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Norwegian Cruise Line (NCLH)

Participants
Andrea DeMarco Sieger Norwegian Cruise Line Holdings Ltd.
Frank J. Del Rio Norwegian Cruise Line Holdings Ltd.
Mark A. Kempa Norwegian Cruise Line Holdings Ltd.
Andrew Stuart Norwegian Cruise Line Holdings Ltd.
Felicia Hendrix Barclays Capital, Inc.
Robin M. Farley UBS Securities LLC
Steven Moyer Wieczynski Stifel, Nicolaus & Co., Inc.
Harry C. Curtis Nomura Instinet
David James Beckel Sanford C. Bernstein & Co. LLC
Stephen Grambling Goldman Sachs & Co. LLC
Assia Georgieva Infiniti Research Ltd.
Jaime M. Katz Morningstar, Inc. (Research)
Jared Shojaian Wolfe Research LLC
Patrick Scholes SunTrust Robinson Humphrey, Inc.
Vince Ciepiel Cleveland Research Co. LLC
Timothy Andrew Conder Wells Fargo Securities LLC
Call transcript
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Operator

Good morning and welcome to the Norwegian Cruise Line Holdings First Quarter 2018 Earnings Conference Call. My name is Andrew 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.

As a reminder to all participants, this conference call is being recorded. to conference like host to now Ms. would turn over the your I President and Investor DeMarco, of Andrea Vice Relations Corporate Communications. Ms. DeMarco, please proceed.

Andrea DeMarco Sieger

Good our Senior and Officer; conference of Norwegian Andrew. joining Vice Rio, President today President you, morning, Line Executive thank Del and and Thank Officer Chief you by us Frank for Financial I Holdings; first Interim call. XXXX Cruise Chief and quarter am will of Stuart, to call for joined begin turning everyone, for and Frank quarter Mark some to Frank Executive provide Cruise Andy before which discuss follow for call as guidance the the Officer opening will Norwegian closing After President for commentary. as words. with well back the XXXX Line. Chief Kempa, Mark results

open questions. We the your call for will then

conference As will www.nclhltdinvestor.com at is days following a Relations webcast today's replay XX being and Investor company's on for this call. call reminder, the website be for available simultaneously

few cover discuss our we Before a results, like to just items. I'd

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

contained associated like over reconciliation Frank? are measures. I'd comments other the the call most our of With Our disclosures comparable Del financial to directly financial also A reference Rio. turn and may GAAP measures earnings to non-GAAP Frank that, in release.

Frank J. Del Rio

Seven the line's incidentally delivery of a Exchange just weekend; City about Norwegian maiden weeks the Seattle, hours will ago in comprehensive will her history. from Bliss not make our activities Cruise this vacation embodies Cruises of Today everyone. Southampton and City, sailings most the Miami, buildup from of inaugural fabulous Her the not York Miami, fleet, in Cruise where inaugural that fall. stoke the which and Thank but to Seas expect marked her two period Alaska, the new instill the in our Coast good best also fervently those also we on-boarding in for Eastern pre-booking The of launch XX the the we you, morning, event latest experience. York demand and and and New further our make the innovative of and in Caribbean that Line States. up Cruises line's in Norwegian Stock team, in in York her history, New the hosting ultimate working this Norwegian cruise West the have United starting the call Angeles build introduction our successful in in resulting call the been New flagship shore-side the but Bliss culmination and for all Norwegian quality, and value marketplace, just new Line, are at brand choice, England; activities that Regent And Los Oceania to Andrea, message

destinations to and to focus target the our want on to three the consistently visit brands Our sailings prevailing highest on that to vessels offering standards. market tastes state-of-the-art most refreshed are they

scenery brand with these the brands that unique perfect lasting As or for observation of cruise can flexibility at Norwegian onboard vacation stylish curve. sale. deliver deliver is for venues impressions offer offering favorite Broadway the first while to the best to can booking experiences exciting, shareholders. for to offerings other Norwegian pillars. from the guests. is crew succeeded its sailing's delivering of Bliss repeat restaurant the certainly line top This experiences debut natural inclusive goal open welcome All the come results of which Regent best, part unique and and and case the best-in-class fun ship on every choices the that Kart But and of Boys to the Bliss discerning is make importantly, the class do valuable ultimate serve will strategy, From Norwegian and what in close In waiting offering ever our entertainment, a no most amenities to long of ship. in with foot around will viewing price stunning Because case most best a of go-to-market achieved customers, American left does this our guests financial world onboard our dedicated attractive track brand. three and inception accomplished that a the Sea time Norwegian and race our on replicating. Bliss, make we we at first seen guest. many anxiously including other each on most is that Alaska's to memorable centered of mean lounge of first to In Go at X,XXX voyages from has our the Bliss's goal the this value all each Free Q, passionate activities, the absolute graciously wildly is smokehouse upscale loyal Jersey words, which freedom includes most North

load. strength new sustained history, Norwegian exemplifies has brands. that brands price of resulted our the fourth the Bliss quarters of our best the operations across which and quarters. execution fourth cruises the premium the booked the pricing and and Alaska, deployments in exceptions, and market-to-fill our this few our Of across with this fourth of Caribbean year-over-year with better and in experienced Scandinavia, been same XXXX Mediterranean, again meaningfully to in is earlier, particular and highest and worldwide showing season continuing to through last half levels. with strategy quarter load build year's for time year. hiatus enters Her strong the pricing the three stated second last same sailings, booked isolated through cruising compared and entering through After of first pricing the Bookings all fleet third Caribbean after deployments Even in across history. resume ahead similar the has come improvement sailings is bundling in first as year company's factors in Norwegian's This XXXX during very the half Hawaii the our Eastern demand strategy and XXXX interest sailings a wave expect Bahamas year's the time Cuba. of quarter XXXX sailings be I our success highest together when As our that are in which occupancy second and through true has precise XXXX for to for global and and particularly continuing continued, are pricing we've demand in balance major

ahead, strong year-to-date. two alive demonstrate and that the that discuss in continued of began throughout first further like to booking and XXXX, points the Looking continuation environment well is I'd late XXXX,

early year. of experienced the full while reiterate during XXXX to up still the time in each last year very brands record well like three pricing cycle, the I'd at above levels with and booking our we First, that occupancy same shaping is

first that first brand booking previous in record in is with sailing the when years Regent first strength Splendor's boost a visibility of the day sister of do want quarter confidence we in reinforces set consumer Today we of is about future introduction result underscores Second, should first mid-April and years with XXXX, their all-time Booking Seas analysts chatter among possible rising to which few my indicator not from any online represent. see it our Seas global by now. some volume Today a Seven three investors that in Seven strength recession set sale ship Splendor's not hands or is recessionary that for heightened record noting held as have from two XXXX that watchdogs pressures for known there of our macroeconomic supply But a cruise disruptions the on marketplace. is that for confidence for industry's over Explorer single The the Splendor. sale risk domestic our many sailings exceeded close of coming in booking and the until released growth yet you was macroeconomic impact curve we a level economic Splendor. term of because when future that in stellar booking I as always ago cruise tell the the leading have Cruises or sales over day years. increases booking increase further pricing government to most increases view the Seas on that I've evidence years coupled And in worth conditions the set XX%. demand near on trends the Seven another this timeframe curve of of extended or of January next market causing demand any importantly supply opened further of confidently in believed and the an its growth. voyages the consider and ship the

will juncture During And looks XXXX each at improve like has as business years year. this well. of the it improved past each two

for an can best this longer strong demand for Our improvement that upon consumer drive there cruise in news trend. that Several the strong operating catalysts building active continue reflect higher. is But are even participant room perhaps still we results stronger environment. secular this to demand is

Some of we are purely others these external. factors control, while

favorite main One off-limits to for that full have factors a old external and access while. is some been destinations of the desirable

effectively high year demand. example will improved severely its cruising Kuşadası its and of Eastern a the Istanbul our limited sailings demand. little still eager areas also in cities a service premium Land the example, that to is For and in Turkey Mediterranean skyrocketed latest deployments, for issues while price become There port the portfolio the Havana popular some and are are of current ability time a certain see destinations. that in infrastructure call sailing our to affect along We return to most additional and we Cuba closed historic Black addition most Egypt destinations for began the to over Sea Havana part to are Mediterranean capacity and and fuel Holy volume of itinerary ago with which destinations, meaningful way. to of short when to our to has among becoming

our already important the bring and one Holdings last of pristine larger looking elevated new believe China in ended, our and have this source a that meaningful these flagship stellar Seven results could Norwegian more significant guest Voyager premium will guests With worked the and fleet command small high ships month port revenue a increase three our soon results. Alaska's detail, have Kempa. of of and have these Norwegian these extremely more. occur gain The enhance deployments. launched initiatives destination. that several Norwegian go-to-market in I'll programs completion and over Line the of which to dining enhancement either further experience marks that Premium the in to positioned across ships and programs Norwegian to infrastructure pricing. was to return remain major being pricing uniquely this both deployments underserved current yielding now rates, program as and result I optimize in capacity like ports and where over To level the down in bring fleet record dock on nimble Mark? just Internally, to committed more additional refurbishment and regions XXXX measure to repeat for increase brands hard that to After price be improvements ports our drove And such Regent more of to Mariner, completed only hardware of larger and Mark it their additional to of which to call. quarter the the premium and Seven Line as And Regent program capacity to transformed two Cruises. in call or the calls fleet, We most in from record successful outsized for pricing one cruise benefit with the elevated popular two destinations Norwegian sought-after commensurate we've XXXX. hopefully allowing with areas, Cruise and In will potential we winding Cruise us I and dry venues, After order be go the recently fleets Alaska, We if extremely Fortunately, offerings these is high which the brands. The Seven price fleet Seas of guest in additional these have business performance will onboard for brand's to just enhancements Ketchikan experience every for some there's satisfaction resulting reopen Skagway lastly XXXX improvement. left this and all Edge are relatively the able waters. public comments. program essentially brand's staterooms to heavy the in $XXX XXXX, condition. million greatly of the metric with Explorer. closing will turn vessels lifting Seas truly contributed ship firmly the record to by Navigator, Seas hopeful

Mark A. Kempa

line results, the outlook begin pleased and highest trends, with in due an income fuel of report by with X.X%. first quarter the commentary net revenue by capacity guidance both expenses, adjusted in X% U.S. result streams. expense full booking record Net earnings the my year the outperforming to prior XXXX or surpassing our day increase of coming $X.XX strong then share $X.XX I'm the a yield history. and the by earnings expected Thank and Better you, above followed beat reported adjusted and per year, of the constant cruise of $X.XX in to and close-in contributed close basis. quarter our our yet on partially with continued approximately guidance was quarter XXXX. with yield exceeded X% a $X.XX I'll as expectations compares quarter noted, than $X.XX. by second beat coupled demand an offset certain increased will remainder from Frank. dollar. strength Results expectations XXXX versus strengthening was of and per another Unless all basis priced timing our and performance for The on the on commentary on cost, fuel well quarter in otherwise metrics with for driven revenue first guidance onboard expense of other as and with excluding topline color net currency

from is first over yield, corporate impact average our to would quarter net been the yield X%. Excluding have brand new which the our growth capacity, dilutive NCLH Norwegian

prior cruise control cost year on net X.X% of fuel basis reported adjusted costs; dry better at cost Looking in a versus and the and as an excluding result decreased X.X% period. fewer as docks

from of LIBOR, connection additional April in expense $XX $XXX hedges, the prior Leonardo financing, fuel in our notes below well ton, offset a Project benefit our The from interest Norwegian increase full debt in due in fuel; net metric X.XXX% in look net XXXX expense interest the Taking XXXX, to million reflects to the Turning was of higher expense the million rates as line, as at to the delivery per of XXXX. partially redemption year. increase decreased of in an $XXX by with October XXXX Joy due interest in in $XX.X to compared XXXX. senior

second the to quarter. focus shifting Now

expected due Norwegian in the scheduled the commencing her primarily of Bliss regularly is annualization and to quarter sailing introduction capacity Our June. early of first to with increase Norwegian Joy the in X%, revenue approximately

result ports satisfaction. which of year private year's of new Harvest hurricanes. terms of of redesigned allocated the sailings for during Bahamas our XX% of have newly those or is also impacts We allowed quarter quarter, us to As deployment destination QX slightly advantage Western from second third Caribbean which highest approximately down our Eastern includes as to during the we and take is in the guest itineraries Cuba, as the the These not the for last and the last one Caribbean, Caribbean to to Caye, sailings prior do second rated a year. is from developed itineraries

quarter the moving is which during to month. Bahamas on quarter our deployment, Norwegian capacity double branded the ship, digits on And Havana our Caribbean Canaveral quarter, primarily third the shoulder Before this up touch by our of QX to Sun, this addition second the our of allocated driven of capacity I'll Port is capacity. from balance the third Caribbean includes is the region Cuba beginning during while Norwegian and XX% sailing to Approximately season. the to

back in up approximately Asia, year program. dry prior approximately accounts year region Edge result down Turning docks addition Europe Pacific the fleet. The XX%, a the of from from deployment; the X% early Norwegian Norwegian represents XX%, QX to to several associated quarter the Africa, the for to with in prior the due as Joy of

and X%; approximately markets, approximately approximately key other for XX%; X% As our for of Bermuda Alaska total accounts deployment. Hawaii

impressive of well lower season in Turning or expected impact for as growth Despite net increase the yield Joy expected yielding the is an to yield to on expectations as China, second net for basis. reported of Norwegian quarter. X.XX% X% X.X%, over rolling as the shoulder year-over-year approximately

introduced net the to to Norwegian effect core quarter X.XX% be tonnage which is for further yield of the during corporate of expected strength pricing NCLA all the brands. Excluding dilutive demonstrating the second brand yield, the new average our up approximately is

costs; excluding to an adjusted as Norwegian the approximately dock introduction the of be which increase dry are days launch basis, and of net to on in due up associated Norwegian reported result ship America enhancement previous we've docks X% since launched to XXXX. in quarter and expenses fleet cruise North as is a primarily Bliss to extended it's a or dry than higher with in the cost Edge large ship for introductions as first Turning expected inaugural fuel the X% X.X% year-over-year program,

the cities Angeles New to York, Los We showcase her are excited Miami, very Seattle. major four and country: in around

tons. expected with EPS consumption into prior Looking of year, hedges we all be quarter expected fleet per of days be a ton approximately price approximately metric our anticipate second fuel fuel to this adjusted the associated higher dry with expense, metric XXX,XXX of the as Edge $XXX to program. to primarily the Taking at result our account, Norwegian is of dock $X.XX, enhancement for net flat

strong points full of across basis. and is all reported three brands outlook as yield the trends basis resulted in X.X% now have XX growth markets or net on be for year, for booking raising an our for approximately expected X% the As all core to up by

brand, introduced fleet. to X.X% expected net tonnage the further illustrates approximately the Norwegian pricing our basis for is new XXX be core of strength or Excluding yield points higher, which up

is reported cost expected prior X% X.X% an Turning to costs; our basis with consistent X.X% adjusted as flat guidance. to fuel on net be excluding to or to cruise up

Looking expense. at fuel

net price with now to be fuel the Our per remainder XXX,XXX expectations. Strong consumption has at metric ton of approximately is tons. in hedges coupled resulted of expectations for higher increase well the the in line top close-in quarter an first with of expected $XXX priced metric demand expected to and year

In high guidance. Despite range. guidance prices rising at moving headwind have we EPS impacted our negatively the $X.XX end midpoint, outlook earnings our addition, this of floor the up the expanding and fuel by raised

now of balance full per having year result, for will with adjusted earnings There The quarter easier higher the the growth. to range mind $X.XX. a comparisons first back of be the are of a of have XXXX. the items As to half a year $X.XX half result keep in in highest versus as yield to growth share the the third few expected is

and prior the costs, with expected the we hurricanes half year the for to expenses down operations. of XXXX lap As our costs from associated China the to one-time launch be of back is related as

reduce initiatives further few a on executed and interest we strengthen quarter, expense balance the sheet. the to During

senior First, XXXX. $XXX our redeemed due of X.XX% we million notes

remains Following redemption, million outstanding. $XXX the partial

$X XX% rate end of favorable XX% the the rate debt recently increases debt in XXXX fixed XXXX XXXX. billion forward entered rate through lock in of In to addition, and of variable interest for approximately XXXX we in remainder rates, to our which our swaps for into and

of financing will delivery Thereafter our XX% percentage debt fixed rate be as our builds, have place. rate new approximately which we efficient take fixed very in

returns we We three our balance with delever times financial pivot will the focused to track as to we performance, for strengthen remain by capital meaningful leverage strategy. on And year strong As our providing in shareholders. to sheet remain end. on to our allocation low capital continues to combination

that that repurchase recently to billion we As a announced part share us three-year strategy, shares. of $X will enable back opportunistically program buy

our closing We that, With back discuss Day this this for over week. Frank Investor turn remarks. later topic at will call the to more I'll

Frank J. Del Rio

of structure over cruising members And a executives new Thank Mark. our you, together vessel Cruise to Last a Miami-Dade announced joined flagship flagship an be what to on plans addition at exciting new is construct in and XX an of as Norwegian terminal. of is just a the been dedicated week, will city We the delivery capital The PortMiami break of time. the new terminal home County has ground government for always iconic recently years. that the world. exciting and Line to PortMiami,

to have were popular will successful final These ship of November XXXX. the and guests Plus fitting wildly the be new With terminal to welcome to handle ships ships ship next welcome the alike. of a to welcome brand in extremely continue in the be Construction passengers is in million X,XXX completion in Norwegian's board the introduced capacity repeat over in new time class. to over our and Miami to that terminal revolutionary X will terminal the fleet with inaugurate a serve guests, when Breakaway Norwegian Encore annually. slated It for

is will the note what Norwegian ship capital We today are ultimate of Breakaway terminals to with taking to Norwegian's have we additions class are are new but set where and the shareholders. excites confident Bliss, Encore me With bar Norwegian path exciting, most high we that ship. perhaps be in indeed returning

position us our results, rapidly to point in our all stellar accelerate shareholders. coalesced plans capital meaningful fleet, and to further investments shrewd stewardship, are to and solidify our operating profile reaching disciplined strategic acquisitions, return We inflection an have financial to deleveraging as

you Norwegian be informative will event. our Operator, questions. to to forward turn surely over an for our exciting that, allocation As I'll and growth benefits at please? And profile with along maximize demand capital of strategies what driving call Friday our We plans the aboard Mark Bliss. coming the welcome mentioned, we'll Investor to Day to discuss with look our this

Operator

you, Thank Del Mr. Rio.

of comes Our first Felicia line with Barclays. question Hendrix the from

is line open. now Your

Felicia Hendrix

to Hi. Good I good make morning your yields correctly. net morning. that interpreting want sure we're and thank just guidance you. for Hey, Mark,

So and like XXXX guidance, half second guidance based and upside you it quarter that net yields your net basis on the XQ something XX points. Is your your by yield that first revised appears new raised right?

Mark A. Kempa

Felicia. should was in Thanks, for in in – the say, we the have did was guidance more we The across We're balance Yeah. year QX, and Yes, really of And brands. then QX year. by we book yield raised and the despite I it we position driven top a headwinds strong better visibility beat all raise demand and from our beat the in confidence outlook that's three the FX in the for line. lot and rolled over outlook. a the just

Felicia Hendrix

that to just then you're is ships the this believe, remarks, Frank, bringing before Eastern you've quarter, and And said back in you and on fourth prepared your Okay. this the maybe for I said you. Caribbean.

but yield half Caribbean, that just second does we just this, Western optimism about reflect about that the the So Caribbean, that mean the doesn't net about Eastern generally? your also guidance talked

Frank J. Del Rio

right, Yeah, last yet. that And quarter, Eastern our and pricing and better did back load Felicia. hurricanes remember fourth this is time both performing this in in to it year. Caribbean last occurred it time year hadn't as the that's about The fleet comes

pleased So, in has the we're back with Eastern way very the QX. Caribbean come

Felicia Hendrix

you. Thank Great. Okay.

Operator

line Farley UBS. the from of comes question with next Robin our And

is now line Your open.

Robin M. Farley

Thanks.

refute data fare given there supply of case. think, kind you've the is us to many I points so

of maybe will of So about my on pricing. the Caribbean sort question this this other debate be part the

fall things April of same looking those last the year versus I now those prices where at XXXX that think, be Caribbean one up. the can is fall at that price sometimes ended people time misinterpreted are that that price really for of cruises Caribbean aren't if

what could in the the ended you year. say those wonder and any those books are So is today year? up some of mentioned, price for But be even Bahamas where versus where same some they isolated look on you of of if last – at it I where down way now to last time is you may have fair the ahead are when – Caribbean parts prices that you quantify those that pricing

Frank J. Del Rio

Yeah.

prices comparison yet there So after last tougher is the today erosion was hurricane whatever on were occurred. the price because to compared a the had prices year where not

they certainly handle So ended. yes. the the to point for on and in second question to four three – same Andy better Caribbean the over and time the than turn are Eastern last point your better were about cruises, where year they the And answer to got about QX who's a I'll that better is prices Today's that. your day

Andrew Stuart

Robin. it morning, Cuba pricing. Cuba, Good is and destination a thought Yeah. useful premium I be might to exclude just unique because

ahead So load if pricing you XX are look on we at factor. the and Caribbean next and pricing over months, load

So, quite frankly, we're feeling pretty good about the region.

Operator

Wieczynski our And you. Steve with Thank of next question comes line the from Stifel.

open. now is line Your

Steven Moyer Wieczynski

Good Yeah. guys. morning, Hey.

supply we gave a of the guess, to your XXXX as you're today when pretty fair healthy lot in out you to And look next marketplace you to around year, any a now good seeing investors. yields there say would level would right to pretty seeing to not might for but helpful concern would what you of a given I continue know high growth normal year. grow that big that's look – you're And commentary of on year? similar answer around you you characterize lot if commentary next based going want the it amount commentary that's Frank, is and expect that think what right and of to be a at in I what I So, activity, to directly, come some booking kind now.

Frank J. Del Rio

giddy XXXX, And Across Steve. Yeah. us you a this yes. primarily for was it this But is on business all Day year Friday, year. look year to bookings Everybody can Investor was We're organic in this that be ahead online hurricane. XXXX. time an at in in to is core about happen despite Encore Norwegian for until out going as with very the with it was remember turned talk tell the shaping about record in XXXX of XXXX September last is Should I going lot segments the the I business XXXX? a for to very optimistic? year, is at what of Remember up how the answer XXXX. Record happened be not time we November. year coming today last And late what fantastic. middle But the for industry

the in the to So be both growth ability that commentary, the under are, there in All are to capacity, kind industry. sustained circumstances business. our pricing in not absorb peers concern bounce be about by dispelled any today they back in myths our the ahead load our of fact hurricanes, we those may what industry's only dispel industry's and the normal and that's after should ability that of myths but the should in European marketplace those

Steven Moyer Wieczynski

And Frank, bundling the Okay. is That's helpful yields? ticket that little helpful. as misconception color Got I going for to well? the about bit color you great and working impact how strategy a and if impact that's that's that might can you. out some onboard in be maybe of terms and there's how how you And prices, you your also in coming that that's around there about a together marketplace then can of guys? talk think give

Frank J. Del Rio

of colors it of clearly see our and strategy advantage begun We've But going Day. tell rainbow be Friday. We We rolling international I preliminary give that it this a by on out better in as you to other of seeing ticket higher extension see Investor this Friday pricing it at rolling well. and markets, are a I'm result booking results you I markets winter will begun we bundling what as out we've spend and a on we you'll in to China started very the mean consider to curve. that on competitive that onboard purpose, the for the see promising. Europe, an

it's that core and to So our we'll go-to-market something continue strategy is to something do.

Steven Moyer Wieczynski

See Thanks a on Okay, Friday. great. lot. you

Operator

our Curtis Nomura. from And question line of you. next Harry comes with the Thank

open. now is line Your

Harry C. Curtis

Or target? to debt a technical Xx mostly any low Hey, need good Do any that I everyone. to debt morning, question of ask is just wanted pay you to Mark. driven? down get EBITDA to or significant leverage your amounts quick for

Mark A. Kempa

at we That's of no, – Yeah. we've to repayment contemplated driven. part primarily target. have debt of any that – end tail completed and QX, further that repayment not early get latter that EBITDA to we Any the QX, debt that

Harry C. Curtis

quick Frank. then a one good. very for Okay, And

supply again but the concerns concerns not quarter are third only supply, system supply. on significant amount of focusing XXXX on the Just because the also Caribbean

to me If XXXX ahead their industry whole the And XXXX. be the far you a doing if that? to to do this industry would about seems of marketing is that marketing amount pivoting of think there significant work a of it some fill were expense expense, yet as

Frank J. Del Rio

No.

think a that's I observation. good

XXXX. I to began inventory spend that's The good brands to we be you next for yes, more. different the the data others week our to if March occurring the case least pivot total that that so. news at we're that booked certainly encouraging money any or there accordingly. to over in will that is early pivoting, spending year's sell in period. earlier dollars than is pivot inventory is last degree spending in that we're investors ever. But not more not in earlier time And our on envisioning point least more of are some marketing in how well than XXXX that that they're case it the and in spending perhaps So following a that at in And will year our should another focusing about think We're because and just again begin that's XXXX XXXX to just

Harry C. Curtis

got Thanks it. guys. I very much,

Frank J. Del Rio

you. Thank

Operator

with Thank And question our from Bernstein comes of next Beckel Research. David line you. the

Your is open. now line

David James Beckel

the for question. Thanks

the here. concerns on of investor piling list Just

have the public discipline. another of think, guess, I certain entrants same its necessarily some disclosure and rules, abide by one perceived aren't to or would don't I public new that be

As to management strategy it relates competitors certain how Caribbean if has entry all? year, at new from your revenue entry affected their this

Frank J. Del Rio

Not at all.

the seen to. I enough a the I market might know, that hardware. point hardware new what marketplace, entrant entrant which you very we think, overall suggests way that of strong again and into that introduced is with referring the new a of another have data relatively And health Caribbean which they the be their have responsible is to new in absorb

an And as pretty from our the nothing prices have wasn't assault usual. we entrant, business case. will. if seeing the to And disruptions so much space that in if better respond do public a peers marketplace, the we higher we're to It's wouldn't to booked or in not had that new any be at again you

David James Beckel

could, anticipate And Norwegian as between helpful. onboard Thanks. your of could of luxury does guidance anticipate rest a you higher percentage That's brand? into a the you bifurcate Do if – quick just for sort follow-up, spend? And you growth digging the that little bit year. guidance and the

Frank J. Del Rio

We don't numbers. report segment those Yeah. like

you industry we're trends you quarter and the spending data color that. happy onboard leading Friday with But It's spend. onboard more We color on will revenue point. generation we'll strong so very we another ex-China, give onboard first about saw give our on more

week further thing a well, is data a cruises booking people has one or of curve last revenue. be strong where And today very will QX. onboard continuing to into it out. been Now your far throughout see booking be, onboard confident QX happened current the terms enough revenue very, what today, year onboard And more so feel more happening what's and their point ships in I

David James Beckel

lot. a Thanks Great.

Operator

Thank Goldman next of Sachs. line the And from our with Grambling Stephen you. comes question

open. Your line is now

Stephen Grambling

change little Maybe horizon, morning. kind do one a new moving the with guess, good I there? regulations you XXXX and impact Hey, of the I the bit. of to guess what IMO about to gears rules think

Frank J. Del Rio

on time for few been our last something some that's minds that's so over Yeah, the years. quite

scrubber the technology. with process our in are of retrofitting We fleet legacy

anticipate builds little that, probably and XX% just we Today, And We capacity online. capacity our HFO, that will we'll around will XX% And more we XX% XXXX give context mix best XXXX around to change. coming operational scrubber XX% All is new right place. that of And to have are we'll HFO, in our we visibility be a would now, somewhere to scrubbers going go XX% burn with roughly MGO. delivered in thereafter then in have MGO. additional bit a our of XXXX have technology. in XXXX around expect

Stephen Grambling

on And that the forced fleet will investment of look maybe as be become that. retirement to required older some you the broader anticipate be Do effectively could follow-up the given industry into a ships actually at you compliant? that

Frank J. Del Rio

Steve. a money of bit quite No, spent so, think I We've refurbishing our don't vessels.

situation. the industry, youngest the we're in fleet that in have We so not

We a small fleet. have

our preponderance are We A price have destinations. many underserved to deployments of markets. premium

reasons the why berth. we per of basis One and industry lead EBITDA the on a capacity day

don't of accelerated at causing us I no, kind any least see at So, all. retirements, not price the fuel of

Stephen Grambling

you versus differences forward maybe but any booking sail new capacity the you that trend the to to lot versus moving luxury customers? in are there And Thanks. And in seeing specifically base, detail forward of in seeing demand consumer in sail a then returning Thanks. to shipping then you provided market any some customer there China it's given are moderate, I bookings, whether change back fly guess by versus of (XX:XX)? the

Frank J. Del Rio

Okay. questions. of I'll extremely try upscale brands curve upscale to expand. brands well. all booking are The forward your remember to The the for performing continue

year-over-year about, to As a no across the can that give say operating by of At it by with impressive. Lines, are some that see the I I in absolutely booking load coming. the of proxy all have the effect mentioned, should it upscale big factor And truly new over increase day And that across pricing, is enough, at boogeyman you Cruise the investors I a can't it's legacy rest brands. see record combination the until all Norwegian destinations. you Splendor across fleet, that fleet I think don't the the doesn't ships, worried which and about just had XXXX start higher things, XX%

and is in continue QX that's the helping in typically in year I In year And see in growth consumer the the of be this onboard year, my feel we're and as in starting from better up like and our important I'm world new does, see bundling balance. We they stuff seeing to six certainly ago. without the any that China in throughout a – dip free that's just is ship we've China in same I've optimistic – America able about capacity going solid North first recent the about been introduced than year said months coming supply a yield increase we're second second have up likes from ability rest At that situation our the test of of Europe. a certainly in introduction Joy the up in did And of the encouraged promotion to of being our the in We're concept in China digits last introduce Chinese to about the Sea the commentary what in pricing terms China the terms I China. of you opposite do. spend which China. the of most addition to of hopeful demand today successfully I introduction. meaningfully to whether because reduction The then half mid-single

Stephen Grambling

That's all super Thanks again. helpful.

Operator

our Infiniti Georgieva And next Assia the you. comes Research. Thank with line of question from

now open. Your line is

Assia Georgieva

few guys. becomes quick morning, sort I June QX think from further? the a for of Europe Will close-in passengers through go to where One We pricing a to weeks of source May end reason be season. switch then Want that early summer important. and raise question. for Good gears guidance basically towards to the now the European and possibly

Frank J. Del Rio

the quite Can understand didn't you question? I your articulate question.

Assia Georgieva

Frank, further passenger come some the for reason basically be source enthusiasm of QX? very Could that bookings I for there's to close European think start season. that

Frank J. Del Rio

Thank Yeah. you.

business Mediterranean, and Europe continues all the sold. in to Europe three across well year-over-year factors Our perform brands both are very load and very, Northern pricing solid extremely gains all well the

marketplace. chasing in a as day. being comes able and North call throughout way. The lot is causing heard saw the But very consumer I to returning the big very to out numbers on that American best where to consumer think, in very, in last American the be laid strategy a our calls North we've that seen say be previous have continuing Friday and we Europe, in the bundling Europe the that it's we're you've year earnings we're go-to-market proven me would command from. sourced for that about and this trend going us where is what on to you of We're the strong. strong strategy to in pricing discussion the business customer very, the It's agnostic was strength Europe our is to

XXXX. story that very very, going a I Europe news to So, think overall be is in good

Assia Georgieva

forward And to Frank. you, I Thank Friday. look

Frank J. Del Rio

Good seeing you.

Operator

And Thank question Katz with our the of next line you. comes from Morningstar. Jaime

open. now is line Your

Jaime M. Katz

some you, curious my stay Hey. with feel for faster that through charters you've taking for gleaned time you I'm question. before are have maybe from help that away you may have selling an others lessons entered shift that period for or from to in charter there business others might like of have? China extended maybe than Thanks how you the

Frank J. Del Rio

doesn't to to Look, industry most line yield can charter you from think you the traditional the way the model shift charter more Yeah. you have the we know, to cruise functions whole as the important model, one manage. in because, that And in of manage near its yield a business that allow essence, the wants away America. I in Hi, is ability North Jamie. of anywhere

number of that XXXX. XX% is away. our charters than we below rest business the with be XX% along in moving will and we of industry ship believe Less will So the full in XXXX overall

get go. way and what I and will of – Shanghai Tianjin where greater from distributing ship across that's but exactly charters. a to metropolitan Chinese marketplace moving broad efficient hundreds And But need fill a the from most away go agents happen. the particular exposed where ship not there throughout travel from charters a products being from market. trend moving still matures a Ultimately long to China that's ways is to just full away believe sailing. is to dominant certainly our of the or – to area people full the area So agent That's we as travel that cruising, having market

Jaime M. Katz

you. Thank

Operator

Shojaian question next our line Research. from Jared with the And Wolfe you. Thank comes of

Your line is now open.

Jared Shojaian

just seeing the your but now, months right good the been Hey, what you strength many on questions. for hasn't Thanks really overall confident my trading you're of for just seeing been everyone. really in morning, midst stock taking all well you've sound now. really Frank,

especially more the on near is is, upcoming? consider now to an leverage get so especially term, question would with might target So right since important? low And why delaying the the you you the aggressive secondary my the X get in opportunity, buyback

Frank J. Del Rio

It for We low. And the many long are is. what share today, price ridiculously think other manage business am it in the term. is investors disappointed I is while as it the we

sooner later it And well for on don't I that Jared, that talk target the our And right Friday. long where plan the how as term think, strongly or important. to and we'll about itself. returning Investor We delevering will is that believe to more and lever delever change from about we we you that to do today I feel delever again are at to shareholders. levels we'll on those capital strategy. area share that and will that and something board It's Day to reach with

Jared Shojaian

switching here. then gears just And Okay.

and you from the in were surprises, February? seeing yield March guidance you say couple unexpected some were initially were conservatism in baking what in back Or would On the which accelerated haven't case months? back-half in some there been there really in that demand you last raised, April just

Frank J. Del Rio

far. Yeah. Business steady XXXX has throughout so been pretty

some brands begun earlier, I've As XXXX our XXXX. said to than more of to booking pivot have

same throughout much of pretty that the the has but the four first inventory. of the some XXXX remained So volume months has year, volume overall to diverted

Jared Shojaian

much. right. All you Thank very

Mark A. Kempa

Okay, Jared.

Operator

comes Patrick Thank from you. with question Scholes line of And the SunTrust. our next

line Your is now open.

Patrick Scholes

Thank you. Good morning.

Frank J. Del Rio

Good morning.

Patrick Scholes

curve quantify help concerns first my could what if now. Frank, perhaps right morning. Good is booking question you your

year imminent. certainly February changed past confidence since isn't reason booking the or the is that the since length giving that of earnings. You a a even listed that how recession over And you curve curve booking as has

Frank J. Del Rio

Yeah.

you end some trend we has continued. the curve at that year-end. And our today year that of the recall booking at XX% prior improved year if the has said that So from

a further is onto I if that what I and optimal at What stretch gives of the You how don't is. doesn't an introduced that continue never well same And into the curve of then doing. that's to know that's And you have and the think out we see, time which booking curve do that marketplace. you're of you point, for booking answer. data idea while overall why what Splendor, she we as what example, prices, raising And XXXX, you have come I future, is. something. until the that's been when said booked sense have QX can the further we

to a a that's curve is about contributing the today believe XXXX confidence year the a talking that's at at is it So why be and point But, to very it longer is, than ago as certainly along able today early we're was XXXX. booked ago even curve raise XXXX, is our and mention a to not year booking point those can't booking way. longer prices than to well yeah, as

Patrick Scholes

intended this just color to Thank Does $XXX billion announcement one noted that more you here. repurchase of year – target? a question change I you Then share for million you today's the $X quick on quick shares. last quarter had authorization, does that. of purchase the said that

Frank J. Del Rio

Well, billion we announced $X weeks couple new the buyback program a ago.

Patrick Scholes

Okay.

Frank J. Del Rio

to see noting it use going still We're things delevering to that best it shareholders well. intent And the we're coming strong capital we're can return We'll we very cash, transcend the Xs. to our year. in low is But way we'll and how the remain doing generating year. opportunistic. to We're the focused begin meaningfully on to through free

Patrick Scholes

Okay.

possibly beyond more and and So of that? case would be be $XXX could million sort the there above base

Mark A. Kempa

repurchase prior That $XXX authorization. we share already the was in of million QX. Patrick, part our completed

Patrick Scholes

okay. Okay,

Mark A. Kempa

billion $X program. The new is completely a

Patrick Scholes

Okay.

Mark A. Kempa

Yeah.

Mark A. Kempa

Okay.

on Thank you. clear be to wanted Just that.

Frank J. Del Rio

questions? other Any

Operator

with from Yes, have I a am line Ciepiel showing CRC. the of we question Vince

is line open. now Your

Vince Ciepiel

my taking for question. Thanks

One you if four your now. last sailings in the be recent of remainder year. and in booking the alluded three change had to Curious of might for that seen to curious trends this what driving peers better Caribbean any weeks

Andrew Stuart

that. booking Andy. trends Caribbean have I'll it's reasonably take strongly. Yeah, continued

are QX capacity we seeing We close-in comparatively. for QX where relatively have strong little and trends bookings

As and pretty happy pricing we the as Robin earlier, we a said ahead are. We're on load, Caribbean we're and with I forward. positive to see XX looking in look months, out the we where trend

Vince Ciepiel

quick Great, Mark. thanks. And for then one maybe a

business the you. looked strength fuel and of raised core You against yields on what like FX the moving despite

you headwind gave maybe FX, and fuel a $X.XX guidance? what saw of last Just from or you on since put curious $X.XX type could you number if

Mark A. Kempa

of in $X.XX I the say would neighborhood it's to Yeah, $X.XX...

Vince Ciepiel

Great. Thank you.

Mark A. Kempa

...combined.

Frank J. Del Rio

have we for more Operator, question. one time

Operator

Certainly.

Our final from of Tim Fargo Wells question Securities. comes the line with Conder

is open. now Your line

Timothy Andrew Conder

here. taking for Thank you question my

Just maybe. different And a beat this but again ask a the way not Caribbean, me couple. to let

it you you of do what the basically out given if it again? If QX that to a Eastern do make you're pulled granted to capacity of QX Caribbean, same and again, you had out had seeing decision lot over you over and would for

Frank J. Del Rio

Yes.

Timothy Andrew Conder

let's Okay, get can okay, to dividends wanted then. mix, then about okay. thankfully. the And it focused What share another guys and and in what very your After remained that Friday, he'll to M&A? thing intently M&A? wait have repurchase so on as deleveraging just ask Frank target you maybe until hit obviously on we But about

Frank J. Del Rio

M&A Tim, Well, how you works. know

You can't really on count it.

open. options your keep always You

one at it not the leave who It's that a are all order out rate. show disciplined there's is have the newbuild talk there we growth vessel very we that. have You to investment to shaking program got how got left. to numbers because our bushes takes I'll acquisition highly in have that healthy And we That's sure make offer. here. Not But industry to pursuing to a this and bankers something year. something consolidated an per already. a We've much

the EBITDA youngest yields industry. We have in the industry. bed per the in generate highest fleet the generate industry. highest We the in the We

it's any one that have. So it, we'll certainly a something but to have frankly, along beef growth take shape, to an or up that that's accretive we If must have earnings, way, don't M&A quite in comes transaction profile. form to not look at we

Timothy Andrew Conder

Great.

we'll you (XX:XX) for the on Okay. you Friday. Thank time. see

Frank J. Del Rio

for Bliss. onboard I morning's forward on a of you, most beautiful participating not And new have seeing our Well, this Friday all if thank day. you, of you you, everyone, Thank great Norwegian call. to in look and

Operator

concludes conference This today's call.

You disconnect. may now