Q4 2024 Viking Holdings Ltd Earnings Call
Paul: Good morning, my name is Paul and I will be your conference operator today. At this time, I would like to welcome everyone to Vikings, fourth quarter and full year 2024 earnings conference call.
Paul: 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.
Paul: This 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.
Paul: The forward looking statements are as of today, and we assume no obligation to update or supplement these statements.
Paul: We may also refer to certain non ifr S financial metrics, which are reconciled and described in our press release posted on our Investor Relations website at IR.
Paul: Viking Dot com.
Speaker Change: <unk> will provide a strategic overview of the company a recap of our fourth quarter and full year results and an update of the current booking environment.
Paul: We will then open the call for your questions.
Paul: To supplement todays call. We have prepared an earnings presentation that is also available on our Investor Relations website.
Paul: With that I'm pleased to turn the call over to tour.
tour: Thank you Carla.
tour: Good morning, everyone and thank you for joining us today.
tour: In our previous earnings calls we have shared at Viking.
tour: Certain unique points of differentiation, which had been behind our success.
tour: You can see these on slide three.
tour: Our 'twenty to 'twenty four performance was quite remarkable and I believe that their flex what makes us different.
tour: The focus on our core guest demographic the power of our one breaking ground the value of our well defined product and the efficiency and appeal of our fleets.
tour: While it is not in the Viking spirit to be boastful.
tour: I do think that we have much to be proud of and I will highlight a few metrics of this great year.
tour: As you can see on slide four.
tour: Our results were driven by a six 3% growth in capacity and a very healthy demand from our customers.
tour: Which was reflected in a net yield increase of seven 4%.
tour: This led to a 14% year over year increase in our adjusted gross margin to more than $3 $5 billion.
This strong topline results, coupled with our disciplined approach to expenses and focus on operational efficiency.
tour: It will us to achieve an adjusted EBITA of $1 3 billion up $23 seven present from the year before.
tour: We also managed our balance sheet, well ending the year with a 40.8% return on invested capital.
tour: And the net leverage of two four times.
tour: We also finished the year with record guest satisfaction scores and great operational metrics.
tour: On slide five we are highlighting our.
tour: Ah repeat guests rate of 53%.
tour: Our direct bookings being north of 50%.
tour: And our leading market share position.
tour: 82% for rivers and 24% for our oceans segment.
tour: We take great pride in these results as it demonstrates our ability to grow our capacity while at the same time improve margins and continue to deliver an exceptional product.
tour: Moreover, during 2024.
tour: Also accomplished other important milestones.
tour: If we look at the next slide number six.
tour: On May one we became a publicly traded company on the New York Stock Exchange.
tour: This was a historic moment, which I considered a natural step to solidify our position as a leader in the travel industry.
tour: To recap this achievement.
tour: Received the 'twenty 'twenty four North America IPO of the year Award from the International financing to review magazine.
tour: Overall, I believe that our successful IPO is a testament to the strength of our business model.
tour: Our great execution.
tour: The IPO award was the latest in a series of accolades we receive during 2024.
tour: We were also ranked number one by calling the Nast traveler across the rivers oceans on expeditions for the second consecutive year.
tour: We were recognized as a world best buy a travel and leisure.
tour: Our commitment to providing a great customer experience continues to be recognized year after year, which is a rare feat for a travel company.
tour: Agenda and live proud of these achievements.
tour: In 'twenty 'twenty four we also celebrated a historic return to China.
tour: Offering our English speaking guest high tender is along the Chinese coast.
tour: We really enjoy welcoming people do this phenomenal parts of the world.
tour: And we also made some scientific discoveries this year.
tour: Well no the most noteworthy occurred in Antarctica.
tour: Our team on the Viking campus discovered a new culinary penguins not previously known designs.
I Dare say makers real explorers.
tour: With that I will turn to lay out to discuss our financials.
tour: But before I do I want to congratulate her on the appointment as president.
Speaker Change: Leah. Thank you very much for your dedication to Viking over the past 20 years and for your leadership as we embark on this next chapter.
Speaker Change: Thank you tore and good morning, everyone. We are pleased to have reported a very strong fourth quarter and with this great full year results. These are on slide eight on a consolidated basis and for the fourth quarter total revenue increased 25.
Speaker Change: Year over year to almost one $4 billion. This was mainly driven by higher capacity and higher revenue per PCB.
Speaker Change: Adjusted gross margin increased 19, 5% year over year to almost $870 million, resulting in a net yield of $507 seven 4% higher in the fourth quarter of 2023.
Speaker Change: The vessel expenses, excluding fuel per capacity PCB increased 0.4% this quarter compared to the same time last year.
Speaker Change: I will note that this quarter capacity increased 10, 9% compared to last year, which brought down some fixed costs when calculated on a dollar per capacity PCB basis, adjusted EBITDA for the fourth quarter totaled $306 million improving $87 million.
Speaker Change: Or 39, 7% higher than the fourth quarter of 2023.
Speaker Change: Net income for the fourth quarter of 2024 was $104 million compared to a loss of $594 million for the same period in 2023.
Speaker Change: The net income for the fourth quarter of 2024 includes a loss of $96 million from the revaluation of warrants issued by the company due to stock price appreciation.
Speaker Change: In comparison, the fourth quarter of 2023 includes a loss of $602 million from the impact of the series C preferred shares and an additional $37 million loss due to the revaluation of warrants.
Speaker Change: These warrants were fully exercised in the fourth quarter and as a result, the fourth quarter of 2024 is the final quarter that this will be impacted by the warrant revaluation.
Speaker Change: Adjusted net income attributable to Viking Holdings limited for the fourth quarter of 2024 with $200 million and adjusted.
Speaker Change: EPS was <unk> 45.
Speaker Change: Adjusted EPS for full year 2024 was $1.86.
Speaker Change: Now I will briefly discuss our two reportable segments River and Ocean.
Speaker Change: These are on slide nine.
Speaker Change: Unless noted I will be referring to metrics for the full year ended December 31.
Speaker Change: For the reverse segment, our capacity Pcbs increased three 7% year over year.
Speaker Change: This was primarily due to the operation of ships delivered in 2023 for the entire 2024 season ships delivered in 2024 for part of the 2024 season, and addition of winter sailings in Europe.
Speaker Change: Adjusted gross margin grew 15, 8% year over year to one 6 billion and net yield was $533 up 11, 7% year over year, driven by strong demand for our European itineraries occupancy was 95, 4% for the.
Speaker Change: Year.
For Ocean capacity Pcbs increased six 2% year over year, driven by the delivery of the Viking Saturn in April of 2023, and the additions of the Viking <unk> and the Viking Vela in September and December of 2024.
Speaker Change: <unk> for the period was 93, 9% adjust.
Speaker Change: Adjusted gross margin increased 12, 1% year over year to one 5 billion and net yield was $522 up 5% compared to the previous year now lets move to the balance sheet on slide 10, you can see that as of December 31, two.
Speaker Change: <unk> thousand 24, we had total cash and cash equivalents of $2 5 billion and an undrawn revolver of $375 million.
Speaker Change: Our net debt was $3 2 billion and we finished the year with a net leverage ratio of two four times.
Speaker Change: We are very pleased to share that since our last call Moodys upgraded the corporate rating of Viking cruises limited to a rating of <unk> III from day one.
Speaker Change: Aligned with S&P's and reflecting the continuous improvement in the company's credit metrics as of December 31, deferred revenue was $4 $1 billion.
Speaker Change: Also on Slide 10, 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: With this I would like to confirm our debt amortization for 2025 as of December 31, 2020 for the scheduled principle payments were $490 million.
Speaker Change: From a committed capital expenditure perspective for the full year 2025. The total expected committed ship capex is about $870 million or $450 million net of financing.
Speaker Change: The main drivers of the increase in total committed ship Capex are the new river shipbuilding contracts for long ships to be delivered in 2027 and 2020.
Speaker Change: With that I'll turn it back to <unk> to review, our business outlook, including our booking curves.
Speaker Change: Thanks Leo.
Speaker Change: If we move to slide 12, you will see that 20 to 25, which safely after a great year.
Speaker Change: Also demand for our core products remained strong.
Speaker Change: As of February 23rd we were already 88% booked for the year.
Speaker Change: $5 $3 billion of advanced bookings these are 26% higher than the 'twenty to 'twenty four season at the same point of time.
Speaker Change: As you can see the figures look very good.
Speaker Change: Notably during 2025, we will grow our core capacity by 12% for.
Speaker Change: With the delivery of 10 River ships and one ocean ship.
Speaker Change: As you will see we're committed to a leadership position in the river and the delivery of 10 ships across multiple regions and one year speaks to that.
Speaker Change: Moreover, this past month, we also signed options for an additional eight through vessels.
Lee: But Lee I will get into these details later.
Lee: As our capacity grows.
Lee: Find it relevant to talk about our crew in our fleet.
First I will note that we have fantastic crew.
Lee: Earned as more awards than any other travel company on the reverse of erosions.
Lee: Most importantly, our crews are significant reason that we'll receive high satisfaction ratings for our guests.
Lee: As you can tell we believe that our crew is essential to our success.
Lee: On the reverse we also have a strong advantage in owning or otherwise controlling a great number of documents sessions.
Lee: We also believe that our extensive in house operations are a critical advantage in our ability to deliver a great product.
Lee: And lastly, we believe that the unique design of our ships.
Lee: Small and almost identical.
Lee: Set us apart and serve as an important value driver.
Lee: If we now move to slide 13.
Lee: You will see the main areas, where this approach provides benefits.
Lee: From a marketing and sales perspective.
Lee: All ships within each product are almost identical.
Lee: This simplifies the sales and marketing process as guests choose a tender is rather than specific ships or considering their age.
Lee: This strategy also allows us to generate higher and more consistent yields across the entire fleet, regardless our ship page.
Lee: Regarding deployment operations.
Lee: Our long booking window allows us to position our fleet strategically to meet guest demand.
Lee: Since our ships are almost identical beacon optimize revenue and net yield by allocating them where demand is highest.
Lee: <unk> fleet design also streamlines operations onboard for.
Lee: For example crew can move across strips with minimal retraining and maintenance and repairs are more efficient.
Lee: Additionally from a multiple perspective.
Lee: The river long ship design and to reduce disruptions due to lower high water since ships can be swap when mineral guest empire.
Lee: And lastly, we also gain efficiencies in shipbuilding.
Lee: By designing almost identical ships, we can streamline their shipbuilding grosses.
Lee: Also our ship construction timeline has accelerated.
Lee: To reduce design phase.
Lee: Now another benefit of our fleet is its age.
Lee: As shown on slides 14, and 15, we have one of the youngest fleets in the industry, which offer a significant advantage.
Lee: To start it allows for more efficient operations, including technological advances that result in lower fuel consumption.
Lee: Our young fleet also requires lower maintenance, which allows us to drive most of our capital expenditures to fleet expansion and the launch of new product offerings.
Lee: This ultimately means that more of our capital is invested in initiatives designed to grow our revenue and cash flows.
Lee: And a young fleet also has stayed where they are efficient design with results and no wasted space or extra weight on board, while maximizing the comfort for I guess.
Lee: You can see this in the case of river long ships.
Lee: As example, the square Bowl allows more usable space. The same is the case with three food decks and a prompt.
Lee: Which enable us commented more guests and therefore improve the profitability of the ships.
Most of the vessel speeds are only two decks and trumped. This means advice and can deliver a superior product to our guests while generating more revenue.
Lee: In the case of our Ocean ships.
Lee: They were designed with a focus on our core demographics on their interests.
Lee: Yeah.
Lee: We use the space typically neither for casinos in children's entertainment.
Lee: <unk> commented state rooms, and a broader range of onboard them and just to improve the onboarding experience.
Lee: This layout allows us to operate with optimal guests to crew ratio.
Lee: While maintaining our high level of service.
Lee: As you will see all these are very relevant attributes that further enhance our margins and profitability.
Lee: Now I will stress that while the ships are efficient and beautiful.
Lee: It is the staff that sets us apart.
Speaker Change: That is now review the booking curves, which are all as of February 23 2025.
Lee: On the next slide.
Lee: You will see our curves for ocean produces that is slide 16.
Lee: The Blue line shows the bookings for 2025.
Lee: Overall were sold to $4 billion of advanced bookings.
Lee: Which is 30% higher than last year at this point in time.
Lee: Our operating capacity is up 18% year over year.
Lee: We have already sold about eight 7% ROE that's capacity.
Lee: I will also note that we're very pleased with the 20 to 25 rates.
Lee: We drove $744 per day.
Lee: They're two $681 last year.
Lee: Now if we move to slide 17, you will see the curves of the river cruises.
Lee: I will start with advanced bookings for 2025.
Lee: Which is again the blue line.
Lee: As you can say, we have sold almost two $6 billion in advance bookings.
Lee: Which is 24% higher than last year.
Lee: Keep in mind that our operating capacity of rivers up 7% year over year.
Lee: Overall from a demand perspective, we're having a great year with 89% over the 'twenty to 'twenty five capacity already sold at rates of $839 compared to $797 in 2024.
Lee: In summary, these are very good trends were 2025.
Lee: I will highlight that depending on the market and additions we might not want to be too far out as we look to optimize pricing.
Lee: If we look at the 2025 occur with some kind of argue that they are a little bit too steep.
Lee: As more of an art than the science when manufacturers that today.
Lee: We might want to slow pace and if you think that it will benefit the overall revenue.
It is important to analyze the curves with these things in mind.
Lee: Our focus at this time is on 2025.
Lee: Specific to selling the remaining capacity.
And resuming our main rivers season in Europe.
Lee: We will not be sharing information on future season yet.
Lee: However, note that both the trend in 2006 and 2027 seasons are open for sale.
Lee: Leah will add some color to our order book on capacity.
Speaker Change: Thank you tore moving to slide 18, since our last earnings release, we have a few relevant updates. This past December we took delivery of the beautiful Viking Vela and Ocean ship that is operating in Europe. We also exercised our options and entered into shipbuilding contracts for eight river long.
Lee: Ships, which are scheduled for delivery in 2027 and 2028 for each year.
Lee: Additionally, we entered into option agreements for eight additional river vessels to be delivered in 2029 and 2030.
Lee: And we announced that we would build two additional <unk> vessels to operate in Egypt scheduled to be delivered in 2027.
Lee: Based on our committed order book, we expect a 53, 3% increase in total births per hour fleet available for operations from December 31, 2024 to 2030.
Lee: This calculation excludes the six river vessels in Russia and Ukraine.
As it relates to 2025 capacity, we expect that the ocean ship the Viking Vesta will be delivered in mid 2025.
Lee: Regarding with Kern River vessels, we expect the delivery to be evenly split with five arriving in the first half and the remaining five in the second half of the year of these 10 ships seven will sale in Europe, two in Egypt, and one in Vietnam.
Lee: Similarly to past seasons more than 70% of the capacity from our core products will be in Europe with the rest split across Australia.
Lee: Egypt, North America, South America, and the polls.
Lee: As you can tell Viking is experiencing exciting growth and we are delighted to share our progress.
While we continue to deliver strong financial results our commitment remains unwavering, we prioritize our guests treat all Viking employees like family embrace a contrarian approach and always strive to do what is right for the environment.
Lee: With this I conclude our prepared remarks, and I'll now turn it back to the operator to take questions.
Lee: Thank you 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.
Lee: If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for.
Lee: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Steve: And the first question today is coming from Steve <unk> from Stifel, Steve Your line of life.
Speaker Change: Hey, guys good morning so.
Speaker Change: Tour or whoever wants to take this Tory you've kind of talked about how you might be booked a little.
Speaker Change: Ahead of where you might want to be just based on the booking curves and potentially leaving some I guess, leaving some price on the table.
Speaker Change: Just wondering why you haven't added to.
Speaker Change: 2026 into your into your booking curve charts, yet and then.
Speaker Change: Maybe give a little bit more color on how 'twenty six bookings are looking and if they would be in a normal range. If they were on those charts right now.
Speaker Change: Hi, Steve Thanks for the question. So this earnings call really we wanted to focus on the 2020 for performance and then also closed out the 2025 season from a bookings perspective, and then of course, we still have to operate 2025.
Speaker Change: We did come out and say that January was a really strong booking months for us and that includes both 25 and 26 seasons.
Speaker Change: It's still early but we are pleased to say that 2026 is ahead of 2025 at the same point in time.
Speaker Change: But again, our focus remains on finishing selling the 25 season, and then operating the year in the same Viking standard that our guests expect so we anticipate we will be able to give a more fulsome update for 2000 <unk> in the next call.
Speaker Change: But.
Speaker Change: We kind of wanted to give an update on how 25 is shaping up and also.
Speaker Change: Im sure that 2024 was a great year for Viking.
Speaker Change: Okay. Thanks for that Lee and then second question.
Speaker Change: Obviously theres been some news out there in the.
Speaker Change: The marketplace about Royal Caribbean and celebrity brands entering.
Speaker Change: Starting to move into the river market our market so.
Speaker Change: I guess the question is going to be.
Speaker Change: How would you guys respond to new competition, and maybe a better way to ask that is what kind of keeps you guys in a unique position to defend.
Speaker Change: Fend off.
Speaker Change: New competition moving into the space.
Speaker Change: It's.
Speaker Change: All of us in dress and to see more attention.
Speaker Change: To this space, but we have been operating in so long.
Speaker Change: We wish people welcome.
Speaker Change: I think our.
Speaker Change: A very strong position as we are as you know.
Speaker Change: We have.
Speaker Change: 52% market share.
Speaker Change: We will take other people a little while to have.
Speaker Change: A substantial dent in that.
Greg: We have a large order book Greg.
Speaker Change: Great customer satisfaction.
Speaker Change: It is a bit different to operate small ships.
Tom: Tom from Big ships. It takes a special talent, which I think we have.
Speaker Change: As a component.
Speaker Change: So I think we will continue doing what we're doing as you know we have a pretty big order book too.
Speaker Change: So I think we will have.
Speaker Change: 100, <unk> by 2028.
Speaker Change: So.
Speaker Change: More or less from somebody else.
Speaker Change: Certainly something.
Speaker Change: We will not make an impact on us I think it was important thing is.
Speaker Change: When you come to the numbers, we have one we have.
Speaker Change: A couple of advantages.
Speaker Change: We're very proud of the design of our ships.
Speaker Change: As Im sure will Royal Caribbean, because the good designers of ships.
Speaker Change: They have seen others do as well, but I think we have a couple of other things we have.
Speaker Change: We have a wide portfolio.
Speaker Change: Dustin.
Speaker Change: At ever destinations.
Speaker Change: So people have a menu of teachers from when they want to go into <unk>.
Speaker Change: That's a hard one hard won.
Speaker Change: Because.
Speaker Change: And we have a great direct marketing.
Speaker Change: So I think I think we will.
Speaker Change: We will continue our business.
Speaker Change: <unk> looked at what others are doing but really container business shouldn't be overly worried about anything.
Dara: Okay got you. Thanks, Dara Thanks, Larry I appreciate the responses.
Matthew: Thank you. The next question will be from Matthew boss from J P. Morgan Matthew Your line is live.
Matthew Boss: Thanks, and congrats on a nice quarter.
Speaker Change: So maybe could you elaborate on current demand trends by region across both river and ocean or any signs of pause whatsoever that youre seeing in today's backdrop with demand trends as you look at forward indicators today.
Matthew Boss: Hi, Matt Hope Youre doing well.
Matthew Boss: For the question I think given where we are with the curves for 88% sold for 2025.
Matthew Boss: We had a really good Q4 as well as a very good wave so as of right now I think we feel.
Matthew Boss: <unk>.
Speaker Change: Go ahead up our 25 season.
Matthew Boss: We're up on capacity or up in yields.
Matthew Boss: And we're 88% solid so.
Matthew Boss: Where we're sitting today, we're in a good spot.
Matthew Boss: And then maybe could you.
Matthew Boss: To elaborate on your total revenue approach, if we think about 12% capacity, 7% pricing for 25, just how you look to optimize yields relative to the double digit capacity multiyear.
Matthew Boss: Yeah. So I'll take this one I think.
Matthew Boss: We said it in the past and we still firmly believe that.
Matthew Boss: In a year with double digit capacity growth mid single digit yield growth is really great and that's what we've seen for the past few years. So I think for 2024, just it reflects what we've been able to do we increased capacity by 6% in 2024, while increasing yields by 7% and as.
Matthew Boss: As you know for 2025 today, our capacity growth for our core product is 12%.
Matthew Boss: And we're at 7% yield increases our advance bookings per PCB right now so.
Matthew Boss: So I think.
Matthew Boss: We stick to that we do feel that double digit capacity growth with mid single digit yield growth is good for the company, especially with the strong order book we have.
Matthew Boss: Congrats again best of luck.
Matthew Boss: Thank you.
Speaker Change: Thank you. The next question will be from Robin Farley from UBS Robin Your line is live.
Speaker Change: Great. Thank you very much just wanted to clarify.
Speaker Change: Your comment a moment ago, you mentioned that 26% ahead of 2025 and I Wonder if you could clarify.
Speaker Change: That is price or volume or both that had was referring to and then also you just reference to the idea of that.
Speaker Change: Mid single digit growth is what you would be aiming for with double digit capacity growth and based on your historic curves.
Speaker Change: To get to mid single digit.
Speaker Change: Yield growth for 2026, you would probably want to be at sort of 10%, maybe a little higher in terms of the booked revenue.
Speaker Change: Her cruise Dave for 26 this far in advance just based on I would say that based on your yield curves for 'twenty four 'twenty five would you say that where you are booked right now for 2026 is consistent with that.
Speaker Change: Our pricing position that could get you to mid single digit for 2006 based on what you've seen.
Speaker Change: Would appreciate any color on this just given so much uncertainty.
Mark I think it would be really helpful for investors to kind.
Speaker Change: Have have that sense of of how 2006 is shaping up thank you.
Leah: Sure Hi, Robin this is Leah so.
Leah: We do want to stay focused on 2025 season, and making sure that we closed out the year, but given the commentary that we've given about 2026.
Leah: We don't give guidance, we're not ready to discuss 2026 until the first quarter earned.
Leah: Earnings call, but I can say that.
Leah: It's both both rate and also volume.
Leah: But again with our capacity increases we feel that we have been able to achieve mid single digits in the past and we see no reason to.
Speaker Change: Do you think differently at this time.
Speaker Change: Okay, great that is helpful. Thank you.
Speaker Change: Maybe just as a follow up.
Speaker Change: Going back to the idea of sort of new entrants in the market. It's certainly I don't think investors are concerned that that other new entrants.
Speaker Change: Anywhere near your market share in terms of capacity.
Speaker Change: But just thinking about it.
Speaker Change: Demand are there anything you would point to as barriers to entry in terms of <unk>.
Speaker Change: Talking right.
Speaker Change: Certain key.
Speaker Change: Cities on your itineraries or things like that that might be difficult for new entrants to get sort of any color around that might be helpful. Thank you.
Speaker Change: Yes.
Speaker Change: No we have from from the get go a bit vary of SaaS.
Speaker Change: Northern Nevada, our customers, but also about getting docker and docking rights.
Speaker Change: So.
Speaker Change: This sort of stems back from the time, when we bought the <unk> company.
Speaker Change: The law for docking rights on the Orion.
Speaker Change: And on the.
Speaker Change: Alba, which result.
Speaker Change: That is very important for us so we have.
Speaker Change: But I think some.
Speaker Change: Some 72 Premier Dorsey.
Speaker Change: Rights, along the along the rivers.
Speaker Change: Some that are particularly unique for example, we.
Speaker Change: We have worked for seven years to get the rights right.
Speaker Change: Eiffel tower in Paris.
Speaker Change: Where we have a long term contract for that.
Speaker Change: And also in Egypt, right outside the car knock temple.
Speaker Change: Exclusive for us. So I think these are very valuable things.
Speaker Change: As you rightly pointed out.
Speaker Change: As potential barriers barrier sentra.
Speaker Change: We are also strong.
Speaker Change: On the.
Speaker Change: Don There Ben.
Speaker Change: Yes.
The joint venture with the.
Speaker Change: Government. So we are very strong.
Speaker Change: Long positions on Dr. <unk> rights.
Speaker Change: Great. Thank you very much.
Andrew: Thank you. The next question will be from Andrew <unk> from Bank of America, Andrew Your line is live.
Andrew: Hi, good morning, everyone.
Speaker Change: Question for tour, obviously some of the earlier questions spoke to this but.
Speaker Change: The uncertainty in the macro this morning airlines are lowering guidance because of it.
Speaker Change: You have a much different customer, but just curiously in this type of macro environment do you manage your booking curves differently.
Speaker Change: Just curious if we should be when you start talking about 2026.
Speaker Change: Should there be any impact on baby kind of your future booking curves as a result of this uncertainty in how you manage them. Thanks.
Speaker Change: Well I think I think we are.
Speaker Change: The light.
Speaker Change: So so far ahead for 2025.
Speaker Change: So that we can sort of get that.
Speaker Change: Hello.
Speaker Change: It also gives us time.
Speaker Change: These are uncertain times. It also gives us time.
Speaker Change: <unk> taken the action that would be needed for 2026.
Speaker Change: We are in unique position that we have.
Speaker Change: Our strong database are big database.
Speaker Change: Hey, guys.
Speaker Change: The contractor people, who depend on travel agents.
Speaker Change: Generate demand.
Speaker Change: We also have travel agents.
Speaker Change: Can generate demand ourselves.
Speaker Change: Not out of thin air.
Speaker Change: But although the database, we have and I think that's that's very very valuable.
Speaker Change: Cost a little bit more marketing.
Speaker Change: We have that to build there.
Speaker Change: We have a strong financial position. So I think we will deal with it.
Speaker Change: As you know I've been in this industry for a couple of years.
Speaker Change: And I see them.
Times come in Bad Times go.
Speaker Change: Sure.
Speaker Change: And I think it's important to be a bit of a contrarian.
Speaker Change: One should not.
Speaker Change: It's fair too much but.
Speaker Change: Bad things happen most things pass after all.
Speaker Change: So I think as long as we are we are analytical about it unprepared.
Speaker Change: Thus, even if we see.
Speaker Change: <unk>.
Speaker Change: That would be fine.
Speaker Change: Got it Andrew I think you laid out.
Speaker Change: As we've said in the past are our bookings are pretty sticky. So this really shows the strength of the booking curves that Viking has riches as torry mentioned, we have time to react so with 88% being sold for 2025 bookings sticky it really gives us runway and time to close out the rest of the year and then.
Speaker Change: Focus on 2026, so the fact that we're talking about 26 sitting here in March of 2025.
Speaker Change: It's a little bit unbelievable, but such as the way things are.
Speaker Change: But its the time factor and as tour says things are cyclical and again with our customer demographic being high and well off.
Speaker Change: They are quite resilient compared to the average consumer.
Speaker Change: Understood. Thank you for that and then just as my follow up.
Speaker Change: Yes, tore obviously, you've done a good job diversifying kind of your river business, a bit moving into Egypt, and opening of China last year.
Speaker Change: Why do we think about over the next three to five years. If you were to prioritize other geographies for growth how would you rank them going forward. Thank you.
Speaker Change: Yes, obviously.
Speaker Change: Our main source market as the English speaking world.
<unk>.
Speaker Change: And there are many places.
Speaker Change: You can go to I think what we have in our portfolio is pretty much our.
Speaker Change: Rather than butter.
Speaker Change: Sure.
Speaker Change: Business.
Speaker Change: But we haven't seen as we've opened up Egypt.
Speaker Change: That has become very attractive to our to our guests.
Speaker Change: Same with <unk>.
But we are dominant on Voyager.
Speaker Change: There are interesting places for four are curious Gus.
Speaker Change: Sure.
Speaker Change: We will hopefully will go to the other.
Speaker Change: Are there similar places, but we have another.
Speaker Change: Area that we have been focusing on.
Speaker Change: It's China.
Speaker Change: We don't make a big splash about it but.
Speaker Change: It's obviously a huge market and we have.
Speaker Change: Our operation there.
Speaker Change: Are we.
Speaker Change: We don't again, we do have different from other people.
Speaker Change: So we have for this year, we have four of the vessels in Europe.
Speaker Change: Dedicated to the Chinese.
Speaker Change: Source market.
Speaker Change: And these quarter over vessels have Chinese staff Chinese food.
Speaker Change: The captains on an article Peavler goods.
Speaker Change: Germany, Switzerland over there.
Speaker Change: No.
Speaker Change:
Speaker Change: And on the rivers.
Speaker Change: But this is this has taken a little bit of time, but this kind of of course become.
Speaker Change: Potentially significant.
Speaker Change: <unk> business and again, its a philosophy that we have which is different from most others.
Speaker Change: And that is if you go on then.
Speaker Change: Viking ship.
Speaker Change: The ones we normally go on is English.
Speaker Change: English only onboard.
Speaker Change: If you go on the Chinese speaking.
Speaker Change: <unk>.
Speaker Change: It's Mandarin only onboard.
Speaker Change: And <unk>.
Speaker Change: Largely a Chinese Chinese food that come to places to experience the history and culture around the river and then they want to come home being comfort on our on our ships.
Speaker Change: That is probably more of an opportunity than anything else we have.
Speaker Change: It's not easy because we are again marketing direct to the Chinese consumer.
Speaker Change: Which is quite good but that is our belief.
Speaker Change: Thank you. The next question will be from James Hardiman from Citigroup James Your line is live.
Speaker Change: Hi, This is Sean Wagner on for James just taking a look at your advanced booking curves is it safe to assume a similar flattening.
Speaker Change: The 2025 curve as we've seen in the past couple of years or is there any reason to believe that.
Speaker Change: I don't know flatten quicker or slower than it has in the past.
Speaker Change: Hi, Sean I think.
Speaker Change: What youre seeing in the curve from discipline for generally is the fact that we're 88% sold so we have some remaining inventory and as you can imagine.
Speaker Change: Maybe the fourth quarter, which are lower yielding order.
Speaker Change: And so the filing is it necessarily flattening, it's really we're finishing off the season, which is what we anticipate doing in coming months.
Speaker Change: Right.
Speaker Change: I guess at the end of the year can you remind us what.
Speaker Change: There is some sort of.
Speaker Change: What's behind the.
Speaker Change: How it kind of ticks down at the end of the year.
Speaker Change: Okay I think.
Speaker Change:
Speaker Change: The way our consumers are we generally felt very well in advance that that is our.
Speaker Change: One of our big advantages so when.
Speaker Change: Your starts and then you have a couple of cancellations, which you see a little bit of a tick down, but it's not significant and as you can see from our 2024 numbers we have.
Speaker Change: Had a very great year, one of our best yet with high yield being high adjusted EBITDA margin.
Speaker Change: Adjusted EBITDA of $1 3 billion so.
Speaker Change: I think the focus should be how well we've done.
Speaker Change: Yes of course.
Speaker Change: And I guess to that point and to previous questions.
Speaker Change: Knowledge and that you guys are sold so far out in advance and youre much more insulated than others.
Speaker Change: Call it travel companies.
Speaker Change: And you spoke to strong January or are you seeing any.
Speaker Change: Any weakening in trends visibly acknowledging that even.
Speaker Change: Even if you were seeing weakening trends youre able to kind of.
Speaker Change: Pivot and youre dealing with much farther out bookings, but are you seeing any sort of weakening in those trends.
Speaker Change: So.
Speaker Change: Following a record book revenue booked in January we are seeing that February is it a little bit slower. This is probably a reflection of the uncertainties in the world.
Speaker Change: But again.
Speaker Change: This this advantage we have of the booking curves being far out.
Speaker Change: Is that we have the time to.
Speaker Change: Q2, not I Wouldnt say catch up but we have time to monitor the booking curves and then also then also start our marketing machine, which is what we use to generate demand. So all in all I think we are fairly we sit here feeling fairly positive about 2025, we're optimistic about 2020.
Speaker Change: Six.
Speaker Change: And we're feeling good about how 2024 ended.
Speaker Change: Okay. Thank you and one more quick one how should we think about Capex. This year and next year, what what are you.
Speaker Change: Planning to do with excess cash.
Speaker Change: So similar to prior quarters. We are we have a very strong order book So our capital allocation priorities are really to make sure that we have.
Speaker Change: <unk> to support that strong order book and.
Speaker Change: And we believe that a big cash reserve provides strong financial safety net.
Speaker Change: That provides stability and flexibility we've talked a little bit about the uncertainties that the market is feeling right now and so this big cash reserve I think.
Speaker Change: Bolsters, our our plans for the future and then our top priorities is to reinvest cash in the business to generate strong returns.
Speaker Change: So we are ready for an acquisition if the right opportunity presents itself, but you can see from our strong order book that we are focused on organic growth.
Speaker Change: Okay. Thank you very much.
Speaker Change: Thank you. The next question will be from Brian <unk> from Barclays. Your line is live.
Brian: Good morning, everybody. Thanks for taking my question.
Speaker Change: So maybe for tour.
Speaker Change: Hey, guys.
Speaker Change: Sort of answered the question about near term bookings.
Speaker Change: And in order to Hawaii, So don't want to re ask that.
Speaker Change: Tore you've seen this business through a long period of time in the highs and lows and your customer is predominantly American wealthy and older.
Speaker Change: I imagine you would say that market uncertainty.
Speaker Change: These folks all have portfolios.
Speaker Change: And asset prices going down is probably the number one factor that would that would maybe.
Speaker Change: <unk> book.
Speaker Change: Bookings or cause hesitation to book, but is there a factor also that you've seen maybe in past cycles, where.
Speaker Change: Waves of anti American or the perception of anti American.
Speaker Change: Sentiment could creep into the broader media cycle and cause Americans to not want to book abroad is that does that affect do you worry about at all.
Speaker Change: Yes.
Speaker Change: My colleagues sitting in the U S and I noticed that in Europe.
Speaker Change: I don't have a lot of anti American.
Sentiment there but of course it is the thing.
Speaker Change: About <unk>.
Speaker Change: The NIH.
Speaker Change: But I think our.
Speaker Change: Guests tend to be educated.
Speaker Change: Educated.
Speaker Change: Curious people, so I think that takes a little bit more than more than a few bad segments from somebody.
Speaker Change: Scared the market quite frankly.
Speaker Change: We're seeing for example, now no.
Speaker Change: Popular our cruises.
Speaker Change: Donmar.
Speaker Change: The.
Speaker Change: That's of course, a long long time back in the history.
Speaker Change: But I think our guests are curious they will.
Speaker Change: B.
Speaker Change: Somewhat impacted by.
Speaker Change: Declines in portfolios.
Speaker Change: Sure.
Speaker Change: So the impact will not be nil, but I think they are not.
Speaker Change: We're not starving on that not having dropped.
Speaker Change: Yeah.
Speaker Change: So I.
Speaker Change: I think there are much less impacted.
Speaker Change: Then.
Speaker Change: Most other travel companies.
Speaker Change: Customers.
Speaker Change: But we should of course, but you should be aware of it.
Speaker Change: Okay. Thank you for that tour a follow up question on the river competitive market dynamics that we had discussed earlier in the call.
Speaker Change: Away from capacity growth from Royal Caribbean and river and the market share discussion more on the product side you guys have created an advantage.
Speaker Change: By.
Speaker Change: Using the same design right and creating the distinctive.
Speaker Change: Product that customers know and love.
Speaker Change: Does that is there a concern to that.
Speaker Change: Advantage, if if if royal Caribbean is maybe the first.
Speaker Change: Competitor that would come in with a large balance sheet with an innovative culture and that could actually start iterating around a product.
Speaker Change: If that could create a buzz in and of itself is that something that you would then have to potentially pivot in your own.
Speaker Change: Long term design.
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: Chip.
Speaker Change: Has to be.
Speaker Change: Less 11 meters.
Speaker Change: Third <unk> wide.
Speaker Change: Six meters on a bit toll on the 135 meters long so the ability to innovate is limited we have done a few things because.
Speaker Change: We have found.
Speaker Change: We have found that for awhile.
Speaker Change: North.
Speaker Change: Full volcanism strips.
Speaker Change: We've found a way by having asymmetric decided another ship.
Speaker Change: It's a patented.
Speaker Change: The same pattern.
Speaker Change: <unk>.
Speaker Change: Uh huh.
Speaker Change: Full of Balkanize Sam.
Speaker Change: <unk> suites on the others.
Speaker Change: So I think there may have been innovative.
Speaker Change: But it's not so much innovation that can be done.
Speaker Change: We have also.
Speaker Change: Ah.
Speaker Change: Been able to get ships being for <unk>.
Speaker Change: The technical.
Speaker Change: We have a slide.
Speaker Change: Slides.
Speaker Change: 14th I think it says.
Speaker Change: <unk> certainly shows.
Speaker Change: We are different from existing operators.
Speaker Change: <unk> been able to get three full decks.
Speaker Change: About doesn't have to be appointed <unk> square.
Speaker Change: We have done that so remind us a bit to 190 <unk> guests.
Speaker Change: Similar sized cabins.
Speaker Change: The same.
Speaker Change: Brent where others got up to a 164 megabit <unk>.
Speaker Change: So we have been very innovative ourselves.
Speaker Change: Our bedroom and Caribbean.
Speaker Change: Now it has been.
Speaker Change: So.
Speaker Change: But I think we have we have.
Speaker Change: We have.
Speaker Change: And I would say one thing is of course.
Speaker Change: We shouldnt be too obsess.
Speaker Change: Only with technology.
Speaker Change: But it's really.
Speaker Change: The thing that.
Speaker Change: That matters as well.
Speaker Change: Where do we take our guests.
Scott: Sure Scott.
Speaker Change: So.
Speaker Change: Do do it for them.
Speaker Change: And.
Speaker Change: And also what is the quality of our staff.
Speaker Change: We all like to think we have the best stuff around.
Speaker Change: Yes.
Speaker Change: But we have very very good stuff.
Speaker Change: And I think they.
Speaker Change: I made the point that we treat our staff like family.
Speaker Change: We are after all we are a public company.
Speaker Change: The family on top has a lot to say about.
Speaker Change: The style in which we treat each other.
Speaker Change: Sure.
Speaker Change: I believe that most people on the most stuff on our ships feel they're part of our family and I think that helps brands onward.
Speaker Change: Yes, that's comments, we hear time and time at a time.
Speaker Change: No.
Speaker Change: We will follow a road Royal Caribbean, but it is also easy to go from a few of demand there.
Speaker Change: We have done this but.
Speaker Change: We will watch them.
Speaker Change: Thanks.
Speaker Change: Great commentary, thanks tore thanks, everyone.
Speaker Change: Thank you. The next question will be from Meredith Jensen from HSBC Meredith Your line is live.
Meredith Jensen: Good morning. Thanks.
Speaker Change: And as you look to capture more and more of the wallet share from your very loyal customers.
Meredith Jensen: You enhance.
Meredith Jensen: Land based options and build out those what kind of products or offering for your customers or travel agents are on the wish list like what what sorts of things do you continually think we may do that that might be something that our core customers would like to do to expand land and excursions and other things like that.
Meredith Jensen: I think the first thing we have done.
Meredith Jensen: Of course, we had our.
Meredith Jensen: Our expedition ships.
Meredith Jensen: So so two years ago I went myself.
Meredith Jensen: On the crews to Antarctica.
Meredith Jensen: It's a phenomenal experience. This September I plan to go the other way.
Meredith Jensen: Greenland.
Speaker Change: What are the call Dsos Red White and Blue line.
Speaker Change: But <unk> got a degree and then and then enter the northwest passage. These.
Speaker Change: These type of things.
Speaker Change: They're very very.
Speaker Change: Interesting for a brought baskets.
Speaker Change: I think an important part of what we're doing.
Speaker Change: Is that where you'd like to be in charge of the <unk>.
Speaker Change: Product deliver it to the extent possible.
Speaker Change: So it's limited.
Speaker Change: Other things we can.
Speaker Change: Offer but of course, when you look at the map and where.
Speaker Change: We are.
Speaker Change: We can offer vacation or.
Speaker Change: Semi exploration anywhere in the world really.
Speaker Change: So.
Speaker Change: I think we'll likely to remain.
Speaker Change: On keels wherever wherever we are we could see that V. Go ahead of ours, but it is not so so.
Speaker Change: So trivial.
Speaker Change: Because we also have some scale. So we can make some money on that.
Speaker Change: Not only.
Speaker Change: I have an interest in Bravo.
Speaker Change: Egypt has been exceptional for us.
Speaker Change: We have a design for there.
Speaker Change: Very good.
Speaker Change: That's very interesting.
So.
Speaker Change: Is it likely to be.
Speaker Change: Field based company for.
Speaker Change: Many years ago.
Speaker Change: Great. Thank you and one quick follow up on <unk>.
Speaker Change: Speaking about Viking being as much of a marketing company as it is a cruise company and how you're reaching out to.
Speaker Change: Chinese consumers as well as outside of North American consumers for your English speaking cruises are there as technology advances and I know you've been ahead of the curve on these things are there additional investments that we should look to to help you better interact with these customers and potentially transact on.
Speaker Change: Online directly as well as directly.
Speaker Change: In the future.
Speaker Change: Is that for me.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Obviously, the world has changed.
And I think we'd like to be ahead of the curve. So we are we are doing more things on the technology.
Speaker Change: Frank.
Speaker Change: And technology.
Speaker Change: In terms of what certain other cruise lines have done like robotic bartenders I'd like to take that.
Speaker Change: No.
Speaker Change: But but.
Speaker Change: In terms of what we can do on the marketing side.
Speaker Change: The online booking what they can do it.
Speaker Change: And draft.
Speaker Change: On websites or whatever we are.
Speaker Change: So things are underway.
Speaker Change: That's where I think big.
Speaker Change: Serious investments they.
Speaker Change: It made in the coming years.
Speaker Change: And.
Speaker Change: And it's exciting to see what looks like good strengths or not.
For example.
Speaker Change: We have the call center, which was an.
Speaker Change: Our head office in Woodland Hills.
Ken: Ken covered.
Ken: And we managed to switch that over to being all that one.
Ken: Overnight quite frankly because of the technology.
Ken: Okay.
Ken: No.
Ken: <unk> taken weeks. So we are quite well equipped I would say.
Ken: But here.
Ken: Here, we will invest more.
Ken: Great. Thanks, so much for the color.
Speaker Change: Thank you and our final question today will be from Dan Pulitzer from Wells Fargo, Dan Your line of sight.
Dan Pulitzer: Good morning, everyone. Thanks for taking my questions.
First tour you would take a lot of pride in being a contrarian. Historically can you talk maybe about the opportunities that you do see to lean any or how you do think about allocating capital.
Dan Pulitzer: And as far as the M&A can you just remind us of how you think about that and how it could fit into your existing company.
Dan Pulitzer: Yes.
Dan Pulitzer: So first of all of course it has allowed us.
Dan Pulitzer: Place orders for new buildings at a time when other people were afraid.
Dan Pulitzer: That is as we come out of Covid of course.
Speaker Change: How does that get new building contract far out.
Dan Pulitzer: Shouldn't say reasonable nothing is reasonable anymore, but.
Speaker Change: <unk> right.
Dan Pulitzer: Some of the prices.
Speaker Change: That's how we ended up.
Speaker Change: There are some possible M&A.
Speaker Change: It's not true and tried to trivial.
Speaker Change: Because we take great pride in being one brand.
Speaker Change: Sort of things how to fit into the one brand category, we don't want to be.
Speaker Change: Conglomerates of brands.
Speaker Change: We want to of course.
Speaker Change: Their focus.
Speaker Change: Exactly who we are and again savi one other thing we are most proud of is probably I noticed.
Speaker Change: No no children no casinos.
Speaker Change: Nickel and Diming.
Speaker Change: We don't have an item you can go to it.
Get fleeced.
Speaker Change: It's good for the P&L don't get me wrong, but it's not good for the experience.
Speaker Change: When people go into Viking Viking experienced that and know exactly what it will cost.
Speaker Change: So it's not entirely trivial.
Speaker Change: But I think if there are bad times now through.
Speaker Change: For a few months then maybe.
Speaker Change: Some opportunities that come along.
Speaker Change: So thats why its need.
Speaker Change: 2 billion in cash and of course.
Speaker Change: If we look at that debt capacity. We also have some of that so there are things we could do.
Speaker Change: And I'd rather.
Speaker Change: Thus.
Speaker Change: Monday and developing the business.
Speaker Change: <unk>.
Speaker Change: And we're starting to shareholders overtime.
Speaker Change: I believe we can make better use of it in the company.
Speaker Change: I as a shareholder can do outside the company.
Speaker Change: We will.
Speaker Change: May sound, a little bit richer set onto enough brilliant, but but it's gotten give up we're doing this.
Speaker Change: Right no that makes a lot of sense and the track record speaks for itself.
Speaker Change: And then just for my follow up.
Speaker Change: I think you mentioned there is February took a step back there was some uncertainties. There is there any any way you can kind of elaborate on that or have you seen kind of trends change or maybe improve it or even deteriorate into March and I apologize for the short term nature of the question. It just it just feels like everything.
Speaker Change: <unk> is highly uncertain right now so any additional detail or color would be helpful. Thank you.
Speaker Change: Yeah sure so coming from a banner month in January.
Speaker Change: February does look like it slowed down a little bit.
Speaker Change: But at this point in time.
Speaker Change: Go back to the curves were 80% sold for 2025.
Speaker Change: 26 is pacing on a consolidated basis.
Speaker Change: A bit better than 2025 same point in time, so on the haul I think we're comfortable with where we are.
Speaker Change: And at the end of the day, what we have is time. So we have time to close out 2025 as Lynn mentioned.
Speaker Change: Really the remaining inventory is end of the year and then we have time for 2026 bookings to develop and then again, we're pointing back to our marketing capabilities and our ability to generate demand. So I think you know.
Speaker Change: When we take a step back we're fairly comfortable where we are from a booking perspective.
Speaker Change: And we are optimistic about 2025 and look forward to focusing on 2026 and reporting on that in the first quarter.
Speaker Change: Thank you and that 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.
Speaker Change: Yes, I'd like to thank everyone for joining us on today's call.
Speaker Change: Your support and interest in Viking.
Speaker Change: Uh huh.
Speaker Change: That's probably what I should say and I wish you a very nice day.
Speaker Change: Thank you. This does conclude today's conference you may disconnect. Your lines at this time and have a wonderful day. Thank you for your participation.