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Norwegian Cruise Line (NCLH)

Participants
Andrea DeMarco VP of IR & Corporate Communications
Frank Del Rio President, Chief Executive Officer and Director
Mark Kempa Executive Vice President and Chief Financial Officer
Andrew Stuart President and Chief Executive Officer of Norwegian brand
Harry Curtis Nomura Instinet
Felicia Hendrix Barclays Capital, Inc.
Steven Wieczynski Stifel, Nicolaus & Co., Inc.
Jared Shojaian Wolfe Research LLC
Brandt Montour JPMorgan Securities LLC
Robin Farley UBS Securities LLC
Stephen Grambling Goldman Sachs
Timothy Conder Wells Fargo Securities LLC
Call transcript
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Operator

Good morning, and welcome to the Norwegian Cruise Line Holdings Third Quarter 2018 Earnings Conference Call. My name is Jonathan, 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 with the session will follow at that time. [Operator Instructions] 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

call and our with Vice Financial Stuart, and for Frank earnings words. the back Norwegian Cruise President Jonathan, closing joining as President some President and by Chief Executive will you, will XXXX good Holdings; Officer Mark call Thank Rio, everyone. Norwegian Thank of Officer the Executive you Frank for us Frank handing Del for Andy before well I'm Mark results third Officer; call. XXXX Line and Chief commentary, Line. quarter Cruise joined opening follow Chief of as provide discuss which today morning, guidance for to for the Kempa, after begin to quarter Executive

We open for your will questions. the then call

being this Investor reminder, call Relations conference at a www.nclhltdinvestor.com. website Company's As webcast is on the simultaneously

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

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

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

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

Frank Del Rio

good and morning, Andrea, you, everyone. Thank

left off. The with third second of up XXXX quarter a picked quarter

Holding strategies, position. demand our revenue contributed It to As book perhaps our acceleration XXXX and the environment Seven Norwegian to history, history. brought share effective multiple by cost Cruises fleet have an Company's of marketing just U.S. growth Regent confluence of competent brands milestone quarter Cruises earnings, a stimulated most benefits Company To execution our by initiatives and into the combined and per everyone Bliss, and earnings our and to strong truly revenue any a perspective, where mostly the quarter the precision transaction Norwegian Oceania importantly Cruise outstanding. by earnings in consumer generate of led earnings coupled adjusted into continued record adjusted highest of in newbuild a for put sure all successful been three year refurbished equal the quarter Seas this will record and of revenue robust demand for demand with proper several was creation last another introduction per and of that years a a lead share of XXXX, all has earnings the the Line the the more ended family. agree and of I'm the with

were results three by quarter main third Our buoyed drivers.

Norwegian for of upscale two from across brands, North our premium from primarily strong voyages brands. Bliss; season blockbuster First, performance our Americans Europe; second, particularly inaugural the outstanding third destinations, demand and and three

worldwide the a three on and onboard increase the on glazers her revenue, deployment, our Bliss has that XX% bluntly, ship a feeding gift capacity consumer spearheaded put Norwegian majestic outstanding go-karts Alaska’s pricing she Norwegian in the despite instagram highest that skyline especially Norwegian no front, the fees amount is Well ticket vessel giving. become even effort money brands, expectations. in guests of double-decker have to a increase. card plus financial performance, brand, calling can appearing of it the has brand Seattle in The Regarding to generating is interest background with drove buy. keeps and Alaska images countless or that the Bliss the on exceeded XX% on in the racetrack

third last Cruises led that continues to Regent fill On our mentioned that XXXX. also and brands fleet. by year most Oceania barometer premium, higher the was brands Oceania attract to innovative, along pace, allowed Cruises European We strong Seas prices. XX% were a enjoy. recall performance Regent Americans with factor while from the brands call, mark trend a that Europe at year record the That banner The second that revenue guests strong is affinity Norwegian the XX-ship us equally year’s brands. and record past the already pricing wanting through of At the the products for for environment, to we've for result the brand Europe season. unprecedented growth impressive. quarter, old strong led by high load you'll demand at world. our the further the for and and consumer of of higher for two booking upscale onboard and all new the And an levels As it caliber from two consecutive broached to time, across brands, North all best sailings cruise satisfaction traveling yield of in pleasantly to a double-digit two number travel the is of important accurate demand it surprised three The Seven a itineraries customer acceleration inclusive our on next same

expected per XX.X% raised full-year such top Our approximately is share year. be over the range growth outlook our guidance of confidence end guidance in again that prior earnings now reflecting adjusted our previous the above a have to we our $X.XX with earnings

right past XXXX historic robust continues this see seen also the windows environments for during with continuing booking We hold to have demand two into levels elongated we both years. the

to that a occupancy calendar XXXX the the higher have enter with book in as once Year we at books we So and strong on this position expect approximately again as turn prices. environment New record to XX% the

better advanced in has and pleased time in point the well and in volumes that on also Regent coming booked up booking for Oceania mentioned year an at history As report the in brands time other been in over I remains and XXXX sales innovative to accelerated capacity. all the all year-over-year final record weeks on any yet year's our have ticket last and three extended. Bliss Norwegian that sister also higher has the we of will it's announced. pricing were X% XX books of ship Class. of leading call, two position their Breakaway further brand weeks to to widely of position levels their the book seen Norwegian Overall, our increase over improve Norwegian even volumes booking ahead are highs. successful with the features leading occupancy levels XX past The year-over-year new and a pricing we accelerate her occupancy XX% to be XXXX this few introduction the the new Encore, with Plus ship in She see across has features past

by travel up Encore York of Eduardo noted Hull are in the from Seven are and the Norwegian like programs Caribbean season or Cruises since year. award-winning for and ship highest of yield. allowing in towards the City the instantly regarding from we of Catalina consumers kaleidoscope in brands, build make Dubbed summer. in Encore, and booked for the artist excited in both Our introduced Regent a success Norwegian Oceania inaugural on OceaniaNEXT. refurbishment joins guest go-to-market XXXX, is coupled Class from proposition, positive the with Breakaway possible turn core guests occupancy value our vacation the will Also Miami should strategy deployment and and drive end winter Edge our be and continues New best color to juncture back launched the the at in to operating These the load upon Caribbean pricing best the to reaction a itineraries XXXX. ships and she which central both which quality highest us Caribbean program the sails it reinspiration from season in her offering Miami will to created as season Art launching Bermuda source to XXXX recognizable our fleet it's program that a first Arranz-Bravo to with hardware her this her she the the sailing was by Regent begin Seas to cruise and Caribbean the best revitalization inaugural price agents we strengthen as in

as than behind the bundling is brand, extension The initiative better the and every Line to program commanding evolution first further Sea vessels, our refurbishment agents an is bars to work stimulating and that excited One about pay initiative driving a XXXX and and overall ships, past Cruise Oceania strategy. a four number of $XXX additional from higher dry-dock days off for and and prices. public sail results beginning and primary of The while a and been the the the of revenue and refurbished highest and companies consumers both in driver the handsomely has incredible guests the XXXX three which with rooms and the by in wide each why offering onboard ticket public areas both our is of highest XXXX, alike cruise of travel lounges. all success include reimagination increased and enhancement program over fleet brand And on will are demand new we new investment Free very the of yield go-to-market will sends NCLH, R-class dining stateroom demand margin. Norwegian OceaniaNEXT an at freshly to in complete million for

open more provide to at airfare our inclusive bar, cruise Norwegian more and Free result free one many. to bundling of specialty with even Sea of value and evolution this to So kids free I offerings is team an brands offerings our and value next excursions, which fare. sail compliments even challenged are bundles WiFi, the launched free Air, The seamlessly shore advantages and free bundle add consumers. of and inclusive dining, The compelling Norwegian to recently strategy proposition Free unique free

yielding of First, has cruise major at want, Free strategy. overwhelming long of it that to product. high contemporary is customers demand inclusive there for an and demonstrated book is of transportation. hurdle that easy Sea haul in The air success natural need overcomes a extension Free what the affordable Air

air seeing sourcing clearly or XX% paying than the purchase launched to additional quality are more packages. us more haul offerings further recently where higher itineraries not great third, short offering, our is guests inclusive our approximately haul a the drive travel and deployment brands to sell in cruise Last as rolled on and are better transportation timing program onboard booking Air inclusive spend to highest strategically more long of guests from her given margins, we to And market versus our announcement for competitors the the opportunity enables flight success Joy, major pricing whose dry posts, strategy the Norwegian of capturing tend earn months on customers. nine crews been to newly this haul, due itineraries across focuses China commission results. additional purchase usual higher over the the ticket a and reinforcing consideration. long to have China least, be We consumers which and in Free Secondly, window tested those we proved in both the agents guests, Norwegian Alaska. has selectively strategy shorter is incentive The air on products of and certainly and voyages

special a the to more will for to take what to Norwegian Cruise the horizon review to like Mark more program's near guests would for the details I add XXXX Line for on for the the offering on but quarter will value look later, in of go little turn Holdings the call and I success, With this into provide Mark? year. in we guidance provide over results to advantage now the rest is of even future. avenues

Mark Kempa

to record and on basis. for Thank Unless yields begin XXXX a followed my presentation, XXXX commentary compares close our of closed to quarter then noted, generated one in earnings primarily the fourth revenue than mentioned a revenue report history. expense initiatives, remainder, a you, Day we comes from well-priced resulting and item will with constant commentary operating call. which of cruise am outperformance which my few to driven and another the our Andrea XXXX. pleased by into and exceeded by our onboard better from the consumption, summarizes as commentary, the otherwise and fuel cost, expected benefit which $X.XX by offset third earnings our color revenue, for with timing a I quarterly the trends, into Slide were in Frank. yet energy I company continued look be I'll excluding booking builds line in new and strong partially guidance bookings fuel Slide its highest XXXX $X.XX Throughout discuss adjusted X will certain how expectations per adjusted currency referring And fuel earlier net ship by the benefits efficiency have share the where benefit net from the strong driven full-year by on shifted and results, from quarter of fourth below and Capacity $X.XX quarter, other and $X.XX, prices. exceptionally costs, fuel in items. higher savings consider on $X.XX metrics to quarter from

prior points. outperforming revenue strong versus yield X, Slide basis well-priced, close or revenue major X% all The across bookings, net by and driven by basis exceptionally to beat strong in X.X% Turning an reported expectations guidance onboard streams. XX on was increased year, as

our Excluding capacity, from the corporate in the Bliss, which yields new Norwegian benefit brand the Norwegian above NCLH average garnered quarter.

quarter excludes basis operations third the approximately related optimization. yield XX have from been which X.XX%, of dilution to growth points revenue China Our approximately net itinerary would

basis, X% net due costs, cruise an guidance the costs. on cost, and reported year of excluding our timing versus to fuel X.X% certain prior favorable increased to to Turning as adjusted slightly

$XXX. was in versus which as fuel in and savings net hedges Our favorable more ton of per increase metric total than came expense fuel price fuel consumption expectations offset at

the X.X% the expected primarily the to in including for our into Caribbean quarter, Now of let's the fleet. of line quarter. Bliss, season approximately due with to Norwegian Highlights is her the for first prior Miami. the discuss increase selling capacity for the deployment winter Bliss capacity Regent introduction Approximately XX% Norwegian is fourth which Capacity deployed and in is and year.

from Caribbean She homeport to XX% year. we big excited innovative slightly will be from this Breakaway deployment itinerary. homeport. first will this bring to Orleans largest our Breakaway approximately Europe ship represents prior sail operating the Norwegian New Western and easy newest and Additionally, Norwegians the time from for down in to ship Class are new of

balance repositioning accounts key and remaining Hawaii America Africa, with As approximately the X% XX%, of for markets, well of Panama deployment, South Canal Mexican other Asia, sailings, for Cruises, our voyages. as Pacific as comprised Riviera

headwinds our Net expected approximately reported China's yield can itinerary quarter X.XX% to found growth discussed on for despite on expected expectations revenue from call. or to This from Our be than Slide fourth the as X. basis. the increase is on X% the impact last higher an comes sailings related optimizations

benefit from new Excluding is Caribbean. of above yield dilution which while expected approximately average XX yields the corporate brand capacity, Norwegian approximately garnering X.XX%, in the our points growth NCLH Net be revenue the is from Norwegian Bliss, China basis sailing operations. excludes which to

the investments bookings. to costs, as X.XX% and and is additional X.X% part itinerary drive to due to of the be Turning cost Primarily net as reported support basis. fuel aforementioned to XXXX or adjusted marketing optimization up itineraries XXXX new approximately excluding on cruise expected to launched an

All one-time and performance and of will by result increasing benefit funded of expenses quarters. the annual third targets that related end higher between confidence be a due tax accrual which at to a as planning certain initiatives. certain the of compensation be fourth certain performance timing the of will achieved year And

basis to China as revenue on is XXX XX full-year. our increase X to with approximately expected X.X% X.X%, of anticipate guidance this ton tons. quarter yield an approximately for approximately prior year. a introduced expect points fuel reported brand, fourth which we account $X.XX, X.X% our outlines price increased latest net point basis excludes new basis, Looking which metric of expense, our or February, increase to of versus net the from for excluding Taking the is at adjusted XXX,XXX yield be approximately expected in over Slide to net the of a hedges for provided expected all $XXX fuel be XX% initial be dilution EPS metric is Norwegian into consumption per represents to guidance tonnage Adjusted operations. XXXX up

excluding the as versus performance adjusted and X.X% to The cruise incentive fuel X% be basis. reported to is expected increase attributed aforementioned sales and Turning net or costs an on to investments increase marketing is guidance up cost, compensation. prior

ton expected of our fuel is for consumption at fuel hedges metric the remainder expense, price to tons. Looking by fuel year. offset of $XXX per net higher with being Fuel favorability prices expected metric consumption XXX,XXX approximately be of is the

years result expectations once performance the from is revised incremental comes from of a XX.X% below increase the prior adjusted which offset represents and strong benefit a on planning from these raise in for components Slide is approximately the of to A and interest adjusted other offsetting half end $X.XX high a of the and our of range line our partially the cruise which from are XX%. again is fourth As growth expense outlook of walks which due a depreciation through net quarter third by comes the of $X.XX $X.XX the EPS the guidance improved of items. remaining previous to costs. approximately $X.XX certain And result and benefit dilution attributable operations. revenue the slight fully benefit $X.XX lower X half in surpasses initiatives, top operational revenue outlook guidance. other quarter, China tax as amortization, $X.XX the of a in improvement outperformance, from and growth $X.XX EPS

and in in XXXX Our with margins to continue expand expected expansion beyond. further XXXX

from the into topline fleet. our we while to razor-sharp costs launch scale by controllable complemented of on drive enjoy leverage profile is we our ships are growth new focus As will results benefit the

X.Xx and of range we are it to targeted the balance reach to expect to continues X.XXx to our at be on the of X.Xx the of sheet, strengthen XXXX leveraged XXXX. track end approximately end by and for As leverage

In adjusted Day, X. rising addition, fluctuating shareholder headwinds our from despite comes targets adjusted foreign are rates. also CAGR, we ROIC This EPS on and and at return to provided prices are illustrated which deliver on Investor track fuel Slide on XXXX we exchange

core Now is environment I'd healthy, multitude in demand provide the while are brands. as by for generation a robust And our in intact. earnings expectations. for successful and single-digit expect the three across to initiatives, strong our XXXX year strong well range of demand vacations cruise fully like XXXX we extremely the on our bolstered reasons, some shaping remains of growth looking up resulting business fundamentals The context

earnings is our And year's initiative, growth with expected our growth beyond. deliveries investment Next XXXX which results are itinerary XXXX to strategic forget XXXX of returns a results newbuilds extraordinary and not timing with of both reflection is benefit period future the shareholder in financial and XX.X%. of optimization bolster lapping in coupled the let's earnings

mind in Now year. into walk few let's keep items a we move as through next to

First, expected primarily as previously redeployment. initiative is strong Norwegian to result optimization discussed, organic our as Joy's net drive strategic itinerary growth, a yield of

cost offset for a mostly our yield are resulting per the approximately at and the the $XX accretion incremental net the to to $X.XX. only we will this to cruise adjusted adjusted initiative strategic write-off metrics a to accretion EPS earnings expected with In increase, same expected to from to related year. power including share related expect million full and time, beyond approximately one-time be non-cash in of contribution XXXX the net in realize generated slight However, Both initiative cost our revenue XXXX. and earnings

of XXXX Second, Holiday a expected result the to China the shift as of sailings the Easter well into quarter as second growth be low first final of the quarter as quarter lowest season. during yield the Joy’s the is

associated versus XXXX to net they XXXX launch costs approximately November Norwegian Seas costs the do the marketing involved with the as expectations. vessels higher as Splendor for respectively. not enter the optimization in expenses XX% Concurrently in fuel pricing XXXX fleet incremental is of expected of our as until Seven Encore and higher an well January inaugural hedges new deployments initiative Third, fuel dry

the Lastly, combined of there the year, and docks including for Regent XX high are shifts yielding schedule fleet. Oceania in dry the nine six

fuel the environment. Turning back to

XXXX the to XXXX MGO the mitigate additional IMO on strategically hedges we layered and regulations As both XXXX approach, our exposure to markets. for

fuel As to proxy a in MGO and Also at correlation our and we hedge XXXX improve XX% switched from XXXX our between an pump, future we of our and the result, hedging XX% we hedge in to proxy oil. total pay the gas currently Brent effort the for consumption have price respectively.

protect as against As a distillate spreads MGO, increased gas oil the to product is risk of to refined better similar Brent. opposed expected pricing to

our beyond us from systems, which we XXXX, with Breakaway ships higher cleaning prices in As equip gas starting we will Class to look to exhaust further XXXX. expect insulate fuel

on systems, the that XX, record of all our which in as standard Slide quarter than regulations. higher earnings history. are installations reminder, we've is can closed-loop To our with a and revenue current a As recap, highest Company's of you delivered another see

outlook high-end of We have once the again previous full-year increased about our guidance.

Frank We shareholder have targets over strong commentary. that, further conviction outlook the back provide well-positioned and in to and hand to our XXXX our closing achieve I'll returns. are call for XXXX With

Frank Del Rio

you, Thank Mark.

shaping just indeed purchases curve very I Mark that and further a to book to driving I confirms our signs demand which and of reiterate That and robust stated, want is macroeconomic statement even our discretionary XXXX well the are call, in elongated before booking on strong three commit environment big made continue that is out is that willing advance. As shows ticket customers weakening. brands years no to ever months last than to up

multiple the the consumers Norwegian in of the fleet The demand Combined boost Line global financial we drive to situation a in strength the XXXX spend from and competence and beyond. expansion of future. today achieving give long-term for ever what and sailing consumer Cruise and is set generating get closer our that confident are that together cruise combined we their levels shareholder sustainable benefits a both returns from refurbishment optimization of have will compelling be highest the with initiatives onboard in itinerary of catalysts and our all underlying vacation in confident Looking a financial clear in picture today total our Holdings targets are to and newbuild programs, come seen?

results We Jonathan. in of call proud We are up opportunities Once can you front I open are us. for for the of questions. posted strong the we have we even more excited to that thank far again, now thus support. lay the and maximize your extremely

Operator

Thank Instructions] Del you, Harry from Mr. Instinet. the from Curtis of Rio. line first Our [Operator question comes

Your question please.

Harry Curtis

go Good morning, tone if positive. year you Hey. was on quarter everyone. a your third call Frank, the back quite ago,

borrow are be get last a to look So us, statement that'd And a you have off share as helpful. XXXX from this detail Ronald if sense Reagan, to today into I'm to trying than better with year? even of you time some you

Frank Del Rio

especially Good year. feel I Harry. a I good yes, this than and past of better heels on the this did today question election, morning, It's Tuesday last coming time the but

better brands. across our We’re booked three

hurricane. We’re We better and year a don't the higher ago at overhang the prices. booked have vis-a-vis today we the Caribbean had that

in early it broader bookings I told, organic see of all see see optimization early and our the see We on initiatives, Encore. picture. it it in the we a pricing So results we in improvement, itinerary

finished, the investors should commentaries I market the as indicator. economists watchers I just look at points cruise data the always During that mentioned leading economic and I and two industry think

all programs. you good What the cruise cruise our consumers that they're indicator on the It's for where future and vessels, but their the to Norwegian enough I'll good record buy as time one today. on feeling we up an there Our of indication another is onboard time still That – book sales consumer current the feeling another existing brand. onboard give is at at This the feeling read and a is have is more particularly how But while to are performance the and great future. spending how today the year-over-year. sign a program is XX% is onboard that of feeling is business cruise. position they're

the you is another So the that consumer I'll And last that's getting say but sailing got got reached and is that early, the little than alive earliest today good again, future. that thing should more is that well brands ever we've XXXX, about booked I it's tell curve XX% especially know for We've a and longer, the and brands. already the feeling booking upscale that indicator the I for is milestone. – we've it's

I So there than Harry. yes, was but a off better ago ago, certainly I even today as well year years am four

Harry Curtis

one without I that have is second there us to pre-launch an what did maybe this have going can And seems So sense sort understand, revenues be into Mark next of drag awful of costs year? question. EPS part you a repositioning Do of to that the an a associated help and year. lot having come following

Mark Kempa

Yes.

as know, part latter you in January of in the Seas Seven we launching Encore So Splendor are XXXX. and XXXX

marketing have So that to associated year have inaugural we costs the with normal throughout plus the costs.

that you drag then have zone typically of to without million spend $X to in And costs. million the on million for that So on pre-marketing, earnings $XX so probably if thinking in, your $XX power. launch $X you look of at neighborhood in somewhere we million all earnings XXXX associated that somewhere top

Harry Curtis

Okay. very Thanks everyone. helpful. That’s

Operator

you. Thank

from the Barclays. next of Hendrix Felicia Our line comes question from

please. question Your

Felicia Hendrix

fourth for variety a the a little Thanks you quarter, you the of to when not think when talking transcript from might between and was Hi. trying and other onboard seeing and extent can the good the do morning. in puts close what to at yields. And net versus figure the you're also maybe that talking in it's Frank upset to from? bookings; booked get really that's out fast be that where improvement. you you be about strength but I'm look still quarter, the there that seeing I the difference extent that were coming August were quarter, about. coming fourth my In you for were now the what question me it talking about It takes Mark, are potentially to was any the taking you there from words, in might just was later, fourth

how about XXXX also it you It And was Just that? far Frank, XXXX. if bifurcate curve, could regarding then the talked just booking out. wondering was you

Oceania? farther Norwegian bookings that wondering and for bookings in mostly brands? coming for of Prestige you kind those Just coming are expected seeing XXXX, is in Are than any that out the

Frank Del Rio

Mark's the long question. got

give upscale All the answer. the for you three bookings ahead the but So I'll bulk the brands. short of in brands two are are XXXX,

Mark Kempa

Yes.

Regarding thought, exactly from little see last China. in in of where a dilution XQ coming guidance. did yields, in bit yields drag revenue we We are a additional our

strip the XX basis was out, points in if that you So that about quarter.

is that our So quarter right guidance the for you previous out, par guidance. our strip if on with

for the booked of the quarter. substantially remainder are We

we been have very in the fourth five quarter indicator revenue. signs weeks it seeing the in a we revenue, third onboard healthy consumer of what, now saw quarter. However, as always and the it of We're confidence. say onboard we've quarter. We is into seeing exceptionally good seen which early strong We're the

quarter think by the feeling it. onboard and pretty good I we're is really any So upside about in to going be driven

Felicia Hendrix

increased trying in how Okay, thanks. And each just to might mostly of Mark, and through out CapEx you XXXX a DNA related, quick figure XXXX? flow and just XXXX about housekeeping that Is million. technology that XXXX $XXX to by I'm

Mark Kempa

into Norwegian you Joy's Yes, last dry we I think XXXX announced recall, dock our when year. $XX is had million investment, really next she – goes on if call,

and that XXXX rounding. increased that just remainder billions, reporting is the will really in that So

that And next year going XX be docks. approximately dry into Joy. read what of mind or the Joy, roughly days the not out keep Norwegian service portion would which I to to of than she days a incremental is So other for XX in from just

influence about going XXXX crews to you So going to that cost as have that's metrics. our think that's

metrics, only from but We it'll will her EPS. accretion slight be to same on our revenue stated, the also we get route increased yield a a benefit as

Felicia Hendrix

so Thanks Great. much. Okay,

Operator

Thank you.

line of the question please. from Steve comes your Wieczynski question Stifel, next from Our

Steven Wieczynski

going for XXXX, terms I today even Yes. guys. Good rate Hey give XXXX growth do a you've you're guidance year? impact, FX talked not not about understand get you're of not. I a not – still is expecting the single-digit right morning. of you'll XX% and with of morning to not the impact. Frank, And EPS or you over feel growth still seeing in is, this you and the guess answer major question how sounded of booking But actually XXXX. guys you're fuel talked about kind positive, patterns that XXXX, what for in next earnings an you of stays Could north terms I'm very sure strength same, onboard now like, a

Frank Del Rio

is an the are take to we gained out me so. cost. it. stage. I'll Perhaps squeeze do we very truly you revenue clear be that business, traction can strive giving we as and look be we in dollar year. to some going we limited fantastic we capacity organic in you're under year-over-year capacity think But early of you difficult a today at belt, we next suggesting But as not in our this growth the to growth. a it's a new of give very can every If year earnings know, boost But new to a amount going picture. real to odd, We're It's same this have

Mark Kempa

out so perform we just as and I'll add difficult for continue over in it a comp make to XXXX, does growth we're this a XXXX. year, XX.X% Yes, reminder, in and again rolling

Steven Wieczynski

promotion your But be since since or inbound has inquiries how was you is announced. the seem us was guess case. Thanks. I investors the maybe is remarks because of And of changed got have web inquiries your traffic we prepared doesn't changed Air on or can is pretty or have announced gotcha. question then clear past We've announced web the to promotion the bookings the that demand that sense a was about how color promotion. your ton how questions sense your inbound Frank, a traffic second doing trended since question, that get that this promotion Free understand couple and you're that or this, weakening. I liked help weeks It's your Okay, over maybe from that

Frank Del Rio

Yes, Steve, your question. He good question. Stuart. closer I'm going to to let Andy this answering am and I much is

Andrew Stuart

who a result on is you of promotion. Thanks Norwegian were Air only. Air that and also of some runaway Joy. Frank Joy for And Yes. the tested talked Because in Norwegian I'll a opening bookings, people result results been inclusive initially who end how you not on a there. And some is outcome. was that pricing you up increase only as up what pricing mix overall a booked has us. his Free the but about buy success people overall product cruise with Steve. the get higher significant Free stop in we commentary get it

happy So with we're very it.

in It’s days the initiative. of are We initiative. the early strategic XXX%

the an we've as to and that traffic a really we've seen in promotion the but Free bit we've launched and expect tremendous can expand is here bring strategy increase in move us. it little and bookings We're increase evolve for now Air growth us successful has as goal resulting This in seen bundling price. been web Free Our to for has a success been so great the forward. in Air, to you we've the an evolving seen we marketing us

Frank Del Rio

It's Steve in a the marketplace. great differentiator

ticket in a now Just at to table, everybody margin. are again, that different price, here, price, the bundling highest so else program, strategy evolve and Regent to you the early Holdings my highest the on brought strategy and you know, as a and Line yield refurbishment go-to-market and only very we of that we our first onboard result the successful I'll price strategy, about Oceania a stress and focuses tenure Norwegian. go-to-market of the has of that, that Cruise And philosophy as extend the the result company continuing in our on yield the wide proved and result to very, strategy, by Norwegian at

successful continued of And and another proven that so example the It's that. to program is we be Free think that track. we on Air

Steven Wieczynski

Great. guys. Appreciated. Thanks

Operator

Thank you.

Research. Our next from question comes of the from Shojaian Jared Wolfe line

please. question Your

Jared Shojaian

taking how year. more just turn else headwinds than Frank, before then that lot up now about versus next rate you'll for when you had stable anything Can terms of because in more headwinds? that is my in XXXX happened did many the to that's we unexpected everyone. maybe that, the unexpected related question. guess to us a asked to guess entered the you saw was booked. at And when make be of XXXX And XXXX? there remind we different have I Good what again, that I of year Hey. next compares that year shaping was anything talked you how year during you nonrefundable can I deposits XX% morning, Thanks think the I or

Frank Del Rio

Yes.

continue So turned I cetera. XX% goes to a to our do strategy we the to curve long be improve two XXXX And hold tell at ideal and significant booking close as know I'm the period curve? to it's year that XX%, I about can pretty to higher where asked it able et And at extend, prices to we don't as always folks, what's thing. we so I good think over booking roughly continue a can I prices we is know, and that is, it's raise go-to-market ideal think

so we're that. very pleased And with

understands Certainly in market reposition of eager tremendous Joy to She's terms itineraries, we what else ship opening sister Alaska. In that. marketplace and very a and job did a see up for that performing Bliss well. we're XXXX She's Joy especially into to the are positive. western a Joy. that

so after well XX those Today, think the far Eastern in XX either those Mediterranean a is in load XXXX, XXXX. in reject shambles, was And that and to both not itineraries XX but sailings touched and let around it before in XXXX if it, have Turkish perform an growing shambles. that or the it's in performing and I ports. – that in itineraries recall in you in – sailings that situation. better XXXX immediately are ports, me If have than Turkish We'll don't just XXXX improving in pricing

can a forward way Eastern to This advance. XXXX. I think very XXXX, itineraries and certainly have Med that business in returning much that continues a if introduce it is and in in looking to us you the industry a way trend you and the continues see bigger in much

on so difficult it's trends continue. a seeing which we hope can positive we're Eastern dime, to Med, in And turn the but

you Med, in situations our was very, the Eastern of prior If yields. that Med capacity recall the high about very at occurred to the Eastern X%

pay get American is the which with And internationally rolled to ticket back terms catalyst closer American. the We've Inclusive to that customer program All that customer, on there a be could And consumer than customer so in out a Americans, done ensures our onboard the that then. higher North And also job us caliber, dependent what international best the North North that today we of they're certainly international are the XXXX, sourcing willing is also we onboard community a less in on Premium by is are expect is. were prices international meaning the the we to customers international throughout something great a we the par the spend that that future.

of So better initiatives year than to system reasons why some we've that the because overall, taken sourcing in the a of fleet I ago. see less I today that's overall, diversify primarily risk and I these of did our so feel one better

Jared Shojaian

Thank helpful. second. I more for all to going And I'm even shortsighted That's which you. be here appreciate great. demand And sounds Frank, you commentary, a the

the weeks. talked You about past XX

the four a see think to the last They’re accelerating. of be think market? into the really I have great lot four started just what seems concerns. creep more in But broad or I we've been about a historically they and any wild you again, since volatility five five weeks, know now? to macro seeing seeing manifest that swings because that you of booking has the impact of in tended last or the are into any Are markets to I like of right like activity weeks lot or

Frank Del Rio

points. volatility lot three pretty yesterday. patterns. market than, didn't track it or go bookings see speaks XX, to didn't any the stable. and in markets stock see what a up last the and we the in the of tell when takes can known We markets that cruise last I marked it overall that Jared, It difference think down four, behavior booking. booking It's XXX industry overall a the they're affect We No, XX weeks don't And and more to last see And week it you went consumer I when we XXX last for. resiliency four points. our any, is

Jared Shojaian

helpful. very you much. That's very Thank

Operator

Thank you.

next of line question Brandt from the from Our comes Montour JPMorgan.

please. question Your

Brandt Montour

my everyone. question. taking morning Thanks good Hi, for

place, and repositioning the and on big given to dynamics Investor which of that there. you to working and mentioned bit the then were obviously but Bliss So it you're of Day, relative be guys like? industry that the At demand an of a us give you Joy for was itineraries on that additional year Alaska, market a you and becoming next in Joy ports on positioning supply and your the the Can so crowded the you is forth. terms just in at update level how going

Frank Del Rio

we So able in saw a by capacity XXXX, that grow and I'll to in start increase XX%. were saying XX% we pricing

think It's much want I is last to the will. visit supplied, there's room you grow. under Americans Alaska great if So that and more I demand that think frontier it. is safe. There to for is market a

mid-teens. full-year XXXX, Joy, And large growing than and at would. we're is normally the for our capacity full the season Bliss. our So industry little capacity because of bit of there of then a we're it in got later XX% I growing Bliss growing a think course the

the across introduced we is Alaska, successful ever year. Bliss. in a of as ship sister that to shift we most ahead our this strong Joy positioned brands So today, news interesting. being The going be Norwegian where it's are a good is last Pricing, three time to were

dry we just Oceana in Oceana Regatta just Bliss, Seven Alaska think a best ticket for Both an yields. got Seas beautifully And with that of Regent combination Jewel incredible course extensive and and the the Mariner onboard we've dock and the ago. generate a two of brand. hardware so Regent came new renovated Joy then Norwegian the days And that in out

deploy bullish grow Alaska. to Alaska infrastructure in come. to We make We're to investments that allows to us our we were the more on there's additional room opportunities years So looking there. strategic to for grow. tonnage think in a us Alaska to there's presence We think

long were bullish we're and so so to in speak Alaska. And

Brandt Montour

Thank And That's then a on helpful. Got follow-up you. fuel. it. as

you hasn't aside that to off curve bunker for realizing could you heavy about a that comments And fuel said really relief just sold the your earlier? of XXXX we're If pricing has that fuel same into WTI year kind that's of extent wondering But just next from the curve ahead recently. baked talk into that the if that expense if some event. from you the XXXX early just

Frank Del Rio

roughly curves pretty to have been XX%. our volatile. Since earnings Yes. increased the last call, X% They've

XXXX why our XXXX over XXXX So that's on other look generally going everything where gas I as represents forward about is our And about as XXXX, and to fuel And to X% we wanted exhaust you give and fuel XXXX X% we fast initiatives see total for to think program then costs XX% to into in levels. right of some XXXX we're you up expect gross into revenues. we now cleaning given be working that that our that color be on.

range going fuel represent of on X% is upper the think X%. probably I to that to

we As remarks, I we we're a we prepared fuel my but also believe back focus latter on are hedging half year. and both mentioned on a did creeps going because of of the part – in focus XXXX, see somewhere heavy in XXXX the with that layering late start XXXX heavy to additional on for to the XXXX

So for next roughly and XXXX. for XX%, this almost call, exact as of XX% hedge XX% be year to we're

remove look to something we with as lucky at day the are opportunities volatility we in market as the dips taking of and and much can. we're So advantage every we'd as

Brandt Montour

lot. a Thanks Great.

Operator

[Operator next of line you. question the Thank from Instructions] Our comes Robin Farley UBS. from

Your question please.

Robin Farley

up look there's guess has we've Fletcher's with Caribbean months. commentary I see I six outlook to guess, months another the for don't then, and in of maybe since out see for short-term after obviously just until other passengers Calendar improvement you Great. the period of Thank six in shift. September or before about start strong but about that others stronger aside hurricanes the cruises if words, so what I the we in here. question, the not hurricanes different Caribbean taken three QX, I'm In that the show guess, year booking we What's do should price passed fact you wonder we booking is three should at shift? how and just from When to to comping been I in add I expectation very you. occurring have and had QX QX October to the market think QX, the last that from shift, is you're but about outside that the QX? been Easter

Mark Kempa

Yes, our for look as the very that. low. that good in pricing take out April We upon of Norwegian the season. capacities about upon We of Caribbean, at feeling We look we're season, I'll most XXXX we happy. the look product is pricing all the low, upon upon Caribbean and Robin say called November of Overall a Caribbean brand. to with the at as really sort

the Caribbean. next pretty So the good full-year year pricing looks for for for

should We last I to continue the the some the had year opportunity that. challenges to definitely benefit in we think have some from load improve see we last hurricane. as of hurricane, so we wake the

Riviera feeling optimistic Caribbean the we're in the same her to records Alaska, the she hit Caribbean. same Norwegian in Mexican way hit records and the she performance. Bliss she is So about that getting comes the as in reception

looking performer So as a out the remarks Encore, Bliss for the from early year, into very Caribbean. we her look is very, strong very, strong is the further indications very in introduction. Frank in his as And said

about So positive generally the Caribbean. feeling

Robin Farley

down, it other budgeting kind basis if you. the you follow-up dry-dock impact, part XXXX on also impact maybe is say, if less just expense? just know which the like have on that's – final dry-docks might I at Thank for but don't you done, just that it not, know more of planned. things sounds understanding cruise? equal dry-docks, the of things least what or I but non-cruise wonder of yet, could not maybe and XXX us then or dry-docks that have but just if And you're marketing do expenses. non-fuel and Great. you on year. give have All I could one the impact And next up or points or you

Mark Kempa

Yes.

in versus as the think think recall XXXX we look have about were total our I dry-docks XXX dry-dark somewhere do primarily if slightly neighborhood, result I days, then XXX. at of XXXX, few days And is more XXXX, you which in dry-dock, or correctly. the XX when XXXX days I in Joy

to as marginally will skew par. So of net she also if much the you excluding a was Norwegian of said cruise really doing yield the be huge the cost I a Bliss. that not really Joy, But of line, driver including the where incremental think And basis the And lot bottom going or Joy going cost write-off. that around she to improvements to pretty going be it's so what but capitalized at accretive skew again, is up, that's to our earlier, better on only we're up, to we're Joy our be because the than because we're is her make will equally dry-dock. ship metrics making major

Robin Farley

you. Okay, Thank great.

Operator

you. Thank

Our of line Grambling next question from comes Goldman from Stephen the Sachs.

Your question please.

Stephen Grambling

but I is sign I Hey, guess understand way duress, concern. the of seen haven't that morning. you perhaps approaching investor any consumer another good of

if different the to what environment company about Norwegian specifically industry If either versus think you were do think the of or deteriorate? business you today downturns, prior the the positions aspects

Mark Kempa

morning, going It’s a answer Stephen. there's things. different be Good to lot a because long of

value down does brands, because doubled introduced customer two downturn and greatest consumer so are just important. on value. XXXX, This the think a to But all of the all a bundling always know environment. strong provide has compared our of well garden product, very of balance three both types the the in the we consumer. the Norwegian But the much times value I important we always recession last to go-to-market sheet. perhaps in balance to to First is of your now strategy variety in and of most that has you've brands what got brand of the the more as different which sheet of much down luxury the consumers low-Xs economic to resilient duress, we've And is company

marketplace company survive go-to-market Those the market. so paid in today. I as downturn there still a be two will And appreciated, is thing if to that of downturn who pre-financial years levels. haven't Norwegian price way, our today, a than to strategy come yield appreciated I last the and companies three in missed a strategy one heavy of will a of for discounted by we it as that year-after-year a Whereas go-to-market and daresay And be that our of missed never years are discount. better Regent heavily operate case of not The believe our more and Oceania downturn in reached some we beat that much, and last it want years. the believe we year was by bundling in then their do brands missed a to being them differentiator XXXX

one the a the brand. So to is new years just but any something by and competitive is track innovative. that our program ships one No will is strategy quite evolve hardware, a gold gold new cart. quite hardware, the philosophy Air brand it two and in top, on ago of else with the metric most think that advantage. about We’ve brand on Regent brand. decker and And a is we cart go-to-market we're the frankly, Norwegian the why frankly, the question Free And three got that not everybody excited without reasons at at evolve the luxury successful of and Regent go just like wants has hardware

area of greater different today. back So company a environment, our the risk customers, our way. very internationally with long we business, brands, told All much say said and par the guests growing. answer we're less I one much on is percentage that centric three domestic North is, the I forget. is international a in like different very, it’s to I'm is to sourcing be before, saw a you and so international We very that And and American our I'll that before one system. of much very a more

Stephen Grambling

a onboard spend on before looked steps within the that. is percentage casino? guess that, right on we of I this ship? what's the like follow-up paid your maybe especially spending So maybe of mix at And What now, your onboard Thanks. someone

Frank Del Rio

Yes, Steven.

can investing upfront But don't to in detail. We get is onboard what pre-booked? level years, technology. much consumer's to the and progress of I continue we arena you the more disclose of ship. that How prior are want that we make we So to tell wallet over is stepping the that, in

prepared my seeing it's and canary We're QX. coal the in remarks, said the QX, So good strong, and that's mine. onboard, good as is it signs I in looking in

that tell casino? specifics I we're very extremely very, casino and continues give you, saw can continually seeing But that there. strength we're I reports arena and So healthy comes the can with to that in operators, that casino a contrast it enough be. year has you I but of But earlier. making to, And, continuously operators, think strong grabbed some wallet yesterday to in of on investments been has channel try our been we this some the and

Stephen Grambling

color. so all helpful That's much. Thanks Great.

Frank Del Rio

time Jonathan, more got for one question, we please.

Operator

from comes Certainly. Wells the of Conder Then Tim our final line Fargo question for today from Securities.

please. question Your

Timothy Conder

being think Mark, you. Thanks infrastructure about looked for I taking Thank The one. my question. investments at Alaska talked Frank, you you alluded that to or and

guess you're broader and looking XXXX subset of half you're the deleveraging as capital way goes far to – to here. further that like and develop it any the it repo get doing? destination that the then that's on share characterize versus potentially sounds expand opportunistic maybe front strategy half development, and The XXXX, as of fair port we it? more could I maybe And into as be you back If obviously of a is deployment

Mark Kempa

to million day. to And – to we we $X stated going have the investor leverage I said to low-Xs, of program expect we there hit think position you be targets as – our we year said our our know, billion want at so and $XXX three, end repurchase We Yes, share three. in we as do we're at available, left. want

we dips there but the we hit ensure of want that. of may leverage take we're cognizant that, market, if to in is our advantage and Now we

As be XXXX, share for we of instituted dividend XXXX, in capital a of a to a scheduled balanced going we at our again deployment, repurchases we we is board which do pure the believe if discretion and potentially have do, is dividends, if which mix portion likely that's something continuously with course. we more Then most and was discussed XXXX. half Alaska our give infrastructure? of your in year in of But be in other I that think the XXXX. latter color the would throughout It probably board we'll in on

Frank Del Rio

as a ever. than grows becomes important and I the think in the more investment is birthing infrastructure industry preferential

our peers We competing marketplace. are the with in

rights So that having those throughout preferential we birthing the popular destinations too. more cruise and they of

what birth And And in that's destinations. popular should or in our place Alaska. what these at protect looking like We're we're well. Mexico, have places we're so places the the We're are so doing doing is to as – I doing. say Caribbean that a that to guaranteed to at in ships looking others

Timothy Conder

would I throw and but far we years changed off Okay, about better ago, multigenerational, as ago, here, you one and that putting. one-year four that may frame – the your customer age if a that how has as here. then talked differences Frank, one demographics? all How last the in

Regent the corporate he pro Oceania form structure. would sort course, Of and whole holding the if included in with of

Frank Del Rio

bought think changed a of mix. is whole the I the baby the part majority millennial lot year-over-year. up that customer don't I the a growing the But boomers customers a vessel. it's mean, still Norwegian about of Norwegian make still Well,

is baby retire them and Oceana cruise. a they've time Regent of to and take It the certainly And money at boomers XX,XXX brand. forget day and a got the XX almost exclusively they the the both changing every given not Let's see last the last itineraries that that longer has higher it at anytime for and I don't operate been, years, operate. – brands in those the that soon prices in much the

AQs ones North see because So onboard. from American is caliber, much high over highest that It's got consumer. advantage the another. after going the the a one international the compliment, I is Norwegian Other for the leadership a – XX% are And you to are that again, day the type to Board, of that a higher highest one a which space than they're the that the quality, what high very shift all we've across that and I between don't who the competitive such we generate focused out consciously ticket than point customer we're why of nearly there on consumer and so to onboard XX% yields huge XX in last $XX we've position others. months. brand That net and will a somewhere

Timothy Conder

gentlemen color. you for Okay. Thank of Q&A End the

Frank Del Rio

it's to the for answer much. Thank be you your throughout everyone we you spend your time morning. I another you thank much. very Thank always, as been day. very with support available wonderful time and your Well, to and will this questions

Operator

This conference concludes today's call.

You may now disconnect.