good at what they do and this is just proper of course for them.
Speaker Change #132: So, as far as managing costs, you know, shift slots really go a long way and to the extent that we do have to, you know, do a little bit more deviations.
Speaker Change #132: Our operators are also very cost conscious and make best efforts to minimize them.
Speaker Change #132: Thanks so much.
Speaker Change #132: Thank you.
Speaker Change #133: The next question is coming from Brandt Montour from Partles.
Speaker Change #134: Brandt, your line of advice.
Speaker Change #135: Good morning everybody.
Speaker Change #136: Thanks for taking my question.
Speaker Change #137: So, starting off on Egypt, you know, I know you guys have a decent amount of your deliveries coming to the Egypt market of the next couple of years.
Speaker Change #138: And so, the question is maybe for tour or for anyone.
Speaker Change #139: You know, is there any sensitivity around that region for Americans traveling to the Middle East because it's a geopolitical event?
Speaker Change #139: And even if you're doing well, do you think perhaps you'd be doing better if not for those?
Speaker Change #140: And how do you think about that that that oncoming inventory through those through that lens?
Speaker Change #140: Thank you.
Speaker Change #141: So, I think I think the Americans have been surprisingly willing to go to Egypt.
Speaker Change #141: Of course, it has been a little bit hurt on the occupancy, but the economics of those ships are so phenomenal that that has been okay. It's been picking up again.
Speaker Change #142: And, you know, we are contrarians.
Speaker Change #142: So I think this is probably the time to even think about more capacity as we have indicated that we are.
Speaker Change #142: So I think Egypt is very powerful for us.
Speaker Change #142: So I think we are not concerned at all.
Speaker Change #143: And Americans are welcome to come and have a name ceremony November December, which I think will have a lot of attendance.
Speaker Change #143: Okay, thanks for that.
Speaker Change #143: That's really helpful.
Speaker Change #143: And then the second question on capital allocation, a question I think you've probably gotten before, but you'll probably get again is, you know, we have you building a fair amount of excess cash.
Speaker Change #143: And from operations over the next couple of years.
Speaker Change #143: And obviously most of your growth is a finance to the tractive levels.
Speaker Change #143: You know, maybe you can remind us outside of growth to the extent that you, you know, you can't find places to put that cash to work in operations.
Speaker Change #143: What is your plan with the excess capital?
Speaker Change #143: I think it's probably a question that comes to me often, but I think I think we should focus first on making sure we have adequate financing, which we do.
Speaker Change #143: And then I think we have many opportunities.
Speaker Change #143: Of course, if we run out of ideas and opportunities, we may have to consider alternatives.
Speaker Change #143: But for the time being, I think we have seen our order book.
Speaker Change #143: And I think that's the sign of our belief in this business.
Speaker Change #144: And I think we it's comfortable to have a cash cash on hand also in case some bad things happen.
Speaker Change #145: But that over the time being, we, we concentrate on guessing the cash in and we'll worry about a little bit later about how to give it out.
Speaker Change #145: Thanks, everyone.
Speaker Change #145: Thank you.
Speaker Change #146: The next question will be from Meredith Jensen from HSBC.
Speaker Change #147: Meredith, your line is live.
Speaker Change #147: Hi.
Speaker Change #148: Good morning.
Speaker Change #149: Just a quick follow up on that last question to think if you could speak a little bit about just sort of the longer term view of the order book.
Speaker Change #150: Obviously, we do have a vision quite a bit out, but given competitors have sort of moved into the future quite a bit with their order book.
Speaker Change #150: I was wondering if you just might speak to given your history how you think about the positioning within, you know, the shipbuilding facilities and and how you think about that for the future.
Speaker Change #150: Thank you.
Speaker Change #151: As I said before, I think we, we think we are contrarians, so that means that we have been able to place orders when other people did not. So you can say, our order book has been obtained as what we consider being, as we consider it being quite favorable prices.
Speaker Change #151: And we now have a more book on the other side of the ship.
Speaker Change #152: So if we're going to double the capacity from platinum to 20 ships, when we think through our options and according to the rule of 72, that means over 7 years, that means 10% per year, which I think is a reasonable thing to have.
Speaker Change #152: We feel we have the relationships for the regards that needed.
Speaker Change #152: We must be the moment largest customer in terms of partnerships that can come to any of you have ever had.
Speaker Change #153: He said, Melissa, and I think we all have a relationship for the leadership builders.
Speaker Change #153: There are not so many parts of my hope and it all there.
Speaker Change #154: I think we're under very good spot that that order will have value.
Speaker Change #154: Thanks.
Speaker Change #155: That makes a lot of sense.
Speaker Change #156: And just a one quick additional, I really hope you have a lot of direct business from your loyal customers, such that marketing has been sort of a network effect.
Speaker Change #157: But I was wondering if you could speak to some of the interesting targeted marketing I've seen around, for example, the Olympics and sort of tying in event-based ship capacity around the sane and the Olympics.
Speaker Change #158: And what kind of ROI you might have seen from that, as one example, how we can think about your marketing and advertising strategy.
Speaker Change #158: And thanks.
Speaker Change #159: Well, as many of we are very proud of many of the docking places we have before for seven years to have the docking place.
Speaker Change #159: We have empires by the I full power, which we had to evacuate for a few days, one of the events of this.
Speaker Change #159: But I think that's one of our key strengths.
Speaker Change #159: I think it's clear that we did place some ads on NBC during the Olympics.
Speaker Change #159: And I think we're seeing spikes in docking for various obviously as a result of these things don't last forever.
Speaker Change #159: So I think it adds to the two who we are.
Speaker Change #159: And so I think that was good.
Speaker Change #159: I think we're very using our marketing to enhance our standing.
Speaker Change #159: We have these special relationships, but the doubt not be and so forth, which helps us enhance our position.
Speaker Change #159: We have a lot of privilege access, which really matters.
Speaker Change #159: Let me focus it off on that.
Speaker Change #159: Wonderful.
Speaker Change #159: Thanks a lot.
Speaker Change #159: Thank you.
Speaker Change #159: The next question will be from Stephen Grambling from Morgan Stanley.
Speaker Change #160: Stephen, your line of life.
Speaker Change #161: Thank you.
Speaker Change #162: Perhaps asking about demand trends from a different angle.
Speaker Change #163: Just given the increased consternation on the back of airlines hotel and parks commentary in the second half, I guess what would you be focused on in your business as a leading indicator to assess whether trends are potentially deteriorating and would be occupancy or any types of add-ons before after cruises or other factors.
Speaker Change #164: And then how should investors think about the levers that you have to pull should things decelerate that may differentiate you from other cruise peers.
Speaker Change #165: I think this is where our booking curves are a huge advantage for us, and we said it from the get go, we would be transparent and we would provide the courage to our investor base as well, which we have done.
Speaker Change #166: And so from that perspective, I think that is our number one biggest indicator as to what is happening for demand for our consumer group.
Speaker Change #167: And I think, you know, Tor mentioned this earlier, we had a great July where we are for 24 and 25 is a good place to be.
Speaker Change #167: We will continue to focus on marketing and sales, to keep this momentum going in a second half of the year, and to continue to, you know, sell.
Speaker Change #168: I mean, I could add, maybe I shouldn't, but when you look at the booking curves for the universe, for 24 and 25, you see they're quite, quite further advanced than they were youths.
Speaker Change #169: And I wouldn't be surprised if we say it would be reasonable to sell that down a bit in the future.
Speaker Change #169: You know, sometimes we feel that if we have an action here, this is an action here in the US, I've been told, but then we like, we then typically like to be a little bit of Adam.
Speaker Change #169: We probably go a little bit further, I think we need it to be a part of it.
Speaker Change #169: That's helpful.
Speaker Change #169: Thanks so much.
Speaker Change #169: Thank you.
Speaker Change #169: The next question will come from Alex Brignol from Redburn Atlantic, Alex, your line is live.
Speaker Change #170: Hi, thank you for taking the question.
Alex Brignol: I actually just have one, so there's been asked ready, but just on China, obviously, a little while ago you reduced your planned capacity source from that market, sailing in Europe, in terms of the ships you're going to have the boats you're going to have available.
Speaker Change #172: Could you just talk about any evolution that has been in that in terms of air capacity or demand or the way that things are opening up or appetite that you're seeing, for outbound China into European river sailing, and then I guess you could, if you could expand and talk about the kind of closer to home sailing, then that would be helpful, so thank you so much.
Speaker Change #172: Yeah, so we are, you know, as we said before, we're taking a measured approach with respect to China.
Speaker Change #172: We have warships operating in Europe as far as warships are concerned.
Speaker Change #173: And I mentioned earlier in this call that I went on a river cruise on the Danube and I actually went on a China outbound cruise.
Speaker Change #174: And I'm happy to report that the guests are very well rated, they're, hey, they have high net promoter scores.
Speaker Change #175: And so I think from that perspective, we do have, we've got the product right for that consumer, but there are challenges in terms of, you know, visas or airlifts, I think those are going to eventually work themselves out.
Speaker Change #175: But again, you know, this is a small part of our business, you know, we do have a very strong core product business.
Speaker Change #175: And as far as China, you know, we will continue to invest, but we will take it in a very measured approach.
Speaker Change #175: And I guess just as an extension of that, are there any new kind of customer source markets, clearly that kind of lend themselves in English speaking, ships that you think are opportunities for you to expand the distribution and that can obviously give you yields comparable to those from Americans which are historically being the highest from coming to Europe?
Speaker Change #176: Well, you know, we have been very strong proponents of having one brand and one customer was, and of course we have been for the English speaking market.
Speaker Change #177: So of course, if we could, it would try and get together, crack on the Chinese market, of course that'd be great.
Speaker Change #177: As they have said, we'll take a very much reproach approach.
Speaker Change #177: There are, I can say, you know, other dog markets in Asia.
Speaker Change #177: And we know which way Asia is going. So it wouldn't be surprising if we do a little bit more there.
Speaker Change #177: But there's a game just getting a small foot out of it.
Speaker Change #177: It wouldn't be the thing that really will have a name back on our significant impact on VNL one way or the other.
Speaker Change #177: There were time, of course, you could see that these markets should be developed.
Speaker Change #177: Of course, these are people that have an increase in the levels of demographics that gives them time.
Speaker Change #177: So that could be something.
Speaker Change #177: But for the time being, we remain mainly focused on the English speaking markets.
Speaker Change #177: Brilliant.
Speaker Change #177: Thank you very much.
Speaker Change #177: Again, I mean, we make a very strong point that we have one brand.
Speaker Change #177: And the more we have looked and thought about others and how they do it and so forth.
Speaker Change #177: I think the fact that we have it once one brand and four product times or three product times.
Speaker Change #177: It's really a very huge advantage.
Speaker Change #177: So that guess when they come to writing, they get exactly that they know exactly what they get.
Speaker Change #177: I think it's very strong point for us.
Speaker Change #177: Thank you.
Patrick Schools: The next question will be from Patrick schools from truest securities.
Speaker Change #179: Patrick, you're right.
Speaker Change #180: Thank you.
Speaker Change #181: Good morning.
Speaker Change #182: Another way of asking the cash well balance sheet question here.
Speaker Change #183: In a long term, stable environment, what would you ideally want or target your net leverage to be?
Speaker Change #184: Let's say in five years, the world continues to be stable.
Speaker Change #184: Where would you want it?
Speaker Change #184: Thank you.
Speaker Change #185: We have, as you know, we've been asked this question several times.
Speaker Change #186: And some of us have become experts and don't drink it several times.
Speaker Change #186: Well, we don't really want to give a commitment to anything like that in the future.
Speaker Change #186: But there can come up for this one.
Speaker Change #186: In any year or less than a year.
Speaker Change #186: So the trend is good.
Speaker Change #186: So it shouldn't give opportunities.
Speaker Change #186: But there may be some opportunities when we like to.
Speaker Change #186: We don't have an ambition of being an investment-grade as a bond.
Speaker Change #187: We are in business of making money for our shareholders, and I think it's better to be in the double-dealer range.
Speaker Change #188: But we are very comfortable where we are now, of course, and there are things we can do, but I don't think we can either go make money and so forth.
Speaker Change #188: Okay, I appreciate it.
Speaker Change #188: This fact probably won't be the last time you'll ask to take that question.
Speaker Change #188: You will get the same answer next time.
Speaker Change #188: I appreciate the answer.
Speaker Change #188: Thank you.
Speaker Change #189: And the next question will be from Conor Cunningham, from Melius Research.
Speaker Change #190: Conor, your line is live.
Speaker Change #191: Everyone, thank you.
Speaker Change #192: I'm the potential decision to hold back inventory closer in.
Speaker Change #193: What might drive that decision?
Speaker Change #194: And if you do hold back, you know, higher demanding inventory, does that potentially benefit some of the off-peak inventory that you sell closer in?
Speaker Change #194: Thank you.
Speaker Change #194: I think from our perspective, you know, I think mentioned this earlier, our priority is to deliver a great experience that a good value.
Speaker Change #195: So in terms of yield management, you know, we want to ensure our guests have the opportunity to book what they want to book.
Speaker Change #195: And so as at this point, we have not necessarily held back inventory.
Speaker Change #195: The back of the year or shoulder seasons, I think many of us are aware that's just something that books closer in.
Speaker Change #195: Generally speaking, whether you hold back, you know, I see the inventory or not, the shoulder seasons just book closer in.
Speaker Change #195: That being said, obviously for biking are occurred, you know, are generally more well advanced than others, including the shoulder seasons.
Speaker Change #195: But at the end of the day, that's not something we've necessarily done yet.
Speaker Change #196: But, you know, when we look at our curve, we're sitting here in August, like, you know, we mentioned earlier, we're 55% sold for 2025 at good pricing.
Speaker Change #196: So we're quite pleased with where we are.
Speaker Change #197: Maybe I could add, you use a word to hold back, but I guess we all know why it is a direct marketing company.
Speaker Change #197: And that means that we generate demand ourselves.
Speaker Change #197: So you can say, marketing is not an expensive such as a revenue generator.
Speaker Change #197: So, so if we, if we should, the action we take is to market less.
Speaker Change #197: We would market less than things are good.
Speaker Change #198: Many, many people market market market, you know, because that's how the market be generated.
Speaker Change #198: So that's that's that's the mechanism.
Speaker Change #199: Yeah, I think when you when you, I guess the question might have arisen from our comment that we said that we would slow down the booking.
Speaker Change #200: But it's we're not holding back, but it's really our demand was so high that the curves were accelerating in a way that may not quite optimize how we would like our yields to that.
Speaker Change #201: And so that was just an indication that, you know, the current like we may not want to be 55% sold out by in by the same time next year to optimize pricing.
Speaker Change #201: That was what that, that was what that statement was about.
Speaker Change #201: And then just on the marketing, leaning in the marketing, are you being more pointed outside of the US?
Speaker Change #202: Like I understand that the US is your biggest source market, but is it being more targeted towards the other English speaking source markets that you're focused on in general?
Speaker Change #202: Thank you.
Speaker Change #202: Oh, OK.
Speaker Change #202: Thank you.
Speaker Change #203: This does conclude today's Q&A session.
Speaker Change #203: I will now turn the conference back over to Tor Hagen, Vikings, Chairman and CEO for closing remarks.
Speaker Change #204: Yes, I'd like to thank everyone for joining us today, on today's call.
Tor Hagen: Thank you for your support.
Speaker Change #205: I'm very interested in Viking been this so far and we wish you a great day.
Speaker Change #206: Thank you.
Speaker Change #207: This does conclude today's conference.
Speaker Change #208: You may disconnect your lines at this time.
Speaker Change #208: Thank you for your participation.