Q3 2024 Norwegian Cruise Line Holdings Ltd Earnings Call

October 31, 2024

I'd answer session will follow the formal presentation.

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My pleasure to turn the call over to Sara <unk> head of Investor Relations. Please go ahead Sir.

Thank you and good morning, everyone. Thanks for joining us for our third quarter 2024 earnings and business update call I'm joined today by Harry Sommer, President and CEO of Norwegian Cruise line Holdings, and Mark Kempa Executive Vice President and CFO.

As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website at Www Dot and C. L. H L. P D dotcom slashing metric.

Throughout the call we refer to a slide presentation that can be found on our website with the conference call and presentation will be available for replay for 30 days following today's call.

Where we begin I would like to cover a few items our press release with third quarter 2024 results was issued this morning and is available on our website.

This call includes forward looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with the cautionary statements contained in our earnings release.

Our comments May also reference non-GAAP financial measures a reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and presentation.

With that I'd like to turn the call over to Harry Harry.

The

Harry: Well, thank you Sarah and good morning, everyone. Thank you for joining us today for our third quarter 2024 earnings call and happy Halloween.

I'm extremely pleased with our results as Norwegian cruise line holdings continues to make steady and meaningful progress driving and leveraging the strong demand environment, while delivering exceptional vacation experiences all while effectively controlling our costs. Thanks to the dedicated efforts of our shipboard and shore side teams I am delighted to say.

For the third straight quarter, we have achieved results that surpassed our guidance across all key metrics, which has led to an increase in our full year guidance for our fourth time. This year. These results demonstrate how our strategic direction is yielding positive results now and positioning us well for the future progressing steadily towards our 2000.

26 financial and sustainability targets.

As you recall from our Investor day earlier this year, we unveiled our charting the course strategy. With addition to have our guest vacation better and experience more and which focused on what I referred to as the four PS people products growth platform and performance I would like to take the opportunity today to share our progress.

On several fronts of this strategy.

I'll begin my remarks by highlighting our performance pillar through both our strong third quarter results and providing an update of our full year outlook next I will discuss recent developments and our exciting Newbuild program part of our growth platform as well as new initiatives on all three of our award winning brands as part of our product pillar are also comp.

On the strong demand, we are seeing and how our onboard offerings and service quality continue to drive improved guest satisfaction, while maintaining disciplined cost management. The balancing of return of investment and return on experience that is one of the core tenants of our strategy and last but not least I will cover some of the key.

<unk> and our sustainability efforts, which underpins each pillar of our strategy I will then turn the call over to Mark who will provide more detailed commentary on our results and updated guidance.

First I am pleased to report that our strong momentum for the first half of the year a combination of the continued focus and execution by our teams on our strategic initiatives and successful cost efforts.

Coupled with sustained robust demand has continued into the third quarter, resulting in exceptional performance as illustrated on slide four we not only met but exceeded our guidance across all key metrics for a third straight quarter, we achieved the highest quarterly gross revenue and adjusted EBITDA in our company's history.

And the highest trailing 12 month adjusted operational EBITA margin since returning to regular operations, improving almost 10 full percentage points from the third quarter of last year, our adjusted EPS increased 31% to 99, well ahead of our guidance of <unk> 92.

Despite a <unk> <unk> negative impact from foreign exchange rates and our higher adjusted EBITDA drove net leverage to end the quarter at 558 times and approximate one and three quarter churn improvement over just the last nine months from year end 2023.

Harry: Slide five lays out the effect of our strong third quarter guidance third quarter results on our full year guidance, while Mark will provide more detailed commentary shortly I would like to highlight a few key points on our full year numbers, we're projecting net yields increased nine 4% this year, marking a 120 basis point improvement.

From our previous guidance as we carry forward strength for the third quarter and raised our fourth quarter guidance. This impressive growth is expected to be a record for the company since going public in 2013 and is truly exceptional.

Our adjusted operational EBITA margin is expected to improve to 35, 3% four six percentage points over 2023, and a significant step towards our goal of approximately 39% in 2026, driven by strong top line growth and our flat adjusted net cruise cost excluding fuel in dry dock.

During the year.

We expect our adjusted ROIC to close to the year in the double digits and improvement from 8% in 2023, demonstrating we are well on our path to 12% by 2026.

And lastly, we expect our net leverage to further decrease to approximately five four times by year end, a major step towards achieving our 2026 target of mid four times.

Each of these year end metrics demonstrates that we are on track to achieve our 2026 charting the course targets and reinforces our confidence in our strategic direction and ability to execute.

Turning to slide six which I know you are familiar with I want to once again highlight how our long term growth platform pillar is set to deliver measured capacity growth and optimize our fleet to drive strong financial returns historically measured capacity growth has driven outside revenue outsized revenue and adjusted EBITDA growth.

And we expect this trend to continue with the addition of new vessels to our fleet I'll provide more details on these exciting developments as we turn to slide seven.

At Norwegian we recently unveiled within 2026 will be the 21st ship in our fleet Norwegian Luna. This exciting addition will launch a variety of funding Sun voyages sailing round ship from Miami, starting in April 2026, as a sister ship to Norwegian Aqua Luna posts exciting enhancements over previous premium class.

Ships, including a 10% increase in capacity luxurious new three bedroom duplex Haven suites, a ground breaking hybrid roller coaster water slide that would've view next year on Norwegian Aqua new.

New activities and games for our guests and a new revitalized service at the <unk> respond Salon and pulse fitness centers speaker.

Speaking of Norwegian Aqua, we're making excellent progress towards your launch in early 2025 earlier. This month I visited the Fincantieri shipyard, Italy at witness firsthand the impressive final touches being a price of the vessel I'm incredibly excited for our guests to experience. This next generation Prima class ship.

At Oceana cruises, we remain committed to delivering the finest cuisine at sea with new experiences on every new build in this case.

Five 3% four six percentage points over 2023, and a significant step towards our goal of approximately 39% in 2026, driven by strong topline growth and our flat adjusted net cruise cost excluding fuel in drydock during the year.

Sorry in the case of the brand's upcoming Laura we're introducing the <unk> for which <unk> newly appointed executive culinary directors and resident Master chefs of France, Atlas <unk> and Eric <unk> have crafted over 'twenty Wizard recipes.

We expect our adjusted ROIC to close the year in the double digits and improvement from 8% in 2023, demonstrating we are well on our path to 12% by 2026 and lastly, we expect our net leverage to further decrease to approximately five four times by year end, a major step towards achieving our two.

Equally anticipating our food loving guests reaction to this new exciting culinary experience when allure debuts next year and of course I'll be first in line.

Finally, regent seven seas cruises recently celebrated the steel cutting for its latest ultra luxury ship seven seas prestige at 77000 tons and accommodating only 850 guests. This vessel will offer our guests unrivaled Stacy with one of the highest guest the space ratios in the.

Thousand 26 target of mid four times.

Each of these year end metrics demonstrates that we are on track to achieve our 2026 charting the course targets and reinforces our confidence in our strategic direction and ability to execute.

The ship will introduce exciting innovations, including our re imagine palatial region suite, a new set of duplex suites and other accommodation categories fresh dining experiences and numerous other incredible offerings that will allow our guests to experience luxury transcended.

Moving to slide eight we have enhanced our offering and partnership building on our bold aspiration for our guests to vacation better and experienced more now.

And we expect this trend to continue with the addition of new vessels to our fleet I'll provide more details on these exciting developments as we turn to slide seven.

Norwegian launched its new brand positioning.

Harry: Experienced more etsy, which underscores <unk> commitment to provide guests with more variety more to see more to do more to enjoy and more value through elevated offerings, providing more of what they love while vacationing. The morrisey offering is an evolution and expansion of the previous free at sea package now.

It's an enhanced beverage package additional nights at specialty dining venues and Starlink high speed Internet.

In addition to its new positioning Norwegian also unveiled its latest partnership as the official cruise line of <unk>.

National Hockey League. This milestone marks <unk> first partnership with the professional sports League and the Nhl's first partnership with the cruise mind. This multi year partnership provides a fantastic platform for the brand to connect and engage with hockey fans everywhere and show them, how they can experience more etsy with NCI <unk>.

Shannon Meanwhile, unveiled its new brand value promise and offering your world included which features an updated selection of always included amenities for our guests as part of the new brand promise guests will now have a generous suite of the menu is included in the fare, including gourmet specialty restaurants in Sweden.

Dining prepaid gratuities, gourmet coffees, and teas laundry services and unlimited Starlink Wi Fi among others. These enhancements have helped drive increased demand and I will now discuss our booking trends on slide nine since our last quarterly update in July the cruise consumer has continued to show strength. This resilience.

Has allowed us to take advantage of the strong demand we experienced in the third quarter net yield grew 9% year over year and outperformed guidance by an amazing 260 basis points. This impressive performance was largely due to strength in pricing and demand across all geographies, but particularly in Alaska, and Canada, New England voyage.

We also saw strong onboard revenue across the board, particularly in shore excursions and communications the latter boosted by Starlink, which is already live on 30 of the 32 ships in our fleet and will be rolled out to the entire fleet by year end.

And another sign of consumer helping confidence pre booked onboard revenue continues to improve up mid single digits from the previous year and nearly doubling from 2019 levels. Looking ahead. We are at the upper end of our optimal range on a forward 12 month book basis, and we continue to see strong demand.

For all brands in deployment with pricing and load for 2025 in line or above this year's levels for all four quarters and full year.

Turning to slide 10, we see the strength of our demand reflected in our advanced ticket sales, which increased 6% compared to the previous year outpacing capacity growth. This achievement was driven by robust pricing dynamic deployment mix increased presale packages and capacity growth.

Harry: Moving to slide 11, I will now dive into some of our advancements in sustainability, which underpins our strategy. We are committed to being responsible stewards of our environment, while creating long term value for all of our stakeholders and I'm proud to share some key highlights of our progress.

This quarter, we received some significant recognition for our sustainability efforts.

MS Ci gave us a rating of a within the hotel and travel industry for the second year in a row.

This recognition reflects our ongoing efforts to integrate environmental social and governance factors into our business practices. It's a testament to our dedication to transparency and responsible business practices.

Harry: Additionally, as ESG Shipping award this year, we were the top ranked company in the ESG leadership category and the only cruise line to even make the list. This accolade recognizes our outstanding achievements and innovative initiatives within the global maritime industry. It reinforces our position as a leader in sustainability.

Cruising and motivates us to continue pushing boundaries in this area.

Harry: Operationally, we also made significant strides in our alternative fuel initiatives.

41% of our fleet has now been tested with a biodiesel blend surpassing our 2024 goal. This achievement underscores our commitment to reducing our carbon footprint and exploring innovative solutions for cleaner operations.

Finally, strengthening our communities is a key pillar of our global scale and sustained program and we are committed to supporting organizations that benefit communities at March during the third quarter Oceana successfully launched the relay for life at Sea program I know Chinas insignia and Vista. This initiative focuses on the.

Well most of our guests and crew by raising awareness through an onboard walk and encouraging donations to the American cancer Society. We're excited to roll out this program to the remainder of the Oceana fleet later this year further amplifying its positive impact. Additionally.

Harry: Additionally, in the wake of the destruction caused by both Hurricanes Milton and Helene, we contributed $80000 to the American Red Cross to help those in affected communities. In addition to the $30000 previously donated to the Red Cross to support Hurricane Aline relief efforts were matching up to 50000 more than public donations.

Towards Hurricane Milton relief efforts.

These achievements demonstrate our fulsome and holistic approach to sustainability encompassing environmental stewardship, social responsibility and strong governance as we continue charting the course towards a more sustainable future. We remain committed to innovation transparency and creating positive change in the communities we touch.

With that I'll hand, the call over to Mark to go over financial results in more detail Mark. Thank.

Thank you Harry and good morning, everyone. My commentary today will focus on our third quarter 2024 financial results.

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

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

Let's begin with our third quarter results, which are highlighted on slide 12.

With the topline results were very strong with net yield increasing 9% exceeding our guidance of six 4% by 260 basis points.

Several factors contributed to the strong topline growth in the quarter.

First exceptionally solid demand and pricing across our deployment, particularly for Alaska, and Canada, New England sailings across all three brands.

We experienced stronger than anticipated onboard revenue across the board, particularly in shore excursions and communications the.

The benefit of this higher pricing and onboard spend is compounded by the third quarter seasonally high occupancy, resulting in outsized growth in the top line and adjusted EBITDA.

Moving to costs adjusted net cruise cost ex fuel per capacity day came in $1 below our guidance of $1 55.

And on Boardwalk and encouraging donations to the American cancer Society.

This was primarily due to timing of certain expenses that will now shift into the fourth quarter.

We're excited to roll out this program to the remainder of the Oceana fleet later this year further amplifying its positive impact.

Mark: This resulted in record breaking adjusted EBITDA for a quarter coming in at $931 million and surpassing our guidance of $870 million by over $60 million, while increasing year over year by approximately 24%.

Additionally, in the wake of the destruction caused by both Hurricanes Milton and Helene, we contributed $80000 to the American Red Cross to help those in affected communities. In addition to the $30000 previously donated to the Red Cross to support Hurricane Aline relief efforts, we are matching up to 50000 more than public donations.

As a result, adjusted EPS was <unk> 99.

Exceeding guidance of <unk> 92 in the quarter and increasing 31% compared to the third quarter of 2023, despite a <unk> <unk> negative impact from FX in the quarter.

Towards Hurricane Milton relief efforts.

We have seen strong results through the first nine months of the year and along with improved expectations for the fourth quarter, we are increasing guidance for the full year, which I will discuss on slide 13.

Speaker Change: With that I'll hand, the call over to Mark to go over financial results in more detail Mark. Thank.

Looking first at net yields in the fourth quarter, we are expecting growth of six 9%.

Thank you Harry and good morning, everyone. My commentary today will focus on our third quarter 2024 financial results.

Which was approximately 190 basis points better than our implied guidance last quarter.

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

We are increasing guidance based on several factors.

Strong demand and pricing in the Caribbean, where we have 30% of our capacity in the quarter and continued strong onboard revenue trends with healthy pre booking for onboard amenities.

These are very strong results considering the impressive 8% net yield growth we achieved in Q4 of 2023.

Mark: Let's begin with our third quarter results, which are highlighted on slide 12 <unk>.

Starting with the top line results were very strong with net yield increasing 9%.

And the headwinds from the rerouted middle East sailings in 2024, which comprised approximately 10% of our deployment in the fourth quarter and was disproportionately weighted to our higher yielding brands.

<unk>, our guidance of six 4% by 260 basis points.

Moving to fourth quarter costs, we anticipate adjusted net cruise cost ex fuel per capacity day to increase by two 7% to $1 55 from $1 51 in the same period of last year and $1 above our previously implied guidance.

This slight increase is mainly due to the timing of certain costs from the third to the fourth quarter, which I mentioned earlier.

Mark: Excluding the six dollar impact of dry docks in the quarter, our unit cost ex fuel will be down approximately 1% year over year.

Reflecting this positive trends fourth quarter, adjusted EBITDA guidance is increasing to approximately $445 million.

These results.

<unk> are driving our adjusted net income to approximately $40 million and a return to positive adjusted EPS in the fourth quarter, which we expect to be approximately nine.

Considering a share count of $445 million, resulting in a positive adjusted EPS in all four quarters of the year.

I want to remind you that at these net income levels, we expect that none of our exchangeable notes are dilutive in the fourth quarter and there is no related interest expense add back.

Mark: Looking at full year net yield we are carrying forward. The Q3 beat and are increasing expectations for the fourth quarter and now expect full year net yield to grow to nine 4%, which was 120 basis points better than our previous guidance and represents a record for the <unk>.

<unk>.

For adjusted net cruise cost ex fuel and excluding the impact of our dry docks. Our guidance remains unchanged and is expected to remain flat year over year. Despite the impact of inflation and increased variable compensation due to the strong performance of the business.

As a result of the hard work and dedication of the entire organization. We continue to pace ahead of our target to deliver 100 million in savings in 2024.

On adjusted EBITDA full year guidance is increasing to approximately $2 45 billion and we have increased full year adjusted EPS guidance to approximately $1 65, which is a 136% increase over 2023 and mark significant progress toward our 2026.

Mark: And of course target of approximately $2 45.

Slide 14 demonstrates how the hard work put in by our teams across the organization has resulted in significant improvements from our initial guidance to our current expected results for the year.

Our full year net yield growth expectation has increased 400 basis points from five 4% to approximately nine 4%.

We have maintained our cost guidance for the full year, which is expected to be flat year over year, excluding the impact of Drydocks as a result, our adjusted EBITDA guidance has increased $225 million to approximately 242 5 billion and our adjusted EPS is <unk>.

Mark: Increasing 42 cents to approximately $1 65.

This performance stems from our ability to capitalize on strong demand, while executing on our cost and efficiency initiatives as.

As Harry previously mentioned 2024 is shaping up to be an extraordinary year.

Surpassing our ops optimistic expectations with record net yield growth.

Looking to next year based on current booking trends in our booked position. We continue to expect our full year 2025, net yield will grow consistent with our algorithm discussed at our Investor day.

Now a couple of notes for modeling net yield in the first quarter of 2025.

First while we have a similar number of total dry dock days as the first quarter in 2020 for.

Due to the mix of vessels and the number of lower yielding repositioning days the number of capacity. It is related to this is 50% higher year over year.

Second as you recall, we had a very strong net yield growth of 16% in the first quarter of 2020 for providing for a challenging comp in the quarter.

The result of these two factors is that we expect first quarter, 25% net yield growth to come in lower than the full year average.

Looking at slide 15, I want to dive a bit deeper into our margin enhancement initiatives.

As outlined during Investor day, a cornerstone of our strategy is to boost margins and reduce cost across the organization, while enhancing or maintaining the guest experience and product delivery.

Our our results speak for themselves and we expect to continue executing on this algorithm as we close out 2024.

We have been able to maintain our cost guidance throughout the year and we continue to expect that adjusted net cruise cost ex fuel per capacity day will essentially be flat year over year fully offsetting inflation as well as increased variable compensation due to strong performance in the year.

Our margin enhancement initiatives continue to yield significant results across the organization.

Mark: As previously mentioned, we are pacing ahead of our target to reach $100 million of savings in 2024, and we remain confident in our ability to achieve our $300 million of savings, which includes certain fuel initiatives through 2026.

As we look ahead to 2025 building on our strong performance in 'twenty four we remain committed to maintaining our unit costs below the rate of inflation, which supports our stated 2026 targets.

Mark: Moving onto slide 16, we can see how these cost savings initiatives have positively benefited our margins.

Mark: Last 12 months adjusted operational EBITA margin for the third quarter improved approximately 900 basis points to 34, 5%.

And we now expect the full year to come in at approximately 35, 3%.

Mark: Total dry dock days as the first quarter in 2024.

This continued progress sets us up well for our 2026 target and returning to margins of around 39%.

Due to the mix of vessels and the number of lower yielding repositioning days the number of capacity. It is related to this is 50% higher year over year.

Moving to slide 17, I'd like to highlight the composition of our debt portfolio and some key developments in the quarter.

Mark: Second as you recall, we had a very strong net yield growth of 16% in the first quarter of 2020 for providing for a challenging comp in the quarter.

While our leverage is still higher than we prefer it is crucial to note that 55% of our debt consist of public debt with the remaining 45% in the form of export credit agency or ECA financing, which is the primary source of financing for our ship orders.

Mark: The result of these two factors is that we expect first quarter 25, net yield growth to come in lower than the full year average.

ECA is essentially provide a guarantee by sovereign governments, such as Italy of the loans, we obtained in connection with the ship orders, resulting in financing rates that are much more favorable than that of which would be secured in the capital markets.

Mark: Looking at slide 15, I want to dive a bit a bit deeper into our margin enhancement initiatives.

As outlined during Investor day, a cornerstone of our strategy is to boost margins and reduce cost across the organization, while enhancing or maintaining the guest experience and product delivery.

Looking ahead, we anticipate a gradual shift to a higher proportion of ECA financing as new ships come online and our remaining expected debt matures <unk> is repaid.

Our <unk> our results speak for themselves and we expect to continue executing on this algorithm as we close out 2024.

In addition, additional additionally, we aimed to further derisk our balance sheet as we look at liability management opportunities going forward.

We believe our strategic approach will optimize our capital structure and debt profile and continue to reduce our cost of capital over time.

Mark: This quarter, we refinanced $315 million of notes due December 2024, with six in a quarter unsecured notes due 2030 with the remaining balance of $215 million to be paid at maturity.

Mark: Our margin enhancement initiatives continue to yield significant results across the organization.

On slide 18, you can see our upcoming maturities after we pay down the remaining balance of the $250 million of the 2024 notes in December we have two components of that to address on the horizon.

Mark: As we look ahead to 2025 building on our strong performance in 'twenty four we remain committed to maintaining our unit costs below the rate of inflation, which supports our stated 2026 targets.

First our 2025 exchangeable notes, which we plan to settle in shares.

And second our $1 $4 billion, five and seven eights notes due 2026, which will become current in the first quarter of 2025.

Additionally, we have $600 million of eight and three eights notes, which will become callable in early 2025 that we are evaluating as the rate environment continues to improve.

Mark: Turning to leverage on slide 19, we have continued to make progress on our net leverage which ended the quarter at 558 times, a 175 times reduction from 2023 year end.

Mark: Moving leverage into the fives is another important step and we continue reducing we continue to expect reducing leverage for the remainder of 2024 ending the year at around five four times, an important milestone in our path to achieving our 2026 target of mid fours.

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

Well, thank you Marc I want to close by reminding everyone of the holistic strategy and ambitious targets that we laid out at our Investor day, which are summarized on slide 20.

We are on track to end 2024 on an exceptionally strong note, marking our best year as a company since we returned to operations and an all time record adjusted net yield growth and record adjusted EBITDA with this performance and our high visibility into future sales, we remain confident in our strategy.

Looking into next year, we will continue to drive towards our Investor day guidance of low to mid single digit net yield growth and sub inflationary unit cost increases positioning us well to achieve our ambitious 2026 charting the course targets I want to express my deepest gratitude.

Our dedicated teams, both shoreside and shipboard their unwavering commitment and hard work have been instrumental to our success as we look to the future filled with optimism about the opportunities that lie ahead for Norwegian cruise line holdings.

Speaker Change: With that I'll hand, the call back to the operator to begin the question and answer portion of the call.

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Speaker Change: Once again Thats star one to be placed into question queue. I am. Please ask one question and one follow up that return to the queue.

Our first question is coming from James Hardiman from Citi. Your line is now live.

James Hardiman: Hey, good morning.

And thanks for taking my questions and congrats.

James Hardiman: On a really strong quarter here, particularly.

On the pricing front.

James Hardiman: Which is where I really want to focus my question. So.

If I'm doing the math right your per Dms, where call it 5% in the second quarter accelerated to 7% in the third quarter, which is obviously.

Exceptional.

Fourth quarter guidance, if I'm doing the math right gets us back to that call. It 5% range, which is really good considering mark.

Not long ago, we were having a conversation as to whether or not we would even be positive in the fourth quarter.

James Hardiman: But maybe walk us through some of the non comparable head winds in tailwind over the last couple of quarters I'm, just really trying to figure out on an apples to apples to apples basis or per Dms accelerating decelerating staying consistently strong how do I think through that.

Speaker Change: Well good morning James.

Speaker Change: By the way Nice report that you issued a couple of weeks ago. So listen I think as we look through to the fourth quarter in pricing.

I think you nailed it when we were talking about this two to three quarters ago, I think implied pricing was somewhere in the zone of <unk>.

Flat to down 1%, but there is a couple of important things too.

We remind ourselves that we're challenging or that we're going against.

Speaker Change: Recall Q4 of 2023, we did have pricing of 14%. So number one we are rolling over a strong comp and that translated to a yield of 8%, but we've also been able to continue to see strength in both our near term and Caribbean deployments. So we've continued to build upon that.

Speaker Change: And then I think what we also need to recall is that as a result of the mid east.

Disruptions late last year, we had an outsized proportion of our capacity that was originally scheduled for the middle East in Q4, which represented about 10% of our overall capacity and was disproportionately.

Due to our higher ending brands. So given the fact that we're we're now.

Speaker Change: <unk> pricing.

<unk>, 5% yield of almost 7% I think we feel this is a great great improvement and certainly somewhere where we can continue to build upon.

Got it thank you and then.

I wanted to talk a little bit about <unk>.

Speaker Change: Analyst day guidance and in particular that the delta between.

Yields and costs, which I found to be a pretty helpful sort of rubric.

As of the analyst day for this year that Delta there was maybe 4% not even.

Now stands at 6% rate, if youre going to grow yields.

Speaker Change: Nine nine and a half and cost three and a half call. It youre looking at a 6% Delta I guess is as we roll that forward to the next year.

Does that make it more difficult to see.

Significant deltas and in particular, your two and a half point.

It seems increasingly likely that youre going to do that over the three year period, but is that.

Speaker Change: Even even possible as we think about 2025.

Basically trying to figure out if there's been some pull forward of that.

Speaker Change: Because ultimately if you if you maintain that delta I think youre going to comfortably exceed that that.

That 245 earnings target for 2016.

So sure James This is Terry and I'll take that one.

Speaker Change: I think the rubric with as you mentioned just the way that easily see through how we can get to 2026, but what we're focused on is the actual 2026 numbers the operation a little bit of margin approaching 39% EPS of $2 45, mid <unk> leverage and a record.

ROIC in the neighborhood of 12% and I think seeing the performance this year.

Pricing of 14%. So number one we are rolling over a strong comp and that translated to a yield of 8%, but we've also been able to continue to see strength in both our near term and Caribbean deployments. So we've continued to build upon that and then I think what we also need to recall is that.

<unk> been six months since we introduced these targets that we obviously have a better visibility to 2025 as well just allows us to be more optimistic and more certain about our ability to obtain the numbers. So I hope that's a little bit less on any specific rubric get more on the four numbers that that we have given out there we are fully committed.

As a result of the mid east disruptions late last year, we had an outsized proportion of our capacity that was originally scheduled for the middle East in Q4, which represented about 10% of our overall capacity and was disproportionately weighted to our higher ending brands.

Speaker Change: Good.

And optimistic about obtaining these numbers in 2026.

And James I'll add to that one of the cornerstones of that is and we've reiterated it today is that we.

We intend to deliver sub inflationary unit cost growth.

As we've talked about in the past, we have a $300 million plus program in place.

Given the fact that we're we're now.

Showing pricing of around 5% yield of almost 7% I think we feel this is a great great improvement and certainly somewhere where we can continue to build upon.

Speaker Change: On pace with that in fact, we continue to be ahead of our pace with that so we increasingly increasingly feel more and more confidence around that so we're lining up the pieces, but as Harry said, we're focused on those four key metrics at the end of 2026.

Got it thank you and then.

I wanted to talk a little bit about the.

Got it really helpful. Thanks, Mark Thanks, Sir.

Analyst day guidance in particular that the delta between.

Thank you. Your next question today is coming from Brent <unk> from Barclays. Your line is now live.

Yields and costs, which I found to be a pretty helpful sort of rubric.

Good morning, everybody. Thanks for taking my question so.

Mark: As of the analyst day for this year that Delta there was maybe 4% not even it now stands at 6% rate if youre going to grow yields.

Question is on bookings color.

You guys gave some color I will appreciate it maybe we could go one layer deeper and talk about 25%.

Nine nine and a half and cost three and a half call. It youre looking at a 6% Delta I guess.

Booking strength and maybe you can talk about that through the lens of the different brands different geographies.

Mark: We roll that forward to the next year.

<unk> I know you said you are up in all four but.

Does that make it more difficult to see.

Any quarter standing out and then you sort of demographics in your database.

Mark: Significant deltas and in particular, your two and a half point.

Speaker Change: Do I think that would probably correlate with your brands, but any extra color would be helpful.

Mark: It seems increasingly likely that youre going to do that over the three year period, but use that.

Yeah. So.

Thanks, Pat for the for the question. This is Harry again, I'll tell you, we really fine tune our revenue management tools. So we managed to booking currently manage to maximize yield and I can't say that we see any discernible pattern across the brands or across geographies or.

Mark: Even even possible as we think about 2025.

Basically trying to figure out if there's been some pull forward of that.

Mark: Because ultimately if you if you maintain that delta I think youre going to comfortably exceed that that 245 earnings target for 2016.

Across to that matter the sourcing of guest that standout for the positive or negative broadly based everything is progressing exactly as we'd like it to be clearly we continue to see this robust close in demand, which allows us to sort of reconsider our booking curves over time, because obviously, we want to take advantage of it we said before.

Sure James This is Terry and I'll I'll take that one.

I think the rubric with as you mentioned just the way that easily see through how we can get to 2026, but what we're focused on is the actual 2026 numbers the operation a little bit of a margin approaching 39% EPS of $2 45, maybe more leverage and a record of ROIC in the neighborhood of 12%.

We don't focus on record book position, we focus on record yield I think the quote I made in last year's call because I can't take book position to the bank I can only take book yield to the bank.

Mark: And I think seeing the performance this year and then six months since we introduced these targets that we obviously now have better visibility to 2025 as well just allows us to be more optimistic and more certain about our ability to obtain the numbers. So I'll focus a little bit less on any specific rubric it more on the four numbers.

That's 100% of our focus so get back to your question, we see good solid in line with our expectations bookings both on and off on a loan in pricing factor for 2025 in line with the overall commentary we gave in setting our target and of course targets.

That that that we had given out there we are fully committed and optimistic about obtaining these numbers in 2026.

Moderate capacity growth moderate yield growth and inflationary costs, both as Mark mentioned with the goal of continuing to improve our margins drive strong cash flows and delever our balance sheet.

Mark: And James I'll add to that one of the cornerstones of that is that we've reiterated. It today is that we are we intend to deliver sub inflationary unit cost growth.

Speaker Change: Okay. That's great. Thank you for that Harry.

Speaker Change: And then the second question is on the booking curve.

You know as we've talked about in the past, we have a 300 million plus program in place.

<unk> said that you are in the.

Upper end of the optimal.

Mark: We are on pace with that in fact, we continue to be ahead of our pace with that so we increasingly increasingly feel more and more confidence around that so we're lining up the pieces, but as Harry said, we're focused on those four key metrics at the end of 2026.

Speaker Change: Part of the of your curve.

I'm just curious I'm curious if that optimal curve is that optimal point has evolved over time pre COVID-19 post COVID-19 and if you've had to recalibrate that downward at all just because you didn't want to leave money on the table with the strength of the demand you're seeing and sort of again, an upward pricing environment and travel any extra.

Got it really helpful. Thanks, Mark Thanks here.

Speaker Change: Thank you. Your next question today is coming from Brent months, who are from Barclays. Your line is now live.

Color on sort of how you're managing that and what optimal means sure. So I think I cover part of it and my last comment, but let me let me reiterate a react I think both the sub points.

Brent months: Good morning, everybody. Thanks for taking my question. So the first question is on bookings color.

You guys gave some color on it was it will appreciate it maybe if you could go one layer deeper and talk about 25 <unk>.

Overall coming out of Covid clearly there was some uncertainty and we werent looking to push the booking curve a little further in advance in order to take risk off the table. We didn't know what we didn't know clearly we have now seen a few quarters in a row of close.

Booking strength and maybe you can talk about that through the lens of the different brands the different geographies.

Orders I know you said you are up in all four but.

Brent months: Quarter standing out and then you sort of demographics in your database.

Speaker Change: Robust close in demand, which is a little different from what we saw last year, where the close in demand certainly wasn't as good as we were hoping for which has allowed us to be for the last few quarters as opposed to last year or is a little bit more challenging so that being said, 100% our booking curve thoughts evolve over time, but I also want to stress frac.

Mark: Do I think that would probably correlate with your brands, but any extra color would be helpful.

Speaker Change: Yeah. So.

Thanks, Pat for the effort for the question. This is Harry again, I'll tell you you know.

Mark: We really fine tune our revenue management tools. So we manage to a booking curve, we managed to maximize yield and I can't say that we see any discernible pattern across the brands or across geographies or.

Speaker Change: It's not one.

Speaker Change: Static numbering in Gary's by January it various by Brad.

For that matter the sourcing of guest that stand out to the positive or negative broadly based everything is progressing exactly as we'd like it to be you know clearly we continue to see this robust close in demand, which allows us to sort of reconsider our booking curves over time, because obviously, we wanted to take advantage of it we said before.

But I'd say for the record.

Speaker Change: And we have teams that look at this all day every day and taken to cap the latest information to set so the short answer to your question is yes. We are further booked ahead than we were pre COVID-19, but we don't think we need to have records. We don't think we need to continue to push the booking curve further, especially in line with its robust close in demand that we've been seeing the last few.

We don't focus on record book position, we focus on record yield I think the quote I made in last year's call because I can't take book position to the bank I can only take book yield to the bank and that's 100% of our focus so get back to your question, we see good solid inline with our expectation bookings both.

Speaker Change: Waters.

Thanks, everyone really nice quarter.

Speaker Change: Thank you Ron.

Thank you. Your next question today is coming from Steve Wisinski from Stifel. Your line is now live.

Speaker Change: Okay.

Hey, guys good morning.

Steve Wisinski: So I wanted to ask a bigger picture question, if I can start here.

Mark: On the loan and pricing factor for 2025 in line with the overall commentary with gave in setting our chartering in of course targets.

Speaker Change: If we think about that.

Speaker Change: Cruise yields historically.

<unk> grown call it in that low single digit range.

Moderate capacity growth moderate yield growth clubs inflationary cost growth as Mark mentioned with the <unk>.

Based on some of the changes that you guys have talked about and that could be.

Goal of continuing to improve our margin drive strong cash flows and delever our balance sheet.

Speaker Change: Cabin design shorter itineraries enhanced revenue management, all of that kind of stuff.

Is it fair to think that there's a good chance.

Okay. That's great. Thank you for that Harry.

Then the second question is on the booking curve.

Speaker Change: You guys and probably the industry as well could start to see yield growth.

<unk> said that you are in the.

Mark: Upper end of the optimal.

Well in advance of that low single digit historical rate.

Part of the of your curve.

Mark: Just curious curious if that optimal curve is that optimal point has evolved over time.

So clearly it is our goal to grow yields as fast as we can but I think the at the algorithm that we've discussed many times on the low to mid single yield growth with low inflationary cost growth et cetera.

Pre COVID-19 versus post Covid, and if you've had to recalibrate that downward at all just because you didn't want to leave money on the table with the strength of the demand you're seeing and sort of again, an upward pricing environment and travel.

Speaker Change: What we're sticking to the timing obviously, we do everything in our power seemed to have yield go up as much as possible, but I think what we're prepared to look based on what we see based on our crystal ball for lack of a better term is continue with that same algorithm. We've been talking about for a while now 24 with a little bit of an unusual year in a positive way and work.

Speaker Change: The extra color on sort of how you are managing that and what optimal means sure. So I think I cover part of it and my last comment, but let me let me reiterate a reactor I think both the sub points I think overall coming out of Covid clearly there was some uncertainty and we weren't looking to push the booking curve a little further in advance.

For it and we are thrilled with our results, but I think longer term, that's what we stick with Lotus.

In order to take risk off the table, we didn't know what we didn't know clearly we have now seen a few quarters in a row of close.

Speaker Change: Moderate capacity growth low to mid single digit yield growth low inflationary cost growth.

Speaker Change: Okay got you and then second question is going to go to the cost side of the equation and market. Obviously, you kind of talked about that $300 million in cost savings between now and 2026 and in your prepared remarks, you noted that youre going to exceed kind of that third goal of $100 million. So far this year. So.

Robust close to demand, which is a little different from what we saw last year, where the close in demand certainly wasn't as good as we were hoping for which has allowed us to deep for the last few quarters as opposed to last year was a little bit more challenging so that being said, 100% our booking curve thoughts evolve over time, but I also want to stress Fran.

Speaker Change: As you kind of sit there and kind of continue to go through your cost structure based on what you have.

Mark: It's not one.

Mark: Static number and it varies by January it various by Brad I mean, you know this but I would say for the record and we have teams that look at this all day everyday and taken to cap the latest information to set it. So the short answer to your question is yes. We are further booked ahead than we were pre COVID-19, but we don't think we need to have records. We don't think we need to.

Speaker Change: Based on what you guys have identified already.

I'm going to ask this in a way you might give me an answer but.

Is it fair to think when it's all said and done that $300 million might end up being.

Low or conservative.

Yes, good morning, Steve So I certainly wouldn't want to get that far ahead of ourselves in terms of being lower conservative what I will tell you is as we have done a very good job at identifying.

Can you to push the booking curve further, especially in line with this robust close in demand that we've been seeing the last few quarters.

Speaker Change: Thanks, everyone really nice quarter.

Speaker Change: Thank you ran.

The goals that we have set out.

Thank you and next question today is coming from Steve <unk> from Stifel. Your line is now live.

And further what we've said is this is not a onetime exercise. This is a multiyear journey. So we are focused on looking at every process in the business from end to end not just looking for any low hanging fruit all while protecting.

Steve: Hey, guys good morning.

So I wanted to ask a bigger picture question, if I can start here and if we think about the cruise.

Speaker Change: Cruise yields historically.

The guest experience and the product delivery.

<unk> grown call it in that low single digit range.

So look we're six what are we six seven months into our stated goals and targets, we're feeling increasingly confident on our path toward that and hopefully.

Based on some of the changes that you guys have talked about and that could be.

<unk> design shorter itineraries enhanced revenue management skills, all of that kind of stuff.

Early some some time next year, we can give further progress on where we stand if it's large or conservative but.

Is it fair to think that there's a good chance.

Mark: No.

And probably the industry as well could start to see yield growth.

We're feeling good with where we are today.

Okay got you thanks, guys appreciate it.

Mark: Well in advance of that low single digit historical rate.

Speaker Change: Thank you next question today is coming from Matthew Boss from Jpmorgan. Your line is now live.

So clearly see it it is our goal to grow yield as fast as we can but I think the the algorithm that we've discussed many times the low to mid single yield growth with low inflationary cost growth et cetera is what we're sticking to the timing obviously, we do everything in our power seemed to have yield go up as much as <unk>.

Speaker Change: Thanks, and congrats on a great quarter. Thank.

Speaker Change: Thank you Matthew.

So Harry maybe could you elaborate on the strong momentum that you cited any notable outliers by brand or region and any signs at all of softening as youre looking into 'twenty five.

Mark: Possible, but I think what we're prepared to look based on what we see based on our Crystal ball for lack of a better term is continue with that same algorithm. We've been talking about for a while now 24 with a little bit of an unusual year in a positive way and we're thrilled for it and we are thrilled with our results, but I think longer term, that's what we stick with Lotus.

Speaker Change: Yeah, Matt I think I commented a little earlier on this so I'll keep my comments on the short.

Really it's across the board, we're happy with all three of our brands, we're happy with all geographies, where we're happy with all guest sourcing markets.

It's hard it's hard to see any cracks I don't want to get ahead of our skis as I can.

Moderate capacity growth low to mid single digit yield growth low inflationary cost growth.

Mentioned before we're focused on this low to mid single digit yield growth. So my commentary is reflective of those numbers I don't want to need irrationally exuberant about 2025, but we are absolutely happy with what we're seeing today.

Okay got you and then second question is going to go to the cost side of equation in Marquis obviously, you've kind of talked about that $300 million in cost savings between now and 2026 in your prepared remarks, you noted that youre going to exceed kind of that third goal of $100 million. So far this year. So.

Speaker Change: Okay.

Great and then Mark maybe just to circle back to your 250 basis point yield to cost target spreads maybe.

Mark: As you kind of sit there and kind of continue to go through your cost structure based on what you have.

Maybe how best to think about the linearity of costs next year, if yields were to come in above your initial plan.

Based on what you guys have identified already.

I'm going to ask this in a way you might give me an answer but is it is it fair to think when it's all said and done that's 300 million might end up being.

Yes, good morning, Matt. So I think we've always said generally speaking when we think about our $300 million plan.

Generally we laid it out is roughly about $100 million per year right that may that may vary up or down marginally, but I think something that's important to note and we've probably been pretty public about saying. This is that if we're able to exceed that low to mid single digit yield growth in a year that does not.

Mark: Low or conservative.

Yeah. Good morning, Steve So I, certainly wouldn't want to get that far ahead of ourselves in terms of being lower conservative what I will tell you is as we have done a very good job at identifying.

The goals that we have set out.

Not necessarily translate that we are going to go and spend more money, we are focusing on right sizing and leveraging the scale of this business and part of that includes right sizing our unit cost base. So we're focused on that but that does not have any direct correlation in terms of outperformance on yield.

The guest experience and the product delivery.

Speaker Change: I mean, it's really at that point that Mark makes us really important. These are independent factors where were targeting a low to mid single digit yield growth, we're targeting below inflationary cost growth.

So look we're six what are we six seven months into our stated goals and targets, we're feeling increasingly confident on our path toward that and hopefully you know.

Speaker Change: Yes.

Speaker Change: Better or worse seeing how the year shapes up we will continue to target below inflationary cost growth and we've seen a culture change in the company towards this balance of return on investment and return on experience, which we talked about at Investor Day, we are super focused and passionate.

Early some some time next year, we can give further progress on where we stand if it's large or conservative but.

Mark: We're feeling good with where we are today.

Okay got you thanks, guys appreciate it.

Thank you next question today is coming from Matthew Boss from Jpmorgan. Your line is now live.

Speaker Change: On delivering a great experience, but on things that guests truly care about and things that generate positive ROI for the company.

Matthew Boss: Thanks, and congrats on a great quarter I'm.

Speaker Change: Thank you Matthew.

So Harry maybe could you elaborate on the strong momentum that you cited any notable outliers by brand or region and any signs at all a softening as you look into <unk> into 'twenty five.

Speaker Change: Great color best of luck.

Thank you.

Thank you next question is coming from Cotter Cunningham familiar research. Your line is now live.

Everyone. Thank you I'm going to ask.

Yes, Matthew I think I commented a little earlier on this so I'll keep my comments on the short.

Cotter Cunningham: The yield question a different way maybe so.

When you say low to moderate yield growth does that is that should that be viewed as kind of your ore pricing outcome. The reason why I ask is that every cruise line has talked about how they left money on the table. So I missed that.

Harry: Really it's across the board, we're happy with all three of our brands, we're happy with all geographies, where we're happy with all guest sourcing markets.

I, it's hard it's hard to see any cracks I don't want to get ahead of ourselves.

The question here is just more around like what's the swing opportunity as you get better at yield managing now that you have bookings back to historical levels.

Harry: As I mentioned before we're focused on this low to mid single digit yield growth. So my commentary is reflective of those numbers I don't want any irrationally.

Cotter Cunningham: So.

Zubrin issue until about 2025, but we are absolutely happy with what we're seeing today.

I think they were like two or three sub questions. There so I'm going to try to do my best to remember.

Speaker Change: Yes, I think most of the yield change that youre going to see in 2025, it's going to be on pricing I don't expect any material change in occupancy and of course, we are not giving <unk> guidance, yet, but I think essentially we are fully sold on a cabinet basis. So I don't see that swinging much or if it does swing it's based on the number.

Speaker Change: Great and then Mark maybe just to circle back to your 250 basis point yield to cost target spreads.

Children that we take primarily on the NCL, Brad which doesn't meaningfully contributed to.

To revenue from a big picture perspective.

The second part of your question. So on remind me was.

Speaker Change: Ah.

Swing opportunities get better revenue metric.

Speaker Change: Everything is.

Speaker Change: How do I say this.

Speaker Change: Theres no evolutionary changes to our revenue management, that's coming up we just do our best day in and day out to get slightly better at what we do which is part of what fields to our stated algorithm of low to mid single digit yield growth keeping in mind that we do continue to increase the capacity.

The company by between 46% a year of new ships come online so.

I don't see huge opportunities here, obviously every day, we work and our goal is to maximize yield I think there's another component which is onboard revenue.

It doesn't get talked much about because revenue management is primarily a tool that talks to ticket price, but we are trying or I should say we are in the opening phases.

Doing better revenue management, our encore product as well and I think some of the close in strength that youre seeing in Q3 Q4, although it's very hard to parse through the financial statements because of the way we bundle our products, but some of the strength that we're seeing in Q3 and Q4 is also not only but it's also around our better revenue management.

We care about and things that generate positive ROI for the company.

Great color best of luck.

Thank you.

Speaker Change: Thank you next question is coming from Cotter Cunningham familiar research your line is that right.

So to speak on the onboard revenue.

<unk> guests more opportunities that are marketing.

Hi, everyone. Thank you I'm going to ask Oh.

Better experiences to purchase on board, which is generating revenue for us as well more pre sales.

The yield question a different way maybe so.

When you say low to moderate yield growth does that is that should that be viewed as kind of your core pricing outcome, but the reason why I ask is that every cruise line has talked about how they left money on the table. So I missed that.

Thank you Mark.

Cotter Cunningham: Actually.

Cotter Cunningham: Doug.

And my follow up question, what percentage of your customers today are doing.

Preboard pre booked onboard spend and then what's the freshwater.

The question here is just more around like what's the swing opportunity as you get better at yield managing now that you have bookings back to historical levels. Thank you.

All of them buy something.

In front of in front of the Chris If you I mean, if you think about the robust things that we offer between drinks packages dining packages Spa short tours and the list goes on and on I think those are mostly the big ones nearly every customer by something before they get on the ship.

Harry: So.

Speaker Change: I think they were like two or three sub questions. There. So I'm going to try to do my best to remember I've been an answer to that yes, I think both of the yield change that youre going to see in 2025, it's going to be on pricing I don't expect any material change in occupancy of course, we're not giving twenty-five guidance yet, but I think essentially we are fully sold on a cabinet.

Okay. Thank you.

Speaker Change: Thank you. Your next question is coming from Vince <unk> from Cleveland Research Company. Your line is now live.

Basis, So I don't see that swinging much or if it does swing it's based on the number of children that we'd take primarily on the NCL, Brad which doesn't meaningfully contribute to our revenue from a big picture perspective.

As you look out over the next 12 to 24 months as part of your long term plan. How are you thinking about the trend line in occupancy I know you I think are a couple of points shy of where it was historically and some of that might be mix, but as youre, adding new Norwegian hardware and 25 and 26.

The second part of your question someone remind me was.

Speaker Change: Swing opportunities to get better, but I think that trend.

Harry: Everything is.

How do I say this you know theres no evolutionary changes to our revenue management, that's coming up we just do our best day in and day out to get slightly better what I, what we do which is part of what builds to our stated algorithm of low to mid single digit Yeovil keeping in mind that we do continue.

Cotter Cunningham: <unk> do you expect occupancy to be a tailwind to yield growth in the next couple of years.

I think I commented a little bit about occupancy in an earlier question. Our ships are essentially full from a cabin perspective. So the changes that we may see an occupancy either positive or negative would be mostly around <unk>.

Harry: To increase the capacity of the company by between 46% a year as new ships come online. So I I don't see huge opportunities here. Obviously every day, we work and our goal is to maximize yield I think there's another component which is onboard revenue.

Cotter Cunningham: Third and fourth in the cabin, primarily children on the NCL brand, which don't really generate much revenue for us. So I don't see occupancy being a tailwind or headwind from that perspective going forward I expect it to remain relatively stable given our employment at least through 2025.

<unk> doesn't shift remember, we have talked about a slightly larger reliance on the <unk> going forward, but we won't really see that until late 'twenty five but primarily for the 2006 results are somewhat based on the new <unk> that we're building at.

At Great Stirrup, Cay, which will allow us to double the number of passengers we bring there in 2006 compared to two.

To more recent years, but I don't really see much happening on occupancy in 'twenty five.

Speaker Change: Great. Thanks, and then another on costs I think you called out <unk>, having some headwinds.

Dry dock and repositioning days.

Which I think also maybe hinders yield a bit but when you think about the full year impact on cost of Drydocks. This year I believe its about three points. When you look into next year as dry dock headwind neutral tailwind to cost growth is this the new kind of baseline to utilize.

As I said, yes.

Yes, good morning, Vince, Yes, so youre absolutely right on an annual basis, our dry docks year over year are relatively the same.

So this is generally our consistent run rate post COVID-19.

Why we called out Q1 is because there is some timing issues within the year, where even though we only have six more drydock days than we did in the prior year. It actually represents 50% more capacity days, so thats not necessarily a call out in terms of cost it's more of the impact.

It will have on our overall comps and the yields for the first quarter, but again that evens itself out over the course of the year and that was why we had called that out in our prepared remarks.

Speaker Change: Thank you.

Speaker Change: Do you expect occupancy to be a tailwind to yield growth and in the next couple of years.

Thank you next question today is coming from Robin Farley from UBS. Your line is now live.

I think I commented a little bit about occupancy and in an earlier question. Our ships are essentially full from a cabin perspective. So the changes that we may see an occupancy either positive or negative would be mostly around <unk>.

Robin Farley: Great. Thank you.

Go back and clarify Harry when you were talking about the long term goals that your focus is really on the number in 2026.

Were you, suggesting that not every year wouldn't necessarily have to do.

Third and fourth in the cabin, primarily children on the NCL brand, which don't really generate much revenue for us. So I don't see occupancy being a tailwind or headwind from that perspective going forward I expect it to remain relatively stable given unemployment at least through 2025, Florida.

Speaker Change: You're going to be $2 five points higher than expense growth. So in other words. This year was a lot better than that piece of the algorithm. So next year it could be less than that $2 five points.

When you were sort of communicated when you said your focus is on the absolute number in 2026, even if not every year looks the same to get there is that how we should interpret that comment.

<unk> doesn't shift remember, we have talked about a slightly larger relies on the Caribbean going forward, but we won't really see that until late 'twenty five but primarily for the 2006 results are somewhat based on the new people that we're building at.

Speaker Change: I think robin that Thats broadly correct no to be clear, we're not providing guidance for 2025 today, so I'm not going to comment on a specific number but we're focused on on these long term targets of 26 not on a specific spread in 25 or 26 individually of course, we don't expect the results to vary that much in these two year period.

At Great Stirrup, Cay, which will allow us to double the number of passengers we bring there in 2006 compared to two.

More recent years, but I don't really see much happening in occupancy in 'twenty five.

Speaker Change: Just on the visibility we have today.

Okay, great. Thank you and then.

Speaker Change: Great. Thanks, and then another on costs I think you called out <unk>, having some headwinds.

Just also thinking about 2025, and you've mentioned expenses go ahead sub inflation.

Dry dock and repositioning days.

Well, what do you broadly think of as inflation sort of today when you when you.

Which I think also maybe hinders yield a bit but when you think about the full year impact on costs of dry docks. This year I believe its about three points. When you look into next year as dry dock headwind neutral tailwind to cost growth is this the new kind of baseline to utilize.

Speaker Change: Thanks.

Yes, hi, Robert So broadly speaking when we look out inflation, obviously is a bit volatile but.

Something to keep in mind, it's not just U S inflation, where worldwide. Operator, so we look at global inflation. So we generally are thinking somewhere around the 3% zone based on what we see today now obviously that may change up or down as we go through time, but generally speaking that's that's.

There's a head.

Yes, good morning, Vince Yeah, So you're absolutely right on an annual basis, our dry docks year over year are relatively the same.

Speaker Change: So this is generally our consistent run rate post COVID-19.

Speaker Change: Typically what we would associate.

Speaker Change: As part of our longer term plan.

Speaker Change: Thank you Robin.

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

Speaker Change: Certainly our final question today is coming from Patrick Scholes from <unk> Securities. Your line is now live.

Great. Thank you.

You mentioned just very briefly during this call about.

What's happening at Great Stirrup Cay can you give us just a little more color, where you stand with progress any further thoughts on the specific timing and anything you can share above and beyond.

Speaker Change: What may be next.

Peter: Peter Thank you.

Peter: Sure happy to give you color on progress and status. So we announced that we were putting the new beer. There earlier this year I didn't personally at great Stirrup Cay, a few times to see how things are going and we feel really comfortable that we will remain on schedule to open the pier in.

And some time in Q4.

The team is really focused on doing an incredible job of building it.

We're really happy to get that period, because as I mentioned earlier in the call. We believe it will allow us to utilize the island more specifically.

Peter: The winter was a little bit more <unk> in that region and plan to double the guests that visit that island, starting in 2006 compared to where we are.

Peter: Today, which should generate higher guest satisfaction higher revenue higher repeat rates you know it becomes a virtuous.

Cycle, so to speak from that perspective listen past that we think the island's Greg we have a great private age we have.

Speaker Change: <unk>.

Speaker Change: Great.

Speaker Change: What it's called I should better silver co. Thank you.

Which is a great <unk>.

But even like experience on the island as well Zip lines.

Speaker Change: Jetskis lots of interesting things for people to do but I'll tell you like with every asset in our portfolio. We are constantly reviewing this balance of ROI and ROE ex to see what we can do to get guests a better experience that will drive ROI.

Have nothing to announce today, but we continue that analysis and that view towards the future.

Speaker Change: Okay. Thank you.

Speaker Change: Okay I think since your question was short James Lewis, Kevin Excuse me, we will have time for one more question certainly our next question is coming from Ben Chaiken from Mizuho Securities. Your line is now live.

Ben Chaiken: Thanks, just one quick one at the Investor Day, you flushed out a number of examples on the cost side would love any update here if theres anything to share then specific areas and 25% that you see as opportunities.

Typically what we would.

Associate as part of our longer term plan.

Yes. Good morning, So look it's very consistent with what we called out there.

So thank you Robin and Kevin I think we have time for one more question.

It's around looking at all of how we deliver our product from.

Certainly our final question today is coming from Patrick <unk> from <unk> Securities. Your line is now live.

Ben Chaiken: Start to finish.

Again on the basis of we do not want to impact the product delivery or the guest experience. So we are looking at every facet of the business and more importantly, we're focused on things that the guests either don't value or that are invisible to the guest so that we can ultimately provide more value to the guest so nothing.

Patrick: Great. Thank you.

Terry you mentioned just very briefly during this call about what's happening at great Stirrup Cay, you give us just a little more color, where you stand with progress any further thoughts on specific timing and anything you can share above and beyond.

Nothing significant in terms of the overall categories to share just other than we are looking at everything whether it's on our ship side operations or at our shore side operations in a very methodical and disciplined manner.

Speaker Change: What may be next.

After the peer thank you.

Sure happy to give you.

Color on progress and status. So we announced that we were putting the new P. There earlier this year I didn't personally a great stirrup Cay, a few times to see how things are going and we feel really comfortable that we will remain on schedule to open the pier in in sometime in Q4.

And then if I can squeeze one just very quick one and I know you gave us the year over year impact from dry docks.

<unk> 24 versus 23, but any chance you can just high level give us some color on the distribution of dry docks in the year on an absolute basis, meaning one eight versus two H.

The team is really focused and doing an incredible job of building. It you know, we're really happy to get that peer in because as I mentioned earlier in the call. We believe it will allow us to utilize the <unk> more specifically.

Yes, I think I think that we cannot probably follow up with that post call. We can certainly give you some color on that.

So once again I want to thank everyone for joining us today.

The winter when it's a little bit more weight in that region and plan to double the guests that visit that islands, starting in 2006 compared to where we are.

We were very pleased with our report and hopefully you are as well will be around today to answer any questions. You may have thank you all happy Halloween happy Diwali and have a wonderful day bye everyone.

Today, which should generate higher guest satisfaction higher revenue higher repeat rates you know it becomes a virtuous.

Cycles, so to speak from that perspective listen past that we think the island's Greg we have a great private beach, we have a.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.

Speaker Change: Great.

What it's called I should better silver co. Thank you.

Which is a great a private even like experience on the island as well Zip lines.

Speaker Change: Yeah.

Speaker Change: Okay.

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