The paragraph is a transcript from the beginning of the Norwegian Cruise Line Holdings Fourth Quarter and Full Year 2024 Earnings Conference Call. The call is hosted by Sarah Inman, with participation from Harry Sommer, President and CEO, and Mark Kempa, Executive Vice President and CFO. The call is being webcasted on their Investor Relations website and a slide presentation is available online. It begins with a reminder of the forward-looking nature of the statements being made, which come with risks and uncertainties, and mentions that non-GAAP financial measures will also be discussed. The earnings release containing reconciliation to GAAP measures was issued the same morning and is accessible online.

The article's second paragraph highlights the company's exceptional financial results for the fourth quarter and full year of 2024. The focus on enhancing product offerings and guest experiences has led to record revenues and net yields, driven by strategic initiatives under the "Charting the Course" strategy. The strategy is built on four pillars: people, product, growth platform, and performance, contributing to transformational achievements and a significant fleet expansion program. The company is on track to meet its 2026 financial and sustainability targets. The CEO mentions record guest satisfaction scores and disciplined cost management while balancing return on investment and return on experience. The paragraph concludes with a transition to another speaker for further details on the results and 2025 outlook.

The paragraph discusses the significant cultural transformation and brand enhancements undertaken by the organization in 2024. Emphasizing the role of their value anchors, the text highlights how aligning culture with business objectives led to success both onshore and onboard. Looking towards 2025, there's confidence that this cultural foundation will further drive transformation. Specific achievements in 2024 include the repositioning campaign for Norwegian Cruise Line as "Experience More," improvements in guest experiences through fleet-wide Starlink Wi-Fi, expanded itineraries, dining and entertainment options, and forming strategic partnerships with entities like the National Hockey League and Aston Martin. These efforts demonstrate their focus on offering what guests value most.

The paragraph outlines the company's achievements and future plans in its long-term growth strategy, emphasizing significant capacity growth with 13 new ships ordered to enhance offerings and guest experiences. In 2025, they will introduce two innovative vessels, Norwegian Aqua and Oceania Cruise's Allura. Norwegian Aqua will debut in April as part of the next-generation Prima Class, offering new attractions like an aqua slide coaster and enhanced amenities such as a larger deck, re-imagined dining, a Prince tribute show, and upgraded spa services. The company aims to leverage these advancements to drive revenue and earnings growth.

The paragraph discusses a cruise line's commitment to upscale cruising and strategic investments. It highlights the introduction and reintroduction of their signature French restaurant, Jacques, and significant investments in their private island strategy, particularly with new infrastructure expected by late 2025 to enhance guest experiences. This is aimed at accommodating over 1 million guests in 2026, a major increase from 2024. The paragraph also mentions their exceptional performance in 2024, attributed to delivering outstanding vacation experiences, strategic initiatives, and disciplined cost management, resulting in record revenue and growth.

The paragraph highlights the company's significant financial achievements in 2024, with a record net yield increase of 10%, surpassing initial forecasts. This performance underscores strong consumer demand and effective execution across all brands. The company successfully achieved its cost-saving targets, maintaining flat unit costs through effective management, resulting in a 900 basis point spread between unit costs and net yield. These efforts have also enhanced guest experiences, with record satisfaction scores reported. The company plans to build on this momentum into 2025, with continued focus on efficiencies and strategic initiatives.

The company's operational performance improved significantly, with a nearly 500 basis point increase in the adjusted operational EBITDA margin to 35.5% and a 320 basis point rise in adjusted ROIC to just under 11%. The net leverage ratio reduced to 5.3 times, demonstrating progress in strengthening the balance sheet, aligning with their 2026 goals. Sustainability, integral to their strategy and driven by the Sail & Sustain Program, has gained recognition, including the ESG Leader Gold Award and an A rating from MSCI. Operational achievements include biodiesel testing on nearly half the fleet and significant shore power investments, pioneering installations at the Port of Seattle and Miami. Strong customer demand led to a 9% rise in net yield and positions them well for continued success in 2025, particularly in summer sailings in Europe and Alaska, despite challenges from a strong U.S. dollar.

The paragraph provides an overview of the company's financial performance and projections. It begins by mentioning a projected 4.5% pricing increase for the full year 2025, expected to drive a 3% net yield growth. Mark A. Kempa then discusses the fourth quarter 2024 financial results, highlighting that net yield grew by 9%, surpassing guidance due to strong performance across brands and increased onboard spending. Although adjusted net cruise cost ex fuel was slightly above guidance due to increased variable compensation, it would have decreased without this and the $6 per day dry dock impact. The strong financial performance resulted in an adjusted EBITDA of $468 million and an adjusted net income of $125 million, with a significant benefit from foreign exchange rates affecting net income and future periods. Finally, he notes the company's record full year 2024 performance.

The company reported exceptional results this year with a 10% increase in net yield, marking their highest growth ever. Despite higher variable compensation costs due to strong performance, disciplined cost management led to adjusted net cruise costs ex fuel only rising by $1 to $160 per capacity day in 2024. Adjusted EBITDA was over $2.45 billion, and adjusted EPS was $1.82, including a $0.10 FX benefit, while operating cash flow was over $2 billion, reducing leverage to 5.3 times. This success, driven by net yield growth and cost-saving efforts, supports the company's Charting the Course 2026 financial targets. For 2025, the company aims to maintain momentum, expecting 3.6% pricing growth and 0.5% net yield growth in the first quarter, with occupancy slightly down at just over 101%.

The paragraph discusses Norwegian Cruise Line's strategies and financial expectations for upcoming quarters. Due to repositioning two ships, Norwegian Breakaway and Norwegian Bliss, from the Caribbean to Europe for dry docks, there's a 71% increase in repositioning capacity days, leading to lower load factors and prices. To mitigate this, agreements have been made with Caribbean shipyards to reduce future repositioning needs. Despite challenges, the company expects a 3.6% pricing increase in Q1 2025 and 3.5% net yield growth in the last three quarters of 2025, aided by a 7% capacity expansion. Adjusted net cruise costs excluding fuel will grow by 3.9% in Q1 2025, impacted by dry dock-related expenses. Adjusted EBITDA and EPS are projected at $435 million and $0.08, respectively.

The paragraph discusses the financial outlook for the full year, expecting net yield growth of approximately 3%, driven by strong performance from major brands, despite modest growth in others due to increased capacity. The appointment of a Chief Luxury Officer is anticipated to enhance yields and margins. Growth in net yield is expected to slow temporarily in the first quarter but pick up to 3.5% thereafter. Unit costs are projected to grow by only 1.25% in 2025, reflecting effective cost control measures and strategic initiatives that aim for sustainable efficiencies without affecting the guest experience. The first quarter will see increased costs due to dry docks and capacity changes, but costs should remain flat for the rest of the year, with a strong focus on efficiency.

The article discusses the company's financial performance and strategies. It highlights a significant spread between net yield and unit cost, leading to strong expected adjusted EBITDA of $2.72 billion and EPS of $2.05 for the year, despite a $70 million impact from FX and fuel. It outlines margin improvements in 2024 and projected gains through 2025, aiming for a 39% margin target by 2026. The company strengthened its balance sheet in 2024 by refinancing high-rate debt and shifting secured commitments to unsecured ones, highlighting a strategic focus on improving financial stability and achieving long-term goals.

In January, the company issued $1.8 billion in unsecured notes due 2032, using $600 million to replace secured debt with unsecured debt, and $1.2 billion to refinance existing notes. They increased their revolving credit facility to $1.7 billion with better terms, optimizing their capital structure. S&P and Moody's have upgraded their credit ratings. In 2024, the company reduced its net leverage by two turns, ending the year at 5.3 times, and aims to reduce it to around 5 times in 2025 and mid-4s by 2026. The focus on deleveraging is expected to strengthen the balance sheet and benefit shareholders. Additionally, operational EBITDA margin improved by about 500 basis points in 2024.

The paragraph highlights the company's exceptional financial performance, including a significant increase in adjusted EPS and a decline in net leverage, attributing these results to the dedication of its 40,000 employees. It emphasizes the successful execution of a strategy set during the Investor Day in May, aimed at achieving 2026 targets. The management team is confident in the strategy's effectiveness and anticipates continued success in 2025. Following this statement, the call transitions to a Q&A segment, with Elizabeth Dove from Goldman Sachs asking for more details on booking trends, brand performance, and geographic performance. Harry J. Sommer responds to her question.

The paragraph discusses the positive booking pace for the company, particularly in Europe and Alaska for the summer period. While the luxury brands are performing slightly slower than expected, the overall NCL brand performance is strong, leading to satisfactory booking levels. Furthermore, 2024 results exceeded initial expectations with greater yield growth relative to cost growth. Cost savings were achieved faster than anticipated due to effective management and staff efforts. Harry J. Sommer and Mark A. Kempa discuss the implications of this financial performance and cost savings, with Kempa acknowledging the progress and potential for further upside.

The paragraph discusses a company's effort to achieve a $300 million efficiency program over three years, noting success in overachieving initial targets and continuing to find opportunities for efficiency in 2025 and 2026. The company is guiding a net cruise cost increase, excluding fuel, that's below general inflation rates, which are around 3% to 4%. They express confidence in their strategy, emphasizing that their efforts are focused on streamlining operations without affecting the guest experience. Harry J. Sommer highlights the importance of guest satisfaction, citing record scores across their brands, which they monitor closely on a weekly basis. This focus on guest experience is prioritized over financials, contributing to their positive results in 2024. Elizabeth Dove and an operator facilitate a transition to a question from Brandt Montour of Barclays, who asks about pricing and occupancy trends for upcoming quarters.

In the paragraph, Harry J. Sommer discusses the impact of dry dock and repositioning cruises on occupancy rates, particularly noting that these transatlantic cruises in January and February have fewer children, affecting those rates. He mentions a mix issue, with a transition to more Caribbean cruises, expecting an increase in guests by 2026. There is also a shift expected in 2025 with more itineraries to Asia, Africa, and the Pacific. Norwegian Joy, a larger ship, is being used for longer Alaska cruises, which also attracts fewer families due to their length. Brandt Montour then asks about the strong demand from the U.S. to Europe, particularly in light of geopolitical events and their impact on booking behavior, seeking clarification on any recent changes due to current events.

The paragraph involves a discussion during an earnings call where Harry J. Sommer responds to a three-part question by stating that last year's 10% yield growth was not due to particularly soft comparisons but was a result of strong performance across all geographies. He highlights Europe’s success and mentions stable customer behavior post-election. After another participant, Brandt Montour, acknowledges his response, operator introduces the next question from Steve Wieczynski of Stifel. Wieczynski congratulates on a strong fourth quarter and inquires about the guidance for the year's yield growth, which is anticipated at 3.5% from the second to fourth quarter. He seeks clarity on potential upsides to this number, considering demand in regions like Alaska and Europe, and asks for insights on onboard factors influencing this growth estimate.

In the paragraph, Sommer discusses the company's confidence in their financial guidance, emphasizing a growth in yield despite minimal cost growth for the upcoming quarters. He emphasizes that their focus is on being customer-driven, not finance-driven, by enhancing onboard experiences based on guest preferences, which leads to higher revenues. Wieczynski then asks about the company's strategy for future capacity growth and ship retirement, given some ships are aging. Sommer responds by acknowledging that they continually assess market conditions.

The paragraph discusses the state of the company's fleet of ships, noting that their oldest ships are from 1998 and 1999, and have not yet reached 30 years of age. The company believes these ships could last up to 35 years or more, delaying the need for retirements. The previous CEO's focus on investing in ship maintenance has kept them in good condition, and the current leadership also regularly inspects them. Although no imminent retirements are planned, they remain open to future opportunities, especially following structural changes in financing that provide more flexibility for potential vessel disposals. The dialogue transitions to a question from Dan Politzer regarding European demand compared to the Caribbean, noting the different market dynamics.

The paragraph discusses the impact of the strong U.S. dollar on demand and bookings, particularly in the European market. Harry J. Sommer indicates that strong demand in Europe is more attributed to their product offering and marketing rather than the strength of the dollar. He notes that Caribbean bookings are less emphasized due to its smaller share of deployments in the summer. Mark A. Kempa adds that while most transactions occur in U.S. dollars, the stronger dollar does not significantly impact demand. However, there is a noted effect on the company's earnings per share due to currency strength. Overall, despite currency fluctuations, the company is optimistic about the European and Alaskan markets.

In the earnings call, Harry J. Sommer addresses potential taxation changes on the cruise industry as mentioned by the current administration. Although the complexities and specifics of these potential changes make it difficult to predict their impact on operating income, Sommer highlights the limited time cruise ships spend in U.S. waters and suggests any policy changes would require legislative action. He also notes potential positives from the administration, such as efforts toward peace in the Middle East and Ukraine, which could benefit the cruise industry by 2026, particularly if ports like St. Petersburg become accessible again, positively impacting their Northern Europe deployments.

The paragraph discusses the cruise operator's outlook on occupancy rates and future deployment strategies. The operator expresses hope for peace for humanitarian reasons and sees potential opportunities in the summers of 2026 and 2027. Harry J. Sommer responds to a question about occupancy rates, indicating that while it's too early to give precise guidance for 2026, they anticipate a mild tailwind due to changes in deployment strategies, such as less focus on Asia/Africa/Pacific regions and more on the Caribbean with shorter deployments. The operator is optimistic but cautious about making specific projections at this stage.

The discussion focuses on projected earnings growth for 2025 and 2026, with an emphasis on capacity and earnings per share (EPS) improvements. Harry J. Sommer notes that adjusting for foreign exchange (FX) changes, 2025's EPS growth is substantially higher than initially indicated. He doesn't expect the U.S. dollar to continue appreciating at its current rate, which would make the target for 2026 easier to achieve. The strategy outlined involves moderate capacity growth, yield improvements, and cost management to enhance margins and cash flow, enabling the company to meet its 2026 goals. Vince Ciepiel inquires about Great Stirrup Cay, aiming to confirm whether it will accommodate 1 million passengers by 2026, potentially surpassing previous targets, and asks about the percentage of capacity expected to stop there that year.

The paragraph discusses projections related to Great Stirrup Cay, highlighting that 1 million passengers are expected in 2026, which is a slight increase from previous estimates. It is noted that 30% of all guests will visit Great Stirrup Cay, but specific yield benefits can't be commented on yet. A pier is set to be completed in the fourth quarter, which will enhance the guest experience and potentially increase throughput by 2026. Additionally, there are speculations about potential opportunities in the Middle East or Red Sea, noting that positive developments in these regions might benefit figures in 2026 or 2027. There is also mention of having 11 ships positioned in Northern Europe.

The paragraph discusses adjusting itineraries for future openings in St. Petersburg and the Middle East, with a focus on potentially taking advantage of new opportunities in 2027. It also addresses the complexities of deploying ships between summer and winter in the Middle East, indicating that changes in deployment for a Red Sea or Middle Eastern opening are not planned for the short term. Additionally, Mark A. Kempa responds to Connor Cunningham's question about inventory management, emphasizing ongoing improvements in revenue management systems. These improvements are part of regular operations rather than any sweeping changes, focusing on continuous refinement and using both art and science in revenue management.

The paragraph involves a discussion about the cruise line's demographics and marketing efforts. Harry J. Sommer responds by stating there haven't been significant changes in the demographic mix of cruise passengers, which includes new to cruise, new to brand, and past guests. The company is satisfied with their current mix and utilizes a team of data scientists to continuously optimize marketing efforts. Robin Farley from UBS asks about forward bookings compared to the previous year, and Mark A. Kempa emphasizes that instead of focusing on specific quarters, the company aims to maintain an optimal booked position over a long-term basis, which they believe they have achieved.

In the paragraph, the company emphasizes its focus on delivering optimal economic results for its customers rather than being concerned with quarterly fluctuations or records. Harry J. Sommer expresses satisfaction with the company’s current strategy, highlighting a strong order book of 13 cruise ships over the next decade and a commitment to providing an excellent guest experience for robust financial performance. Despite others' interest in river cruising, the company plans to concentrate on its core business. Robin Farley thanks Sommer, and the operator concludes the conference call, inviting further questions throughout the day.

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