The paragraph is an introduction for the Norwegian Cruise Line Holdings' first quarter 2025 earnings conference call. The operator, Donna, introduces the call and states that participants are in listen-only mode with a Q&A session later. Sarah Inmon, the host, announces that she is joined by Harry Sommer, the CEO, and Mark Kempa, the CFO. The call is being webcasted on the company's investor relations website, and a presentation will be available for 30 days after the call. The press release of the results has been issued and is on the website. The call will include forward-looking statements subject to risks and uncertainties, and it may reference non-GAAP financial measures with reconciliations available in the earnings release.

In the first quarter of 2025, the company exceeded its guidance across key metrics, with net yields surpassing expectations by 1.2% and adjusted EBITDA reaching $453 million. This resulted in a trailing 12-month margin of 35.5%, showing significant improvement from the previous year. Despite these successes, adjusted EPS ended slightly below guidance at $0.07 due to a $0.05 foreign exchange impact. The CEO, Harry Sommer, also highlighted long-term initiatives, such as the introduction of the Norwegian Aqua ship and enhancements to Great Stirrup Cay, as part of their strategy to balance return on investment with return on experience.

The paragraph discusses the delivery and features of the Norwegian Aqua, the first ship in Norwegian Cruise Line's new Prima Plus class. Delivered on time and on budget, the ship reflects the management team's focus on enhancing guest experiences while considering financial returns. Aqua is 10% larger than previous Prima Class ships, with redesigns and new offerings, such as replacing the go-kart racetrack with the Aqua slide coaster, increasing staterooms, and adding amenities. The slide coaster has generated considerable interest online and exemplifies the company's commitment to improving guest experiences and maximizing ROI.

The paragraph discusses upcoming developments at Great Stirrup Cay, Norwegian Cruise Line's private island in the Bahamas, aimed at enhancing guest experience and financial performance. A new pier will allow docking for two ships simultaneously, eliminating the need for tendering. Starting in 2026, over a million guests are expected annually. Enhancements include a resort-style pool, welcome center, tram system, an adult Vibe Beach Club, and a family zone. These upgrades aim to improve guest satisfaction, encourage higher spending, and differentiate the Caribbean offering, with plans for continued improvements as capacity increases.

The paragraph highlights Norwegian Cruise Line's digital advancements and fleet management improvements. The revamped NCL app has been fully rolled out, with over 800,000 guest logins in a quarter, driving pre-cruise revenue and providing consumer insights. It enhances guest experience and up-sell opportunities. The fleet management strategy focuses on new ships, modernization, and repurposing older vessels. Recent drydocks for Norwegian Bliss and Breakaway introduced new guest enhancements, including the Silver Screen Bistro, expanded stateroom capacity, and more dining options.

The paragraph discusses the company's strategy of enhancing guest experiences and financial returns through strategic fleet management. This involves signing agreements to charter older ships, such as the Norwegian Sky and Sun, to Cordelia Cruises in India, and the Regent Seven Seas Navigator and Oceania's Insignia to Crescent Seas. These actions help optimize the fleet, simplify operations, reduce fleet age, and maintain cash flow from charter agreements. The strategic positioning slightly reduces projected capacity growth but aligns with long-term financial and operational goals. The paragraph also notes that booking trends remain positive with advanced ticket sales up 3% and steady key indicators like cancellation rates and onboard revenue.

The paragraph discusses the company's outlook for the remainder of the year, highlighting that Q2 cruises are mostly sold, with strong onboard revenue. It acknowledges macroeconomic uncertainty affecting Q3 bookings and occupancy, as the company prioritizes price over load factor. With increased Caribbean capacity in Q4, the booking curve is shorter but remains within optimal range, above historical averages. The company plans to expand close-to-home itineraries to improve demand long-term. It adjusts its full-year net yield growth outlook to 2%-3% due to potential top-line pressures, but maintains its 2025 financial guidance. Cost-saving initiatives are expected to offset potential revenue challenges, with $300 million identified in efficiencies.

The paragraph discusses the company's strong financial performance in the first quarter of 2025, highlighting that results met or exceeded expectations across key metrics despite a decrease in occupancy due to increased drydock days. Net yield outperformed guidance, driven by robust growth in net per diem and bookings in popular itineraries like the Caribbean and Hawaii. The company also managed to control costs effectively, with adjusted net cruise costs growing less than anticipated, primarily due to delayed expenses to the second quarter. Overall, the company maintained its focus on disciplined pricing, cost control, and long-term business management.

In the quarter, adjusted EBITDA was $453 million, exceeding the $435 million guidance, while adjusted net income was $31 million, affected by $23 million in foreign currency losses. Adjusted EPS was reported at $0.07, noting a $0.05 impact from FX losses. For the second quarter, with today's date being April 30, the company expects strong visibility and forecasts occupancy at 103.2%, down 2.7% year-over-year, due in part to increased sailings in Asia, Africa, and the Pacific. These trips involve higher pricing but lower occupancy. The company prioritizes pricing over occupancy for long-term results, anticipating net yield growth of 2.5% and net per diem growth of 5.2%. Adjusted cruise costs, excluding fuel, are set to rise by 1% due to cost shifts from Q1 to Q2 and expenses for delivering the Norwegian Aqua. Consequently, adjusted EBITDA for Q2 is projected at $670 million, and adjusted EPS at $0.51. For the full year, average occupancy is expected to be 102.5%.

The paragraph discusses a 3% increase in sailings in Asia, Africa, and the Pacific, emphasizing the company's strategy to prioritize price over load factor to build a strong foundation for the future. They expect full-year net yield growth of 2% to 3%, driven by a strong pricing strategy with growth of 4.3% to 5.4%. The company is prepared to offset potential top-line pressures through cost savings initiatives, projecting a minimal increase in net cruise costs excluding fuel. They are not significantly affected by tariffs due to global sourcing strategies. The firm's efficient operating model and cost control measures aim to protect margins and profitability amid changing conditions, and they remain confident in their long-term strategy.

The company is maintaining its 2025 adjusted EBITDA guidance at $2.72 billion and its adjusted EPS guidance at $2.05, despite challenges. Operational EBITDA margin improved to 35.5% in the first quarter of 2025, with an expected rise to 37% for the full year. Through its transformation office and cost efficiency efforts, the company aims for a 39% margin target. On the financial front, they refinanced 2025 exchangeable notes with new 2030 notes, reducing diluted shares by 15.5 million without increasing net leverage, and can cover their $640 million in 2025 maturities with current cash flows.

The paragraph discusses the company's financial outlook and priorities up to 2026. They have $1 billion in debt maturing in 2026, which they plan to service with organic cash flow. With 93% of their debt at a fixed rate, interest rate changes will minimally impact their expenses. They aim to reduce leverage, which temporarily increased due to acquiring the Norwegian Aqua ship, affecting net debt calculations. They project leverage to decrease throughout the year, aiming for mid-4s by 2026. The CEO, Harry Sommer, emphasizes the strong fundamentals of the cruise industry and NCLH, highlighting its growth potential, consumer demand, and competitive value compared to land-based vacations.

The paragraph highlights the company's strong performance, supported by a reliable algorithm and cost-saving initiatives that ensure long-term sustainability. It credits a seasoned management team, effective capital allocation, and commitment to financial strength for driving strong shareholder returns. The company reaffirms its full-year financial guidance despite macroeconomic uncertainties and remains on track to meet its 2026 goals, focusing on margin expansion, debt reduction, and high return on invested capital. The paragraph emphasizes disciplined business management, balancing cost efficiencies with guest experience, and appreciates the dedication of its 41,000 team members. The company's confidence in its strategic direction is affirmed before the floor is opened for a Q&A session.

Harry Sommer addresses questions about the company's booking status for 2025 and early 2026, recent customer behavior, and updates on guidance for volumes and pricing. He notes that there was some initial instability in April, particularly concerning their European itineraries for Q3, likely due to American customers' reluctance to commit to long-haul travel. However, bookings and pricing have recently normalized, aligning with levels seen at the end of March. While Sommer anticipates ongoing challenges with Q3 European itineraries, he emphasizes a strategy focusing on pricing over occupancy. The company's guidance suggests they will achieve the most significant year-over-year price increases among major cruise lines, positioning them well for the latter half of the year.

The paragraph discusses optimistic guidance and booking trends for a company, highlighting a 4.5% midpoint yield in the latter half of the year. The company is ahead of historical booking data from previous years like 2017-2019 at higher prices. A shift to more Caribbean itineraries, 10% more in Q4 than the previous year, affects the booking curve as these typically book closer to the departure date. This isn’t seen as a weakness but a result of consumer behavior. Although there appears to be a slight decrease in forward bookings over a year, it is not viewed as softness but an optimal position given the circumstances. Additionally, the company plans to reduce reliance on European itineraries in 2026, favoring more seven-day trips instead of longer ones for strategic benefits.

The paragraph discusses strategies for optimizing booking processes and enhancing profitability. By adjusting the booking curve and implementing more comprehensive pre- and post-hotel stay programs, the company aims to increase margins without expanding cruise capacity. On-board spending remains strong, with guests willing to spend during their trips. The company is committed to a targeted approach in cost management to maintain or improve guest satisfaction and brand equity. Over the past 18 months, they have focused on eliminating waste and improving efficiency through their transformation office, which supports their EBITDA forecasts and bottom-line targets for 2026.

The paragraph discusses a company’s strengthened supply chain and commercial strategies to accelerate operations amid potential top-line pressures, while staying on track with their $300 million-plus program and 2026 targets. Mark highlights confidence in meeting these targets by flexing finances and improving margins. Harry Sommer adds that guest satisfaction is at a record high, as evidenced by the number of customers booking future cruises during or after their trips, indicating strong demand and future bookings for 2025 and 2026.

The paragraph discusses the prioritization of guest satisfaction over specific metrics. Mark emphasizes that they are not cutting costs indiscriminately but are instead increasing spending in key areas like quality meats and proteins to enhance guest experiences. Savings are being achieved in less critical areas such as fuel costs. The conversation involves Harry Sommer and Mark Kempa thanking Matthew Boss for his comments before addressing a question from Steve Wieczynski about breaking down bookings across different brands, specifically the Norwegian brand versus luxury brands.

In the paragraph, Harry Sommer addresses concerns about booking choppiness in the cruise industry, specifically in relation to their luxury brands compared to Norwegian Cruise Line. He explains that all three brands—Norwegian, Oceania, and Regent—are experiencing similar booking patterns, with pressure on Q3 European itineraries, which are more prevalent in Oceania and Regent. However, this issue is limited, and their winter itineraries and world cruises are doing well. Sommer dismisses concerns about recent promotional activities for Oceania, saying they're routine and don't impact pricing strategy negatively. He emphasizes that they are maintaining a strong pricing position with a projected 4-5% price increase year-over-year in the latter half of the year.

In the paragraph, Steve Wieczynski asks Harry Sommer about the differences in yield guidance and whether they are due to challenges with 3Q bookings or changes in on-board or close-in demand. Harry clarifies that the choppiness in bookings was more like two to three weeks, not just one, and recovery has begun. He emphasizes the difficulty in predicting the future due to factors like tariffs, which affect consumer sentiment, making it uncertain to assume consistent success in upcoming days.

In the paragraph, the speaker addresses concerns about recent challenging booking trends, emphasizing the company's focus on maintaining price stability rather than lowering prices to boost bookings. Despite a two to three-week slowdown in bookings, they achieved a 4.6 to 4.7% year-over-year price increase, building a strong foundation for the future. Competitive practices like offering dollar deposits are mentioned, but the company doesn't plan to follow them. On-board revenue remains robust, and no significant reductions are anticipated as passengers continue to spend money once on board. The conversation concludes with operational remarks, followed by a transition to the next question from another participant.

In this paragraph, Robin Farley asks about the year-over-year pricing and booking trends in light of advanced ticket sales and capacity increases. Mark Kempa responds noting that while advanced ticket sales are up 3-4% and capacity is up 5%, the shift to more short-distance itineraries impacts these figures due to shorter booking windows. He mentions that currently, pricing is up and load factors are consistent with historical ranges, though there is some volatility in the Q3 European destinations. Despite this, the overall booking outlook appears healthy with a recent encouraging uptick in bookings.

The discussion centers on the visibility and booking trends for Caribbean cruises happening in the later part of the year. Mark Kempa acknowledges that there is less visibility for this period, but notes that "Fun and Sun" itineraries have been performing well, with strong demand for cruises closer to home, particularly from Americans who prefer staying nearby due to the macroeconomic climate. There is some volatility in European bookings, but the expectation is for close-to-home itineraries to do well in Q4. Harry Sommer adds that enhancements to Great Stirrup Cay launching in November provide a positive boost, potentially offsetting typical Q4 Caribbean softness.

In the paragraph, Ben Chaiken from Mizuho asks about the return on investment (ROI) of the investments being made in Great Stirrup Cay and whether these investments are marketable and capable of driving pricing. Harry Sommer responds by affirming that they intend to market Great Stirrup Cay more aggressively in the coming months, emphasizing new announcements, additional activities, and improved accessibility due to the pier, which should lead to a higher visitation rate. He states that the investments align with their long-term ROI goals and are expected to make the island more marketable, enhance pricing on cruises, and boost on-island spending.

The paragraph details a discussion about anticipated increases in guest visits, projecting growth from 400,000 to over a million visits next year, which is significant given the total annual guest numbers range from 2.5 to 3 million. Ben Chaiken asks about the impact of increased capacity in Alaska, Africa, and Asia on occupancy and yields, specifically considering the Caribbean and Fun and Sun itineraries. Harry Sommer responds that while these itineraries typically have lower relative prices, their higher occupancy is expected to result in a net yield tailwind. Additionally, operating costs for these itineraries are lower, especially compared to more logistically complex regions, offering both yield and cost benefits. The conversation then transitions to a question from James Hardiman of Citi.

In the paragraph, Harry Sommer addresses a question about 2025 guidance and its assumptions regarding market stability. He acknowledges current market conditions and notes encouragement from recent booking rates, which are performing well for a typically slower season. However, he cautions against extrapolating short-term performance over the entire year. Sommer expresses confidence in meeting the year's guidance if current trends persist, but he highlights the uncertainty of ongoing conditions and does not assume they will remain stable. James Hardiman finds Sommer's explanation helpful.

The paragraph features a conversation between Harry Sommer and James Hardiman regarding future projections for 2026. Harry mentions that while it's a bit early to draw firm conclusions about 2026, they are optimistic because their booked positions are ahead of historical averages from good past years like 2017-2019. They have some visibility to confirm their targets for 2026. Conor Cunningham then asks about how inventory management adjusts during a period of slower bookings.

In the paragraph, Harry Sommer and Mark Kempa discuss their company's approach to revenue management and pricing strategy. They mention that, although close-in discounting was used for certain problem areas in Europe, they are committed to maintaining price integrity for future periods like Q4, Q1, and summer of 2026 as they believe it provides a foundation for growth. Mark highlights the use of bundling packages to add value for customers and notes that they have many strategies beyond merely cutting prices. Pricing promotions are applied selectively and only for specific needs. Overall, they stress the importance of careful revenue management in the current environment.

In the paragraph, Harry Sommer mentions that the company is increasing its marketing spending to boost demand and maintain pricing levels, contrary to any assumptions of a reduction. Conor Cunningham then asks about cost efficiencies amid rising marketing expenses. Mark Kempa explains that the company is not cutting products; instead, they are focusing on eliminating waste and enhancing efficiencies system-wide, including in back-office operations and supply chain management. He highlights improvements in commercial negotiations and minor technology investments that contribute to backend efficiencies without affecting the customer experience.

The paragraph discusses efforts to enhance guest experiences without disrupting them, as indicated by improved guest satisfaction scores and increased cruise certificates. The conversation then shifts to Brandt Montour from Barclays, who asks Harry Sommer about the observed hesitation of American travelers to visit Europe compared to other destinations. Harry Sommer and Mark Kempa acknowledge the challenge but do not have a definitive explanation, noting that their focus is on improving the European offering to maximize occupancy rates.

The paragraph discusses consumer hesitancy regarding booking European itineraries, particularly from North American customers, due to macroeconomic uncertainties. Mark Kempa clarifies that the issue is not related to supply but consumer hesitancy. Brandt Montour asks about booking trends for summer 2026, especially for luxury brands with older customers who book in advance. Harry Sommer responds that there are no challenges with bookings for Europe in 2026, aside from a minor dip in early April; overall, bookings are in line with normal patterns and doing well.

In the paragraph, Harry Sommer expresses optimism about the company's long-term strategy and progress in various areas such as new ships, on-board products, deployment patterns, and brand improvements. He is excited about the upcoming quarters, particularly mentioning the inauguration of the Allura later this year. He concludes by thanking everyone for their participation in the teleconference and webcast, which the operator then officially ends.

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