Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Norwegian Cruise Line Holdings Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is John, and I will be your operator. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions for the session will follow at that time. [Operator Instructions] And as a reminder to all participants, this conference call is being recorded.

to Vice conference ESG President Communications. like host, to and now John, Jessica of would turn over the your Corporate I Investor Relations, you, Thank Ms. John. Please proceed.

Jessica John

Financial us everyone. John, of XXXX Officer year Norwegian and Executive President Mark Del Cruise business Officer; joined Holdings; you good Rio, you, I'm and fourth Kempa, morning, Cruise and call. Line. President by Thank for and Line and earnings and joining Sommer, Executive Officer today Executive for update full President our quarter Chief Chief Thank Harry Vice Chief Frank Norwegian and of

begin our commentary, after financials will remarks. to which, discuss the call handing closing to back call follow Frank with before Frank the Mark opening for will

We will then open the questions. your call for

call company's is on conference webcast www.nclhltd.com/investors. at this Investor website simultaneously the being reminder, a Relations As

available a conference also also may website. found call, will reference We and days make call presentation presentation replay Both during this Investor which slide be following today's on for Relations the for call. our XX be to will

like I items. we begin, few a to cover Before would

release. results release XXXX and statements. forward-looking Relations the materially These This that could considered conjunction that statement includes with be quarter and in this such cause available risks issued with our cautionary uncertainties full involve fourth to website. in call and year actual our Investor results statements earnings press on from morning Our is was our differ statements should contained

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

Del to Rio. turn to like the that, With over call Frank Frank? I'd

Frank Del Rio

today. was no year our like XX-year other everyone, joining Thank you, and you a thank for Jessica, history. XXXX company's in us morning, good and

fleet our concluded through service midway our year. reentering we with As in great cruise last the back, vessel the come successfully

storied brands. achieving next significant recovery Our continually our push for chapter and our the preparing year, milestones to transition to challenging on of forward several team this road

full up year our our reached at we nearly and XXXX the booked our telling, fleet a significantly ramped to guests With high in ship, inflection critical several welcomed our position maintained fleet, the points, newest Prima record prices. carrying seas, more levels perhaps million occupancy pricing industry-leading ended record Norwegian back for financial to X.X world-class and

These as backdrop considering accomplishments ongoing impressive lingering are even when were uncertainty. they against more geopolitical and as impacts achieved well macroeconomic the COVID-XX of

shore-side as be I everyone their to both tenacity, opportunity to to proud, again the and entire to want every inspired world. hard dedication once and which I'm of each you. the work alongside we of and strive thank vacation one choice for honored forward incredibly us take propelled our work, the and for shipboard team, has around

to shipyards, all want value our continued our for and express their and support sincere loyal stakeholders our partners, investors also I guests, thanks And lenders, travel to partnership. of

Shifting bright let's horizon. our six, for our the slide key and we the to attention what which company, future our turn is positioning outlines certainly on catalysts current have a to

broader cruise is First, goods. resilient target that be of continues upmarket physical to and the experiences purchase industry, the tends more our are which we and skew see in to consumption to over healthy financially of consumer, encouraged prioritizing

consumers two willingness about on to the high-level we to carefully evaluate indicators the travel. We've previously monitor of cruise talked spend

second which continue signs indicator which of first actual spending, the of indicator of one real-time is onboard consumer's a booking curve, hold strong a The the a length being the fading. revenue, forward-looking with being of to and no both

passenger bright in than XX% onboard quarter XXXX elongated approximately in the window cruise also comparable higher revenue spot gross to the booking same day continues compared to revenue fourth the per fact, period. was in XXXX. In a the quarter the well Onboard be with quarter,

travel also and is are appealing and consumers, three markets. the for on target our resonating to the consumer gives in confidence is not future. but This the The proposition bottom-line experiences and to our cruising value us their unique only brands of to respective now spend incredible offerings continues with willing that be compelling

taking align and with foundation strengthen quarter profitable we improve broad we to can our a enhance across the so margins. This our in and initiative the and our right-size cost operating Second, strategic actions business rebuild our that and ongoing began are we includes growth. sustained priorities base to for efficiencies fourth to

past this years have start could been the imagined. have You anything now? initiative may we unlike few ask why While

and for focused to minimizing the and were adapt environment we of capital, cruise by a advocating industry health unprecedented evolving raising and the enhancing burn, First, taking disruption on our restart rapidly to to to prolonged cash operations. period a health programs withstand measures necessary public safety

our then discerning to brands. while expect operations We shifted experience the our unparalleled focus providing relaunching same our from guests they leading our vacation

this to opportunity bar took also We long-term. pricing unique raise for the on the

and is of through than cruising how loyal brands know on on we realize our our our phased focused that can maximize and transformational our lens aspect business to we full value that squarely ramp the complete, profitability of nearly even back Now guests in are stakeholders. growth. is for of occupancy how a period Every our better we potential as before, embark all is being evaluated

reduce further our to maximize revenue cost exploring and generation. first to are profile opportunities, We foremost, and

our spend, some initiatives product chain of structure, actions improve seen thoughtful and taken reductions, cost optimization, already overhead to we've corporate of supply delivery. likely of rationalization You've normalization itinerary including the marketing

very and our no superior and business, exceptional levels. service delivering sight as and experience guest stone guests, We not continue will an evaluate identify the leave to incremental we will to course, our prioritize of we on opportunities. of And lose continue will heart turn of we

to approximately in each touch is growth for brands, our deliver over in on XXXX one gearing year, in berths. newbuild are The upscale a up will newbuild basis, XXXX. industry-leading to shown first I our increase we for catalyst compared seven, want X,XXX capacity This history, our fleet XX% last pipeline. our of time result on adding including as the over slide berths day our to additional On XX% in an this to

to slide alternative we to made been accommodate have pipeline our two on in part modifications some related you fuels. can the lengthened the shifts have future use primarily ships eight, of in see These the last to As Class. Prima newbuild

We Pima gross Norwegian, XX% now Viva. and than tonnage be for expect larger approximately approximately the fourth ships and to third be sixth Class to and larger fifth Prima XX% and Prima the Class

profitably travel, days have We a to be remain As Class this with capacity vast and demand brands we XXXX. into one now from larger world vacation to on many a our expansion in land-based to bit, delivery XXXX have result, each particularly the confident year ship compared Prima to and unserved expect tapped markets shifted broader industry's around consumer our yet delivered for the alternatives. the when absorb under-penetration ability and continued not into, underserved that our

booking, now discussion and our our to Shifting demand trends. pricing

slide in you the see improvement guidance. XXXX line in can below the XX% quarter, quarter, is gap with As fourth yet the factor This on XXXX. comparable closing reached in versus demonstrates sequential approximately nine, occupancy XX%, our load another

quarter and of to the XXXX in have the a through continuing This ramp already historical first leading return is quarter beyond. second achieved quarter, to of occupancy XXXX we beginning XXX% as levels the in

our slide of as XX% the front XXXX. XXXX, up fourth per net In constant terms in an growth currency strong over result reported on quarter pricing, of and DM another in approximately up illustrates XX, in the XX% with basis pricing

XX, to XX%. cumulative approximately of end, Turning our to our was slide at within for XXXX year XX% position book range optimal

also prices. spot as our sweet continue XXXX record believe higher and guests to pricing. performance now optimizing encouraging of book of balance it is early is while this book position at We ahead the year delicate Full strikes XXXX's to

in have been see strong earlier pleased continue, Since we season including usual. positive booking very likely wave to momentum started last than two a we spoke that months November,

Cruise month Line in month. week November day, a by fact, wave a of they Subsequently, Black start Cyber record as push. and record led of was another and Monday strong a to record line holiday setting In boosted booking January, record celebrate traditional record-breaking sales Norwegian the month Friday for

positive times experienced year's offer launch which net and it a with brand levels. XXXX pre-pandemic to XXXX Our Regent in resulted reception last launch also day wave booking four similar nearly a record launch, wave volume

book Mark will which gives we continue confidence strong to the brands in further position XXXX and shortly that our experience us across cumulative detail. our guidance, demand achieve discuss current dynamics that Our more we can

outlook. I'll Mark? I'll with now, be commentary and back closing our over little comments his But turn on the later. Mark position financial for to for a call

Mark Kempa

per otherwise Frank, net and a yield guidance XXXX results, the fourth excluding recovery. commentary per everyone. constant net today progress our financial and commentary capacity quarter fuel currency net day XXXX on noted, will adjusted on is you, My cost, cruise my good our morning, metrics focus financial and on on diem, Unless Thank basis.

guidance. metrics key nearly our highlighting all quarter or of outlines fourth which exceeded results, XX Slide met

strong top strong the onboard Focusing passenger re-launch. XX%, pricing our we and line, approximately diems on per ticket versus total net increasing drove the performance XXXX, achieved XX% up cruise continuing quarter, the with approximately have in revenue since revenue pricing per generation

fuel half versus costs, approximately to costs, in ramp operations continue excluding decreasing the Turning XXXX cruise line adjusted capacity net per expectations, the to half XX% second first with up. with our as day, was

guidance is a rate. half of XXXX XXXX our go-forward run As not representative indicates, second

adjusted nearly a milestone achieve breakeven. in fourth second time half however, EBITDA generating return the positive stepping we for three as For the significant another environment. free cash This stone represents normalized flow operating adjusted was years. quarter, of first the in XXXX, We another did, to

slide Looking XXXX at expectations year on full the for XX.

representing of We of to billion the is adjusted are the company. cadence is the range, quarterly expected This providing adjusted of guidance. be to targeted end to in record translate return our EBITDA $X.XX at EPS approximately and $X.XX midpoint $X.X EBITDA of range billion high with of our pleased the normal annual guidance. our to to to for Adjusted expected

net outlook, stellar year translates on closer of the This line strategy expected reflective performance to components expected This compared range emphasis at look discipline. of to per a of is to is approximately X.X%. increase growth diem this to yield XXXX. net the top in X% for and the our as of go-to-market XX.X% to range X% in the Taking price

of Moving is $XXX of approximately for to second represents the the $XXX to average per day compared XXXX. expected fuel costs, as average decrease half year. capacity full cruise a the XX% in nearly to adjusted net ex This cost

The which elevated certain scaling of in as XXXX part hyperinflationary moderation key half decrease including of in and the second re-launch; expectations pricing pressures in resetting on food raising focused includes bar our of back on and we the marketing as normalization of as during drivers operating and areas, this expected and of were Frank investments, the the and of minimization scheduled optimization and capacity touched of timing initiative finally, margin efficiency broad elimination normalization protocols; of our days logistics; and on. enhancement that a cost acquired of efforts our drydocks; results result previously the ongoing

the sequentially XXXX in as Keep mind lead rate over year are and year exit increases costs are as realized, cost to to full occupancy trend that to which the lower as expected we guidance. course of reduction our is a expected compared run initiatives to lower

As premium baseline, consistently do will a both which have the to higher when normal due gain to we as be past years XXXX costs our capacity, to add communicated, as will cost the we headwind as four over expect compared a elevated mixed top-line. we three hyperinflation well on years operating and

business continuing for and and reiterate our leaner an no continue silver but There us to our to revenue cost I future right-sizing is exceptional opportunities to base to actions we want to stronger that are across position best are evaluate as operating committed bullet, improve all a deliver while accelerate will experience. we and organization. guest the efficiencies, taking deliberate to

rebuild them, Our quarters. not demonstrating this our coming over improvement to only look is continue but over forward time, goal and we to the margins, to enhance

pricing our expectations X.XX% XXXX. higher of XXXX X.XX%, our quarter. as quarters Now, expected result approximately increase per primarily for occupancy approximately and while to Compared ramp be to of to net net expected X.XX% at first remaining is expected to let's to diem take increase the continued the with a a for X.XX%, levels, to look is yield

cruise approximately capacity or $XXX per approximately costs net of to Adjusted XXXX. excluding day is XX% fuel below expected the be half second

to will yet reduce months expected the cost to due lower realized. costs recent occupancy fully quarter as actions is in quarter First highest taken not to be be and

adjusted a to of the guidance for all is at the XXXX. expected of quarters XX% decrease this expected account, implied for is compared in to looking our be period and XXXX, into loss $X.XX. the to in expected first cost approximately When million same EPS is quarter remaining of be adjusted approximately the $XXX EBITDA Taking approximately

debt Slide of measures to approximately balance optimize related vast deliberate ship which to to financing. have our majority demonstrates opportunistic are service, billion debt $X XXXX, results the and scheduled Moving we agency-backed profile. credit XX export of In our of sheet. maturity the our our

also of In months, our large maturities. addressed XXXX recent we a portion

First, operating facility this significant we and extended month, credit of XXXX. credit Earlier to completed to one under loans term markets in January advantage by non-extended facility complete transaction bond an the operating year of approximately remaining of the billion our of amendment facility. took $X.X a we refinancing this the improvements

$XXX debt to secured use due these replace de-risk cost. and only at the allowing notes with repay issued debt new term and We million proceeds senior marginally a XXXX [ph] us of X.XXX% maturities higher longer-dated near-term loans, to

which of we you course the part all and the for of is others, significant operators, ecosystem, totality the benefits. includes, the which ECA actions, manageable these is As of economic our profile and rely credit the shipyards debt, a of broader the at export a have cruise on look related back governments This which few industry, differentiator connected a you unique agencies, see, of over approximately and When and is XX% suppliers debt. next the among employment maturity shipyards years. can with

of are able very by efficient demonstrated well during partners support new-builds interests all the incredibly the they as our align, as provided supportive, the financing these are to our we for pandemic. secure as As closely

upcoming Investor debt website. detailed provide we on the Relations also a our For additional on detail schedule of breakdown payments,

liquidity, overall which XX. and liquidity on last on position transactions, announced to remains And strong. two further outlined -- enhance night, just our Turning our liquidity we page slide

backstop X.XX% the million XXXX. issued the agreement and on commitment, commitment, year revised due undrawn we part a First, as extend of secure of second extension company existing to billion our the $X notes option $XXX

at we reduce to time, revised election XXXX. to the the XXXX, amount through extend same with million, the our to February the with commitment now the option through At agreement undrawn $XXX extending sole

of not $XXX do combination on commitment. We of provides the currently these liquidity And to bottom-line. the intend two to this approximately company actions draw million in total, the

be the Second, into backstop facility will unsecured the non-extending of commitment. portion This matures a undrawn operating facility we new available million backstop this XXXX. of in provides draw quarter a for and entered XXXX. credit in which also fourth to remaining facility $XXX Securing beginning the January

position approximately approximately $XXX for these Pro includes $X.X the available at under billion, is forma commitment. recent which transactions, liquidity million, year-end our

the For currently draw. future is enhancement housekeeping, this undrawn $XXX does not it include the million as to available to liquidity we not obtained with commitment

strategy, the Before medium- on handing our laid handing slide XX. relentless long-term Frank, reiterate call financial the back want I to on on call our focus -- as and out executing to back

of again back for globe. We the But will once delivering incredible of committed value corners our are opportunistic three and be experiences stakeholders. most all brands continue are to all, to and vacation delivering we to excited to be full all on operation in

Frank With comments. that, I'll closing turn for it back to

Frank Del Rio

Mark. you, Thank

on an few XX Before prepared global Sustain, up our slide remarks, key provide outlines, to Sail sustainability we our which a & highlights. update program, like I'd wrap

fleet. to last emissions our we to we zero promising blends Since lever successfully biodiesel reduce testing gas a net existing on on to have progress fleet, spoke, the ships advance our three our pursue emissions. additional help meaningful in made potential We of greenhouse completed commitment fuel

source Cruise alternative these accommodate modified our in PRIMA methanol scheduled future. to recently final an for we in to the delivery fuel addition, the and In Class Line green and contracts two Ships XXXX ships Norwegian to as XXXX for reconfigure

to and fuel, to pursuit in of While and net needed the exciting action will dual future an this our be and additional decarbonization reinforces of both methanol important represents our forward modifications step diesel, commitment use enable the fully zero. in

call the some takeaways, find turning Before XX. Q&A, over leave slide to can you with you key to I'd on like which

all-import from on true outsized enjoy believe mix benefit, North environment focus for given strategic we positioned especially our we brands. First, global the and This we versus the remains are our in consumer an consumer economic national is current resilient. sourcing upmarket American well and target

to a book XXXX. year start pricing by momentum with are with and season, the wave and is for strong we our booking position positive, pleased Second, buoyed

sustained we focused company to and next Third, position strengthening on growth, its best take for will are era. profitable strategic continue we measures the the for to foundation

up engine the along coming And to lastly, our restore cash with needs rev generation in pipeline which, continues to transformational new sheet meet build our our our a balance to path liquidity years. provides and

our bit and the I'll a so open Operator? up commentary today, conclude call here your quite for covered questions. We've

Operator

Frank. you, Instructions] Thank [Operator

Jessica John

quarter the all we from another to get Q&A line, our question to from loyalists also provides cruise. questions in you platform, to management. we The was upvote our take do address Before and plans what shareholder Frank, to our avenue top to top questions online want one? question brand customers a first this investors new reward them entice and to are bring to submit on want the of which that

Frank Del Rio

Sure.

continued past think for new growth. I and absolutely guests guests our are both critical

have great our repeat product have as anywhere to high XX% who We high as XX% of because running incredibly for of rates base from brands the for a Norwegian loyal love guests region. our each brand

through operates. to always And new programs them, engage each brand loyalty we're for with including our ways that popular looking

finished build have as new just we a also pipeline discussing. robust We

and we brand. have the attention ships One for new all historically ships and brand surrounding year each build to being outsized introduced brought know this alone above new new

just Oceania brand's was Just which this the having Giada of Norwegian consider to fun the as of Katy Vista, Laurentiis named And past see. is highlights Prima choosing buzz summer. on recently, godmother upcoming focus when the De Perry performed it Godmother

new but guests, also to cruise loyal excitement, These not and among new even announcements guests. create to just brand

significantly the attract community experiences message, to to ahead vastly can. is industry whole that unique say day, cruises times offer traveling runway as we and have a many of guess significant we'll cruise and yourselves, that is buzz, what we and drive value as we continue having part the new so large many deliver message as a drawing underpenetrated, You've to to cruise do the even as do investors possibly a have every of such heard awareness, a partnering to single possible guests, creating -- us with that

Operator

you, Frank. Thank

the proceed Our Wells with Fargo. comes line from of Please question question. Dan first with your Politzer

Dan Politzer

I on have Mark. guys year, doing you Hi, to first wanted good questions. How touch Thanks. a is balance relative morning. do Frank. And my your been work taking lot there's sheet. about this Thanks what that of to you to issue morning, Good for equity there. leverage appetite debt? to Obviously, think extent next the year?

Mark Kempa

Well, Dan. discussion Board issuing morning first foremost, good of Hi, and is the a equity decision.

it what tell can has of will I but I So, that, meetings. been any our leave is there, Board discussion in not that in you

issue We've company. more said that prudent is believe to and time do time equity we to not de-lever and again, it the

we the As we Xx our with here and that a is year handle. look balance turn have our forward at look sheet, want goal we we to said internal

include year delivery this the take for what does has on. since we of that and earnings that's what full potential. for company around, in And focused have newbuilds adjustment we But clarification, we're rallied that an the that's do the not

what using rallying an as against but not our it's easy before, said we're the We've sand. we're and stake in that, task, that's

year. for ahead our company and there's the the of industry for So, especially a in lot opportunity

our that power dynamic pricing guidance looking our a We the as environment, are well see and year. we are results that's QX as evidenced signs our in and all for by good,

But unknowns there. nevertheless, there is out some

pretty right So, good now. we're feeling

we've a where our position just good to our our stands and of about on of lot sheet but that liquidity issued today, guidance work there's it continue We feel overall do. hitting we and path balance

Dan Politzer

follow-up, just are then a for positive. And obviously Understood. bookings

APCD have these putting You're efficiencies. any bookings to expectation back that you you all EBITDA level? you and as progress per through can guys to when get continue Do cost recover $XXX

be more efficiencies, room the Thanks. years? amount, you there on could give just And to what total the color cost to achieved? coming that, if little extent with also, in they're bit along be time further a maybe going that And could

Mark Kempa

that's lot a unpack to there. Great,

vessels. per only operating May EBITDA not at So, capacity we this take XXXX to Look, day. right? let it was where so me this is -- we look start last time, all of started If going we industry of was our long with where the ago,

So, progressing. we are

We our progression. for It are out quarters hitting a laid that we've several milestones now. is

will doing it is Onboard revenue are but time. overnight not It's well. process. spend well, trending an Bookings take

as we our think about is And part so, enhancing cost enhancing right-sizing our margins, base. revenue, that that, and of obviously,

the believe squarely now reset term pricing. that will said that, cost we strategy our we be right-sizing of our benefit we focused done we've on believe longer was our out which We a We've the to and wanted are on bar coming for all base. constituents pandemic

we a on to the As look growth. of future, we're period transformational

between XX% almost pipeline now of and growth XXXX, have with scheduled We deliveries. our

to have focused and going on. what we're on that's we leveraging So, better, do are we scale, to our do better and

going it's the So, lot to of different places. come topline. from on focused we But a

translate the which capacity focused translate we're will cost, per improved that into again ultimately squarely and going to then day. EBITDA Now, on pre-pandemic that's to achieving margins,

Dan Politzer

so much Thanks all the for Understood. color.

And the comes question line proceed your Please of with from the Wieczynski Stifel. with question. Steve next Operator:

Steve Wieczynski

have I the cutting to customer I'm costs experience? you is done Yes. guys getting action want board, about to think how versus guess, being you. morning. you at I reduce whether read for what I things Hey assume guys. want balancing on that, taken And guys ask things to ask, or like cabins, we've which about there, probably Frank, servicing Good cutting entertainment I this some is, is costs. that's out like

how out you balance do impacted customer start perception starts to trying two experience you about product? be Just your long-term things. eventually But to you and to worry of hurt the those that the figure

Frank Del Rio

what for is Steve. you what goose Obviously, the balance egg, believe -- golden that customer. and receive. to to balance. we're a that don't trying actually morning, is pay the kill they want the It the they We Good which pay, customers lays what

the across cut only lower all cabin not categories. a or categories all mentioned brands It's cabin you example, per the lower equate service in to turndown across that for diem. we that So, did

That's and that's look, we're management's to So, and XXX, costs. what revenue it's minimize responsibility optimize economics doing.

Mark Kempa

it the to Steve, is, I simply done the hospitality in as sector about others we're other to think ourselves aligning have think, well. what way

is new. So, nothing this

customers are a getting society service. I today's to different think level in used of

on is guest We're but sure the wholly for we're the experience that focused what not degrading intact, going the align making product. normal We're ourselves to hospitality to new the sector. squarely is

think, I it's do. right to thing the

Steve Wieczynski

Okay. That which But an be is Mark, service sense. I've seen And we've makes question, fees think, seen guys kind probably and acuities not going I amount. your pretty or it's at then, you, by you to for this also a in. second question, -- kind increase of a I'm least, guys you quasi-accounting decent of expert

And I want what the that themselves, assume half some sense. guess on And that about side? -- other yields kind you to of get don't here your that help think that half guys just of your of portion -- if for I'm don't I'm hits expectations does that if hit cost? all to it I -- could has is get that yields too to ahead hit is, trying I'm then impact us that to figure and at I yield what of would out, makes trying hoping

Mark Kempa

hit direct as go part also think but going which service taking but the I'm but a me big that. costs, there's obviously net Look, that, an to in you're Steve, a to increase Well, question, it. revenue, I also rolled we employment absolutely, up when asking fees, the accounting it does for cost get And our there's cost go to against there's cost. cruise gross our that, of some which chance

the all the But, employees of revenue crew to the dedicated that, but change consistent again, that's are or to is the something and to is been fees, no a there the us a there working that's No component accounting who component it on years. majority comparability. vast change in again, over for in and service our So, goes ship, cost it.

Steve Wieczynski

Thanks, you. Got Appreciate guys. Okay. it.

Operator

Conor proceed Research. the Cunningham Please of comes next And with Melius the line question. question your with from

Conor Cunningham

you Thank time. everyone. Hi, for the

potential buckets frame of Just terms you you're improvement cost like up expecting in the that and can you're a just talking the biggest maybe initiatives there? the where and about, upside

And you about little it's bit bit little weighted, that going hit. when more then, just unpack half helpful. if could a be second just it a is of Thank would detail, assume I you. maybe lot but give would that a to

Mark Kempa

Yes, certainly.

highest said take place. think as on So, about of half going little go-forward quarter. in forward as it as the will back expect toward look costs of my be basis. rate And then as QX remarks, sequentially, on our initiatives decrease cost And be some I prepared and each the hold we cost, we quarter those gain would our the I the way more be think look that's what to you to exit of is a well XXXX, bit representative a to as

a the more operating remind more effect to There as we a pronounced have -- with you we're bringing that on online taking capacity we thing want are well. well I is one as as mix

a you by the year. vessel of are year higher vessel this in operating May class NCLH at know, guys we bringing on much have than end cost the default, Oceania the tail average. Regent of As Those, an a and

some the in mix. of as is overall So, that a there guidance result impact cost

keep So, in mind. that

And then We buckets believe the when after spent you cost, overall lot customer, before, can pricing. elevating we've on We've on think going successful everything we about the think there. XXXX of. that creating in marketing the been it's demand, a said you

There -- start side, our So, everything whether our chain corporate things focused on side, can bullet that's on itineraries little our that everyday things what in of back. we going this do optimizing consumption. scale to industry, no squarely it's so the is on ship we're initiatives, that best silver But going it's a supply getting forward. scaling but optimizing our up we're lot that fuel and it's add we're

Conor Cunningham

you on pricing. still still guys weakening mean, sound still but there's great I follow-up maybe some Okay. There's And to then concerns pricing, on overall. -- some consumer

So, if little could just curious current bookings unpack a was your I you bit.

something been bit, shifted the why implies deployments weakness reason is on don't somewhere. only ask I I a have little there's if and that The margin know

would any Thank help there So, helpful. you. be

Frank Del Rio

Yes, don't simply this Frank. any see We weakness. is

remarks, in as we've -- continue mentioned markets on, things record including view remain prepared very spending the normally vacations. that that they I our seen booking job back levels as strong strong, it's As very, the November. dating And to record long my their they'll new on money labor spend have a and consumers

consumer. So, don't we simply weakening a see

XXXX, you about If at in you in it's same the start forward year. the And quarter than the booked XXXX, better for XXXX higher ahead were next if into too XXXX. each quarter bookings, pandemic. XXXX before at look our looking bookings in are time to XXXX running comparable is talk which prices at even early they than never

haven't we at least shying brands. our away that indication any So, vacations, simply from not seen with three consumer cruise taking is the

Conor Cunningham

you. Thank Great.

Operator

And comes Patrick question the Truist with Scholes Securities. the line of from next

Patrick Scholes

Hi. Good morning, everyone.

Frank Del Rio

Good morning.

Mark Kempa

morning. Good

Patrick Scholes

confident some to back this summer last I you from about expectations or last EBITDA and Going had you comments pretty record talked in -- fall, seem last believe for year.

record I'm would However, certainly the a not apples-to-apples and when at if below, imply midpoint range, EBITDA. I look at the comparing

guided in think record in that makes are just I your EBITDA looks earnings previously if I then that it as I last line. relates since expectation think range? getting now correctly, how it it you And And asked. the ahead, to what I'm about changed hitting target was additionally, like What's this sense, for hope bookings

Mark Kempa

Yes, we we think got it.

changed. has nothing Patrick, So,

or over we've in one last very On have and the two environment. strong learned a team if the management there's anything a is as that we're a we hand, unique -- consumer. year think I society

we're high strong and wage very And have We hand, us we economists on growth that chance a -- telling recession. other the employment. there's of have

territory we're pick. is world. in uncharted your I the like take in this you into -- So, We're

all So, sure we're changed. of where front by We is but being conservative. most point, as want -- to we putting to But We're be range be reasonable the confident nothing world make we given at we are, nothing whole. targets, to the of should think from want factors has way appropriate think we but the a hitting that. out are in implied that a this go

Patrick Scholes

into rationale the dipped review would Can again Can just fall, a It that's last Okay. just not been the explain Apollo quick that hopefully, time, you just sounded the financing? at I questions. like changed. intention have that us have last or with there? of, but you summer couple why follow-up you

Mark Kempa

Certainly.

small So But debt it's reason that if foremost, overall facility. first most look you did really past, and had two-year the We the we we is wanted that options. it wanted the in overall months XX-month wanted -- a draw was at And six our the our which on minimal. the important and you we as do eight-month was a recall look million, to you We options. we price structure, were And facility. on option. when options, had counterparty $XXX flexibility getting

we minor the two-year backstop, the So, the a flexible draw, look to scope relatively the thought relatively of broader on at having of reasonable when totality is which of a in debt, that overall you course our cost action facility. was that versus take prudent at

Patrick Scholes

callbacks later. and a Okay. Jessica And number might then Mark, of question actually last save you this one,

converting to up Just I year notes for the million. I your do convert in exchangeable is year. share going the see sometime that's the assume -- Is full from or $XXX count

what Can the expect roughly remind of how correct? occur? what us, it's I you you added which from ones and quarter are to that if each many are And May just -- how many at -- that's shares XXXX the might those, and correct if those XXXX think and August

Mark Kempa

think telegraphing Yes, Patrick, But we'll to been expect share of our some average I on tell which a slide diluted we've which are converted details convertibles those we've saying in in been we that call. $XXX believe is count XXXX assumes deck that of for calls that you about I get-go. from now. our think take can approximately the offline our couple cash, what I we post the And that be million, have fully

it XXXX the be But which and really will have for convertibles, accounting the not is there, do that really a equitized. a reflection convertibles, choice of where but it. just XXXX the just is We

million for share the $XXX So, for diluted the on fully use count year. average, would about I

Patrick Scholes

check slide you. on Thank deck out you. that. I'll the Thank

Operator

of Please with question. Wolfe from Research. And Fred question comes proceed line the Wightman next the your with

Fred Wightman

that you bit a guys. the little than going guys or you the class? premium that initially the like Hey size are sounds were Thanks for to was when about just the changes know to excited first smaller touch I be ship bigger It a those iterations. introduced. few on question. plans Can offering

changed? what else? the Was So, experience, cost, exactly the guest it something

Harry Sommer

guess, She's Listen, great of Harry me, the Yes. Prima. about revenue, great importantly, is satisfaction Sommer. This our excited performance really scores. gate is we yields, great excuse most great were of and the experience, come -- out book best I ship, onboard

economies and bigger, scale in now guest we that little ships the at can we great will X the and be in XXXX. better XXXX X, looked we great operation, and driving take get bit the Prima When that increase it's think for of which slight financial delivered performance a by slightly experience, hence, platform

part last important The goals very which comments, the time. a really for combination, them Mark our in in as field future being We're making decarbonization We we technology. is lot methanol of later over to is prepared the different work very mentioned ethanol two ready, the excited with in a think on for experts the about the hold built ships of the in XXXXs. being

in to on well, having get counts. scale ship to more methanol at addition house, larger more able we're tanks, passenger as the to But those the

fantastic we key guest deliver and the along to more experience what do and the to become is can again, scale a So way. leverage decarbonized see

Fred Wightman

give that the pricing you when talked marketing in the while Was earmark you spend Makes that get hoping feedback consumer line on maybe you on you back sense. could spend or not? qualitative half feedback Did a with benefit sort just And the that for were then whether you what XXXX, expectations? for guys met expected? about you your of had the that in had some

Frank Del Rio

philosophy as we go-to-market period. to pandemic pandemic fill discount the out we to fill, net and the Our diems industry-leading per of to basic coming throughout don't of if to hill. slippery goes climb We've happened others importance. able that what takes to seen to back when it the too up was utmost decades not be yields years, our period market Being discounting keep able far, and

was of to time worth booked position able say it not we make where through, cost the better history, if our any this is best end what And at the statement Mean in an the So, turned was at operation industry-leading yields at just mid-year was that book the given maintaining in in to be industry our ever. gone XXXX, well year our to than fleet and marketing were of has and the until incredible we full higher prices. it.

our decision So, for make was right strategic the yes, unquestionably, it company. to

The got create its We industry had on we zero We back. days. momentum was years, operated hadn't the revenue Now, XXX we've to that in knees. momentum. fleet believe full two for

you and two one estimation, had we stimulate my away the the and ways you give can you So, market. to choose market of or can to market. do in can And discount can you it we product

we've And now that so regained same and back to than and have continue marketing think that were we're We ago the period. at be strong we start done year XXXX over now and a better we booked spend. momentum bookings today on paring can

those be same to filled. the at and time, have Now we're three new ships adding

But that just will a think out. a a basis, gross per marketing knows Mark a basis, PCD laid down. exact capacity I as that on on marketing the basis, costs number. costs come result dynamics maybe come of So, down day number, not will sure the I'm On

Harry Sommer

by think right And we've sold, theoretical which we is in seen material look metric comment. in metric this a QX. It's the just Frank versus marketing When days decreases the decreases, that is at described, Harry again. QX I capacity not marketing, for costs divided

to already days coming mentioned, sell brands that. we with So, as more have starting But to the across Frank three we're new this year. capacity realize ships

Harry Sommer

you. Great. Thank

Operator

question line Please of with with from the next question. Hardiman our And James Citi. proceed comes your

James Hardiman

Hey, my good morning. call. Thanks for taking

per trajectory in the rebound quarter. make strong I Really sure wanted I to here just fourth diem. So, the understand sort on of

we net to growth that I XXXX. be the range. X% think basis guess, to to that from about X.X% in on quarter, a went versus up year the XX% from for think as first I XX% X.X% plus going I range it's and

I the know to you're involved diem. some region mix detail, I guess, would would why here, per which a think Oceania launching there's ship an be and that accretive ship, I'm but assuming I

number? diem that maybe of So undulations us sort of the per just walk through

Mark Kempa

James, it's Mark.

look, fleet our proposition vacation operating. to yield as wouldn't from when go is a So, X% anything of the you strong growth classify XX.X% And industry pretty market. it's you really deceleration. mix our of vis-à-vis QX for But look where a I year, QX, value impact spot broader at cruise the given you on number think you QX, where were the I look full to at the when

the were We on itineraries slower higher slower world. or which a slightly have weighting the of in much the QX, of restart impacted opening exotic

there the So, whether consumer. that it a little than a was world, or getting was cruises Australia of was in area little more more operation, the or anticipated bit we those Japan hurdles back there to hesitation and on

So characterize it quarter, to I really impacted would QX was by normalization speak. last that. just as the so

XX% based and guidance But quarters, X% on at think for when there strong to look that I the look seeing you're of three our our beyond implied remaining growth you very you guidance.

So, good we're feeling pricing today. is the where

James Hardiman

to was generally talked or I of how ex-fuel but up point bit with sort point EBITDA hang a with fuel talked seems spot to fourth was maybe least cruise quarter, at prices costs and fuel, of short. your a just you And about there -- line revenues get in for What you sort the seem clarification, Okay. the net of October. to the better thought since expectations

led line? unless that EBITDA what to the So, on

Mark Kempa

James. performance. just stock, lagging some our to we Yes, had it that ensure speak, was year-end so very making to accruals our slight, no it into fully truing we and of was affecting that really year, XXXX the issues And going up sure were

on It was just the So, items margin. all material. nothing

James Hardiman

Got it. Thanks guys.

Operator

the from question. comes with question Macquarie. Paul of next Please line proceed Golding with your our And

Paul Golding

much. My first so question is Thanks a just around comment.

destination. think just around made I exotic the you Mark,

to now Eastern basis? given of a compares qualitative on background geopolitical just from how words, year fill the year? In that us So, disruptions the any to up right give other Thanks. disruption more could destination last destinations Med the line timing and Baltics last year-over-year these you exotic higher-yielding mix a gap year, on how last

Mark Kempa

certainly. Yes,

are we deployment more more not toward latter at -- we leading a year products. But overall, to European capacity have those we the more really to for we I because accelerating do look through that's mix. quarter So, cycle part the as this have fourth when and we concerning think QX year. quarter, of us, we exotic do third and see We look demand

less slightly capacity. Alaska capacity We have and Caribbean more

So a, would we overall, more a a for one-time well based trending bit up the this QX call shaping we anomaly overall what with again, deployments, restart. to that's longer absent itinerary are us, but exotic or

Paul Golding

Great.

Frank Del Rio

Okay.

operator. question, more one for time have We

Operator

And UBS. the Please with Okay. final Thank question you. line of the your Farley proceed with question. comes from Robin

Robin Farley

exit One about how would you. more bit Thank normalized. little Great. a QX expense talked is you have the for look expense by rate questions. two I

rate up With versus for and that would sort imply the kind the of be increase of XXXX? kind XX% of still we normalized QX full year in what as low you? going to mid-teens of kind that rate think does exit of up forward of run XX%, sort Is the a should

It build $X.X some to higher CapEx just like it to billion of fuel based seems that the $X.X CapEx. bursts additional and and know And seems some question in things then there may number? maybe there you things contributing new talked be I on my And newbuild adding on alternative those numbers, Thanks. of like two fuel other upsizing expense higher other just alternative the than ships are the is other in number the Prima a about billion them.

Mark Kempa

Hi, take that. I'll Robin,

there was in questions two I think there.

the because I with can last I'll one start So, one that's the remember.

more we're Regarding size XX% almost newbuild, it's significantly four XX%. vessels -- by, the more than look, four increasing on three and and think, of pretty the I than

vessels we those vessels, just also to on and getting not there it's There's are lengthening be vessels, methanol cabins, cost adding So, six, importantly, but the -- them is ready. five -- more widening to a the it's that.

this say, simply take is I the a We is to think not costing to cost. additional we bigger. because There that good in cost. as there just vessels burst of $X.X behind hesitate a making I the technical it billion, a it's lot or caution going is is green right cost it, at think always to free. you but aspects the and relation look would

just caution that you would note. I on So,

on rate think exit costs. I the the of the question And our your first of was -- part

about thinking teens I where think look but we again, squarely we in low somewhere vis-à-vis XXXX, it would is the on. you're probably focused correctly, are

I job better And have leveraging year, a as to see to we our quarter-after-quarter you're scale. front. that continue this improvements of do going to that prove think We on

Robin Farley

much. Great. Thanks very

Frank Del Rio

everyone, for As time today. support your and always, you, thank

will stay your day safe. to good wish you be available and We please a answer we day, any you. of and throughout questions the Thank

Operator

And this concludes today's conference call.

You you, may a now lines. disconnect your have great day. Thank and

Norwegian Cruise Line (NCLH) 28 Feb 232022 Q4 Earnings call transcript