The paragraph introduces the Norwegian Cruise Line Holdings' Third Quarter 2024 Earnings Conference Call and Webcast. The operator welcomes participants and indicates the call is in listen-only mode, with instructions provided for participation. Sarah Inman, Head of Investor Relations, takes over, mentioning the presence of Harry Sommer, the President and CEO, and Mark Kempa, the CFO, on the call. The earnings update is being webcast on the company's Investor Relations website, where related slides and replay options will be available for 30 days. The discussion will include forward-looking statements and non-GAAP financial measures, with necessary disclosures provided. Harry Sommer then begins his remarks, thanking participants and wishing them a Happy Halloween.

The paragraph discusses Norwegian Cruise Line Holdings' strong financial performance and strategic progress. The company has surpassed guidance for three consecutive quarters, leading to an increased full-year outlook for the fourth time. The strategic "Charting the Course" approach, focusing on people, product, growth, and performance, is yielding positive results and positioning the company for future success. The CEO highlights recent third-quarter results, new initiatives in their growth and product platforms, strong demand, guest satisfaction, cost management, and sustainability efforts, which are integral to their strategy.

The paragraph highlights the company's strong financial performance in the third quarter, surpassing guidance across key metrics for the third consecutive quarter. It reports record-high quarterly gross revenue and adjusted EBITDA, with a notable improvement in the adjusted operational EBITDA margin. Adjusted EPS rose by 31% to $0.99, exceeding guidance despite negative foreign exchange impacts. The company's net leverage improved significantly, and the strong third-quarter results have led to an increase in full-year guidance. The company expects a 9.4% increase in net yield for the year, marking a record since going public in 2013.

The paragraph outlines Norwegian's financial goals and strategic initiatives leading up to 2026, highlighting an expected improvement in operational EBITDA margin to 35.3% and an adjusted ROIC in double digits by year-end. The company aims to reduce net leverage to approximately 5.4x and is committed to achieving a mid 4x target by 2026. Norwegian attributes these improvements to strong top-line growth and stable costs. The paragraph also mentions the company's strategy for long-term growth through fleet optimization and announces the launch of the Norwegian Luna in 2026, which will feature enhanced amenities and increased capacity compared to its predecessors.

The paragraph highlights the ongoing progress and exciting innovations at Norwegian Cruise Line Holdings. The Norwegian Aqua is set to launch in 2025, with impressive developments observed at the Fincantieri shipyard. Oceania Cruises is debuting the Allura in 2024, featuring a new Creperie with recipes by renowned chefs Alice Coretti and Eric Burrell. Regent Seven Seas Cruises is building the Seven Seas Prestige, a luxurious ship with exceptional guest space and innovative accommodations. Norwegian Cruise Line also introduced a new brand positioning, "Experience More at Sea," emphasizing enhanced variety and value for guests.

The paragraph discusses Norwegian Cruise Line's new "More at Sea" offering, an enhancement of their previous package that now includes an upgraded beverage package, more specialty dining nights, and high-speed internet. NCL also announced a partnership with the National Hockey League, marking the cruise line's first collaboration with a professional sports league. Additionally, Oceania Cruises launched its "Your World Included" brand promise, featuring amenities such as specialty dining, prepaid gratuities, and unlimited Wi-Fi included in the fare. These enhancements have driven strong demand, with net yield increasing by 9% year-over-year, particularly in Alaska and Canada/New England voyages. The increased demand was supported by robust pricing and onboard revenue, notably in shore excursions and communications, with Starlink internet already active on most of the fleet.

The paragraph highlights the company's strong consumer confidence and demand, with advancements in pre-booked onboard revenue, robust pricing, and advanced ticket sales. It also emphasizes the company's commitment to sustainability, receiving high ratings from MSCI and recognition at the ESG shipping awards for its environmental efforts. The paragraph underscores the company's leadership in sustainable practices within the maritime industry and notes progress in alternative fuel initiatives.

The paragraph highlights several key achievements and commitments of the company towards sustainability and community support. It mentions that 41% of the fleet has been tested with a biodiesel blend, exceeding the 2024 goal, to reduce their carbon footprint. The company launched the Relay for Life at Sea program on two ships, benefiting the American Cancer Society, with plans to expand it fleet-wide. Additionally, they donated a total of $80,000 to the American Red Cross for hurricane relief and pledged to further match public donations. These efforts emphasize their dedication to environmental, social, and governance responsibilities. The paragraph concludes with a transition to Mark Kempa discussing financial results.

The paragraph discusses the strong financial performance of a cruise company in the third quarter, highlighted by several metrics exceeding guidance. Net yield increased by 9%, surpassing the expected 6.4%, largely due to strong demand and pricing, especially for Alaska and Canada New England cruises. Onboard revenue also exceeded expectations. Adjusted net cruise costs excluding fuel were below guidance, resulting in record-breaking adjusted EBITDA of $931 million, which was $60 million above projections and represented a 24% year-over-year increase. Adjusted EPS reached $0.99, higher than the $0.92 guidance, despite a negative foreign exchange impact. Given the strong results, the company is raising its full-year guidance and expects a 6.9% growth in net yield for the fourth quarter, exceeding previous expectations by 190 basis points.

The company is raising its guidance due to strong demand and pricing, particularly in the Caribbean, which accounts for 30% of its capacity this quarter. Despite challenges from rerouted Middle East sailings affecting higher-yielding brands, the quarter shows impressive performance with an 8% net yield growth in Q4 2023. Adjusted net cruise costs excluding fuel are expected to increase slightly due to timing shifts, leading to an adjusted EBITDA guidance increase to $445 million. This contributes to an expected adjusted net income of approximately $40 million and a positive adjusted EPS of $0.09, fostering a positive EPS for all four quarters of the year. The company's full-year net yield forecast is revised upward to 9.4%, setting a record. None of its exchangeable notes are expected to be dilutive in Q4.

The company maintains its guidance for adjusted net cruise costs, excluding fuel and dry dock impacts, with expectations flat year-over-year despite inflation and higher variable compensation. They are on track to save $100 million in 2024 due to organizational efforts. Full-year adjusted EBITDA guidance is increased to approximately $2.425 billion, and adjusted EPS guidance rises to about $1.65, marking a 136% increase over 2023. The full-year net yield growth expectation has increased from 5.4% to approximately 9.4%, with cost guidance remaining stable. This performance reflects strong demand and effective cost management. The company anticipates a record 2024 and consistent net yield growth continuing into 2025 based on current booking trends. The paragraph also includes modeling notes for the first quarter of 2025.

The paragraph discusses the company's performance and strategic initiatives. In early 2025, they anticipate lower net yield growth compared to 2024 due to high prior-year growth and increased capacity days. The focus is on enhancing margins and reducing costs while maintaining service quality. They aim to save $100 million in 2024 and $300 million by 2026, including fuel savings. Their cost management efforts are on track, expecting flat adjusted net cruise costs despite inflation and higher variable compensation. They plan to keep unit costs below inflation, supporting their 2026 goals. Slide 16 illustrates the positive impact of these cost-saving measures on their margins.

The paragraph discusses the company's positive financial performance, highlighting an improvement in the 12-month adjusted operational EBITDA margin for the third quarter, aligning with future margin targets. It details the composition of the debt portfolio, noting that 55% is public debt and 45% is Export Credit Agency (ECA) financing, which provides favorable rates backed by sovereign guarantees. The company plans to increase the proportion of ECA financing as new ships are launched and current debts mature. Additionally, the company refinanced $315 million of notes due in 2024 with new notes due in 2030, and plans to settle 2025 exchangeable notes in shares. It also notes the upcoming maturity of $1.4 billion in notes due in 2026, stressing a strategy to optimize capital structure and reduce capital costs.

The paragraph discusses Norwegian Cruise Line Holdings' financial and strategic progress. The company has $600 million in notes that will become callable in early 2025, and they are considering their options as interest rates improve. Their net leverage has decreased to 5.58x, a reduction from the end of 2023, and they aim to further reduce it to 5.4x by the end of 2024, with a target of mid-fours by 2026. CEO Harry Sommer reflects on the company's strong performance in 2024, with record yield growth and EBITDA, and remains confident in their strategic goals. He expresses gratitude to the team and optimism for future opportunities. The paragraph ends with the transition to a Q&A session led by the operator.

In the paragraph, James Hardiman praises a strong quarterly performance, focusing on pricing improvements. He notes that per diem rates increased from 5% in the second quarter to 7% in the third quarter, with fourth-quarter projections suggesting a decrease back to 5%. He seeks clarity on whether these per diem rates are accelerating, decelerating, or remaining stable when adjusted for non-comparable factors. Mark Kempa responds by acknowledging the strong prior-year comparison, with a 14% pricing increase in Q4 of 2022, leading to an 8% yield. He highlights ongoing strength in near-term and Caribbean deployments and mentions the impact of disruptions in the Middle East last year, which affected capacity and was skewed towards higher-end brands.

The paragraph discusses financial guidance and targets set for 2026. James Hardiman inquires about the gap between yields and costs, which currently stands at 6% and questions its sustainability into the future. Harry Sommer responds that rather than focusing on this specific gap, the focus should be on achieving the 2026 targets, including a 39% operating margin, $2.45 EPS, mid-floor leverage, and a 12% ROIC. He expresses optimism about reaching these goals, based on the performance this year and improved visibility for 2025. Mark Kempa also joins in the conversation.

The paragraph discusses the company's strategy and progress related to unit cost growth and bookings. They emphasize their commitment to achieving sub-inflationary unit cost growth and mention their 300 million plus program, which is ahead of schedule. The conversation then shifts to bookings, with Harry Sommer explaining their refined revenue management tools designed to maximize yield. He notes that there is no specific pattern in bookings across brands, geographies, or guest sources, and the overall performance is meeting their expectations. The focus remains on maximizing yield rather than just the volume of bookings, as yield is what ultimately benefits the company financially.

The paragraph outlines a discussion between Brant Montour and Harry Sommer about the company's booking strategy and how it has evolved from pre-COVID to post-COVID. Harry Sommer explains that initially, post-COVID, there was uncertainty which led them to push the booking curve further in advance to mitigate risk. However, they have recently experienced strong demand for bookings closer to the travel date, which has been better than the previous year's performance. The booking curve strategy is adaptable and varies depending on the itinerary and brand. The company aims to improve margins, generate strong cash flows, and reduce debt by managing booking curves effectively in a strong demand and pricing environment.

The paragraph features a conversation between an operator, Steven Wieczynski, and Harry Sommer regarding the potential for future growth in cruise yields. Wieczynski asks whether changes such as cabin design and enhanced revenue management might enable cruise yields to grow faster than the historical low single-digit range. Sommer explains that while their goal is to increase yields as much as possible, they plan to maintain their existing growth strategy of low to mid-single-digit yield growth with low inflationary cost growth. Sommer notes that 2024 was an unusually positive year, but the company intends to continue with its established growth algorithm.

In this paragraph, Mark Kempa discusses their company's cost-saving efforts, specifically the goal of achieving $300 million in savings by 2026. He expresses confidence in their progress towards this target, noting that they've already exceeded a $100 million milestone for the year. Despite the positive trajectory, he remains cautious about declaring the $300 million target as conservative. Instead, Kempa emphasizes a long-term, comprehensive approach to cost reduction while maintaining product quality and customer experience. The paragraph also transitions to a question from Matthew Boss, who inquires about the company's strong momentum and any signs of future softening, to which Harry Sommer responds briefly, indicating strong performance across the board.

The paragraph discusses the company's satisfaction with its brands, geographies, and sourcing markets, while emphasizing a focus on low- to mid-single-digit yield growth. Mark Kempa explains that even if yields exceed expectations, the company will not automatically increase spending. Instead, they aim to right-size their unit cost base and maintain cost growth below inflation. Harry Sommer highlights the importance of managing yield and cost as independent factors, with a company culture shifting towards balancing return on investment and return on experience.

The paragraph discusses a discussion during a Q&A session where Harry Sommer addresses a question from Connor Cunningham regarding yield growth for a cruise line company. Sommer mentions that most yield changes expected in 2025 will be due to pricing, with no significant changes in occupancy anticipated, as they are already fully booked. He notes that variations may occur based on the number of children on board, particularly with the NCL brand, but this doesn't significantly impact revenue. While there are no major upcoming changes in revenue management, the company aims to gradually improve and maximize yield, adhering to a strategy of low- to mid-single-digit yield growth, alongside increasing the company's capacity by 4% to 6% annually with new ships.

The paragraph discusses the company's efforts to improve revenue management for on-board products in addition to ticket pricing. The aim is to enhance on-board revenue by offering better marketing, experiences, and opportunities for guests to make purchases, resulting in stronger financial performance in Q3 and Q4. Nearly all customers buy pre-booked on-board packages such as drinks, dining, and tours before boarding. Looking ahead, the company expects occupancy to contribute to yield growth in the coming years, especially as new Norwegian ships are introduced.

The paragraph discusses the occupancy and cost factors for a cruise line. Occupancy levels are expected to remain stable through 2025, with changes primarily involving children in cabins, which don't significantly impact revenue. There is a focus on the Caribbean region for 2026, with plans to increase passenger numbers due to new infrastructure. Cost-wise, the impact of dry dock and repositioning days was highlighted as a headwind for the first quarter, affecting yields. However, on an annual basis, the number of dry dock days is consistent year-over-year, indicating a stable cost baseline post-COVID.

In the discussion, Robin Farley from UBS seeks clarification on long-term financial goals, specifically regarding yield growth surpassing expense growth by 2.5 points each year until 2026. Harry Sommer confirms that while their primary focus is the number for 2026, yearly variations may occur, and they are not providing specific guidance for 2025. Mark Kempa adds that, when considering global operations, they anticipate inflation around 3%, though this could change. The conversation indicates attention to a long-term strategy rather than yearly exactitude.

In this paragraph, Patrick Scholes from Truist Securities asks Harry Sommer about the progress and future plans for Great Stirrup Cay. Harry Sommer responds by stating that the construction of a new pier is on schedule to open in the fourth quarter, which is expected to increase island usage, especially during wavier winter months. This enhancement aims to double the number of guests visiting by 2026, improving guest satisfaction, revenue, and repeat visits. Additionally, Sommer mentions various activities available on the island, like private beaches and Silver Cove. Though no new developments are announced, there is ongoing evaluation to enhance guest experience and drive return on investment.

The paragraph is a transcript from a teleconference where Ben Chaiken from Mizuho Securities asks about updates on cost-saving strategies discussed during an Investor Day. Mark Kempa responds by stating they are examining all aspects of product delivery to enhance guest value without affecting experience. Kempa also addresses a follow-up question about dry dock scheduling, indicating specifics can be provided later. Harry Sommer concludes the call, expressing satisfaction with the report and offering to answer further questions. The call ends with holiday greetings.

The paragraph thanks participants for their involvement and gives them permission to disconnect, wishing them a good day.

This summary was generated with AI and may contain some inaccuracies.