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Norwegian Cruise Line (NCLH)

Participants
Andrea DeMarco Vice President of Investor Relations & Corporate Communications
Frank Del Rio President & Chief Executive Officer
Mark Kempa Executive Vice President & Chief Financial Officer
Felicia Hendrix Barclays
Jared Shojaian Wolfe Research
Steve Wieczynski Stifel
Brandt Montour JPMorgan
Harry Curtis Instinet
Thomas Allen Morgan Stanley
Call transcript
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Operator

Good morning and welcome to the Norwegian Cruise Line Holdings Third Quarter 2019 Earnings Conference Call. My name is Carmen and I will be your operator. At this time, all participants are in a listen-only mode. [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. Mr. Marco, please proceed.

Andrea DeMarco

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

questions. We will then open your the for call

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

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

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

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

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

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

Frank Del Rio

the and to out. a XXXX quarters and few third Andrea, good There that you, morning, I'd important parallels are between second Thank like point of everyone.

net also second, third day, we not but First, quarter, Cruise quarter in company's Holdings first the net like $XXX yield. any a the just Line net $XXX surpassed has for the per that capacity which highest the Even mark, decrease but company, a as yield nearly for the X.X% At Norwegian yield our record of quarterly only cruise revenue days. is in highest history, ever posted experienced came revenue the operators. ever not in time marked another quarterly quarter and record impressive we the the quarter in record-setting marks third major the for our more

our North itinerary of benefited quarter and Also demand both in resilience by continued quarter and in the environment Europe our lastly to like optimization, big that second XX% around once business is headwinds And the from and we ones, both grew overcame alive proved third known from demonstrating in again similar the the initiatives the and brands. strong Alaska strategy new we the particularly the once experienced respectively. global we American quarter, well. again the that strategic the consumer, what a power of external Also and non-controllable consumer and quarter, second by benefited quarters especially headwinds model capacity go-to-market XX% our utilized where

through cut short-term how primary see goals call provide we our of business put a this One forward. is again noise with once perspective the of core these picture impact the going of you the clear of and performing and to in disruptions

stronger, delivered events. results that we So in strong following have the not line the financial would with third setting if performance bottom quarter, even and another record for quarter been

abrupt call, and to earnings sailings in our as of the impact prior was covered from First Cuba. the cessation

this impact lead per had travel of the and In the the from largest termination make we the case third meaningful time Cuba bears ban. Given fleet any the changes, to earnings steadiness share. redeployment lack quarter $X.XX of the negative

canceled and quarter of Eastern Alaska, other Asia. Cuba beginning premium-yielding and sailings Mediterranean have onward lap The redeployed the including that to through and time, fourth year's as this the Cuba over second in itineraries Southeast vessels Cuba impact, thankfully, the sailed quarter we would diminishes to XXXX,

The July premium previously an peak Europe, second on which event was one of the early and impact occurred disclosed in of priced per month approximately summer disrupted sailings that technical resulting share. Norwegian issue Pearl in $X.XX in

third Dorian Dorian, drag was cancellation the Bahamas per occasion most guests, to share. in quarter impact most $X.XX two of valued came how assist team disruptions citizens of the members voyages earnings only And ravages during of and also was by of the and storm. rose I'm cost proud our stemming recently, extremely voyage the a affected of not of together, and the the the several Hurricane our from to aftermath which the and but to the

back donations that transport monetary goes as cruise collect generously Cruise as team With as forever of quickly partners, relationship Here Norwegian path to relief guests the others. the year a Bahamas is relaunch and industry, and in the modern are as travel we which Line as to early Hope could days Campaign and well to XX-plus concerned gather why our Hurricane members, from supplies, responded link, we Relief of Starts

to approximately than outpouring a supplies, hospitals less rebuilding increase emergency including and such Abaco million coupled the the Hearts contribution, million, aid were debris of the All million infrastructure, in to $X In across schools with respond Bahamas, cash Hands commitment cleanup assist and our one support, Freeport $X $X to we and able including as Islands. with community and removal month overwhelming of to and due in the and

our sailings possible as this Nassau and shows areas, important four the bringing the thousands And guests of by to to and particularly island soon in Cay. private Great response summary was the Slide as resuming at affected a Bahamas aid. was to support important of bringing tens as on Stirrup while of extended immediate just relief

this per share delivering $X.XX guided achieved once exceeded per and and and our them we But some, from taken guidance the our not if by Dorian, would previously which, third in for achieving from results. guidance unforeseen issue by technical account the then the impact some share. by obstacles did While to again of Dorian Cuba for the time Pearl outperformed quarter, on $X.XX end earnings have that to into voyage guidance were impact laid

This earnings again onboard capabilities extraordinary results highest stemming model, combined premium season and strong industry business such by helped as excellent margin. which and resilient a once in ticket from both our wide expectations exceed deliver and markets again, of performance once highest the the peak our demonstrates the and yields company with the Alaska the Europe, and

high-yielding in of addition performance the Norwegian the was Alaska Our Joy. by bolstered better-than-new

very this form Norwegian her setting region. Joining ship the deployment growing our of profitable sister and to Bliss sizable cornerstone strategy record in

we In bolster two presence further our commitment and the region coming will years on the to fronts.

current deployments; my First, and sailings itineraries, the our and that offer guest through with longer, will key I port later projects, in second, remarks. experience enhance seven-day more additional of will development which capacity, port more unique generating and and discuss expand complement operating that our guest infrastructure revenue which and in facing immersive detail

these America. to our second the drive in comprise us this sailing, including world or come that's point that North the from strategy rest important ship or it's allows important for and itineraries, Australia, To guest train that Americans largest Europe their sourcing drives best flies sailings sourced sourced our providence. for us takes from South the yielding guests area a distances embarkation. of of model benefited home, our European, differentiator we to global know do from that locally and And yielding go-to-market our guest regardless the and note guest that not their Meanwhile, majority bus car higher because long Europe board that of a sourcing of a to Asia, of to but contingent very while the or for the guests a source is highest one that port

and Norwegian But months with partners. in well-publicized agent brand's target Europe's ticket offering travel and guests of markets resonated our spite at from revenue economies, Brexit which well XX% a our the seven source the weakening European ago, for issues has including extremely has whopping European actually and Sea by sailings Italian booked Free introduction of increased the since obviously German the

Caribbean, for stories. As it's tale the of two really a

remains across First, year demand same into pricing time and well extending of sailings for strong eastern low core brands Caribbean western deployment and three last with ahead our XXXX. for in both stressed the overall in will and again seen and frankly not we any Caribbean. And the dynamics see quarter quite as have for deterioration now, to demand greater last do I not expect

in of including this which period. If six demand anything, an over load to has Caribbean year-over-year seen factor over sailings, overall our the we increase have revenue in lead to acceleration resulted demand four last for book weeks

historically faced sequentially diminish were the reposition destinations to Cuba as destination. by to Second, more are which the the sailing Cuba certain necessity short vast majority brand, from Norwegian and this of and Cuba which Dorian. now shortened lapping window normal lower-yielding already Bahamas and the booking expands much time additional capacity formerly But voyages nature impact window sailing will to of intensive for reducing solely regulation headwinds by Cuba converted the change from frames sailings, a shifts as later the Dorian we canceled were sailing and from to the approach thus the especially as from to Bahamas the impacted booking in short premium XXXX Bahamas of in headwinds short-lived and

have which than and launched in Cruise activities word more our or newest, has just over reports deployment best have XX as since Caribbean week The always Miami. her it core at first be the four of last could reappearance took region will additional artists we offering new effusive Encore, Norwegian save Norwegian this for by delivery years critical as performers or the performances both most ship usually on defined continue launch will inaugural ship largest can Europe ship and The their a and been began Caribbean innovative we strategy in stellar and demanded an from the for to-date from audience be cruises material. brand years. And by first a strategy encore We in expected. been Encore as the brand's

Norwegian fully a collection Plus as the of are the of Breakaway that's the the indeed If features definition her name Encore Class. embodies indeed best for

for As features, Galaxy racetrack pack they ship fleet, virtual cruising. Pavilion enter Bliss the the first these reality including and Joy vessels exciting stunning new included cart and launch the observation Alaska and view Norwegian sea the perfect made at each that but go

Our of ones, of by the dining focusing and we in marketing ship why versus Onda are Sea at strategy have the Encore broad one cornerstone expanded, new Scarpetta. campaign, in introduced wide Norwegian's a new booked, elevated which history is including enhanced these and the price features and Collectively features continued best margin. of become the reasons by for the Caribbean these of consumers Norwegian highest consumer introduction reason the Encore concept, upscale added And Free brand's Encore's has of another the value a refinement on go-to-market success Norwegian price. acceptance bundle is

Seven heels be the the Seas for the January On will Encore XXXX of Seas of in Cruises Splendor delivery brand. region of Seven

can the brand's fully both Splendor perfected Splendor you embraces ones. resonated impressive. extremely slide new large and contingent halo pass which of is has see guests with effect target As luxury on loyal The her from well X, tagline of

nearly record in For already new booked time of capacity, year brand's is the the Regent's like XX% brand versus XXXX, last continued same prices at capacity. Regent track absorbing increase despite and sister higher Oceania Cruises, profitably brand XX% demonstrating

benefiting a strong history. a a the year, not occupancy This from in Regent record ship only and up yield. new for to Line formidable the is leading is being but big industry booked continues one Norwegian highest-yielding XXXX pricing our introduced Splendor also Regent ship environment, dominance be company's the the Cruise as slowdown net for another Encore it and XXXX for weather brand. outpacing introduction the consumer brand into record already Both all sign be of extend to levels a with She across are win win in introduction Holdings Splendor in brands. no is big not demand three only shaping the with and helps best

by XX.X% our our for sales, the of expand windows underscoring booking over strength brands recall has only might appetite last ticket strong calls, on XX% window, expand underlying our our third have that year stellar expanded increased no three capacity And on that our earnings brands. growth it advanced, advanced is deposit increase booking been by X.X%. action overt few prior growth the not year XX%. You of demonstrating the consciously and of In a has forward capacity further ticket significant approximately other growth taken forward for business I've forever. should consumers' cannot so But while demand we to on words outstripped which in quarter, the the that mentioned cruising

be But now, our detail. I'll I'll final the in expectations over results call the for with Mark? some call turn the and of end for the the review updated Mark our back year thoughts. Now to at to for quarter more

Mark Kempa

XXXX you, cost constant Thank Unless XXXX compares commentary and metrics capacity excluding on fuel net Frank. per cruise otherwise yield currency basis. and adjusted noted, a net day my

X, driven and exceptionally on $X.XX, strength third $X.XX $X.XX Hurricane by EPS strong bookings from a by see expectations revenue earnings above impact onboard in quarter, Slide adjusted can the revenue primarily you despite in As guidance of strong close-in drove with beating our performance Dorian.

items. a Dorian from experienced direct impact from three quarter The

New and our of to back revenue extended resulting Norwegian was of two home. costs First to the repatriate Orleans of of in Port and the cancellation Breakaway to closure which additional as us Sun forced two a Miami, lost reroute ships; result voyages guests

itinerary not for down from Eastern the of and many Second, but the only while were awaiting weather cautionary the ship ships sailing for ports as operating changes path multiple a measure Seaboard system. where of up as the Florida closed

impact, which the of relief $X.XX August days record for efforts approximately would have million. not Pearl. the $X.XX to on would by this and have lastly, impact a decrease our grown exceeded $X EPS totaled capacity and year's and despite adjusted Cuba our And in hurricane X.X% prior of $X.XX guidance of If

guidance quarter, with if prior expectations as-reported increased capacity net the XXX And Turning X.X%. year Dorian, remain X.X% the basis the to disclosed in would Pearl, outperforming of out fundamentals yield coupled yield noise and strong. basis or for approximately decrease Slide X.X%, core Net Stripping from on X. by a Cuba on have X.X% versus increased points. previously an not impacts

sailings on sales which of of to a the growth cycle. inaugural Bahamas which to robust premium compressed of prior lower-priced premium and net had benefit X%, Bliss, comes growth compared Cuba Alaska in both season current filled top that cruises year's year the yield included Norwegian be priced This priced included very for

with Adjusted Turning for costs prior our Cuba expense highest year year Fuel to making as-reported dock dry expenses the increased which was which expectations issue. to in on Oceana's quarter net This increase bolster net with guest ton of basis, the an prior hedges consistent costs. to was a along XXXX for combined quarter included $XXX in fuel our related as costs such QX in of due growth XX% cruise versus XX.X% call, excluding marketing expectations. than Pearl's XX-day cost in result expenses of the previously scheduled increase Regatta, due relief of at an unanticipated to incremental repatriation in costs fuel outlined metric sailings efforts versus per the Dorian, to guidance with $XXX. and came sailings with containing marketing associated higher calls, slightly price and technical operating and

deployment X I'll highlights. direct to Turning to review Slide QX. to you

repositioned are Caribbean focal there for ships markets the to and our As Europe. two their the quarter: deployments, winter

of is versus which of the year due XX%, for down prior season. the Europe XX% to mix XX%, capacity the extended quarter Norwegian nearly with of Pearl result region. addition a increased representing for Getaway approximately European and deployment decreasing to mix with along primarily capacity approximately Epic the up Norwegian as a Caribbean X%, is extended to Our increase the season in approximately

business are to $X.XX expectations fourth for at fundamentals X. higher entirely headwinds, the driven by an Dorian. quarter and expected expenses pricing slide on Core despite of incremental lower Looking strong, due

on net focus first. Let's yield

the for quarter. impact mind in mix Encore keep approximately the expected our the Bliss includes basis performance and reminder combined outlook QX a in of points that of As XXX dilutive

Bahamas also the yielding one-two surrounding quarter demand the Seven includes highest the result to dock ship the coverage consumer as of the a this basis scheduled sailings converted for of media Seas Explorer. a in Cuba Dorian's storm. dry combined Bahamas-only the XXX Regent yield dampening net of point fleet from on Further punch being with near-term of sailings extensive sailings drag

time quarter the for QX. of implied to are in to that the expected and window other core strength return That ourselves And be Cuba basin as half of the we destinations in passes more in the that our impacts Dorian, outlook net capacity booking and an the to is improved Bahamas said, seeing in normal distance early beginning offset the is impact news good we will importantly guidance. prior by reposition yield, from to as compared Caribbean, and fully pricing from higher resulting yielding in Alaska will such the our

when of the core impact quarter ships in out To the strip results new fourth the better Norwegian the Dorian that our top from noise Cuba, line you mix strength fundamentals the illustrate from in of premium priced benefited an season. Cuba year prior over expected X.X%, from and Norwegian growth which successful X.X% sailings increase Caribbean Bliss' in solid recall net incredibly you the as yield inaugural and

an cruise Adjusted Turning annual X% an X.XX% our less as or caused the of of of basis, to up be X.XX% than costs various Dorian. is represents to damage an basis. net primarily as on approximately The reported islands to due one infrastructure increase to by expected costs. and increase which excluding to to on cost result repair private fuel replenish half erosion beach is a fronts its

higher launch to expected that than required and Miami York slightly and Explorer and New its brand's Regent bolster Europe, marketing successful the the the ship of Encore of XX% extended for costs further in of dry Norwegian Higher in year. and to inaugural the expenses harmonize sales Splendor, launch to dock support growth higher Splendor expenses sister activities

approximately $X.XX be an estimated into of to these $XXX includes account, would over which to Cuba for been all expense. expected from ton, Looking metric with of EPS price of expected our anticipate and quarter of $X.XX, at fourth an adjusted items year. prior fuel adjusted We two metric this Taking be the of consumption increase tons. hedges XXX,XXX net fuel approximately EPS of guidance XX% Dorian. $X.XX, Exclusive approximately impact have is per

foreign Turning fourth components XX. other on year. Slide the accounts benefit in XXX you combined outlook exchange the in resulting $X.XX. the third quarter million with full for fuel topline from third in revised the $X.XX revenue of and a The stronger shares the the year. in to Caribbean to outlook the full quarter $X.XX through I'll benefited in approximately our core walk EPS adjusted the primarily and a from Accretion repurchased year quarter, savings outperformance of for

were marketing aforementioned benefits by and These $X.XX $X.XX a offset revenue of the partially $X.XX is impact attributable from of $X.XX which to dry attributable to costs. and cost and is dock Dorian

been As August increase if exceeded midpoint approximately from to year. approximately for our approximate original put guidance our have and the in Pearl the of To beginning the expect over not at guidance we end would result, an provided or a the of Dorian be range adjusted the $X.XX. $X.XX of in EPS prior and have with would high year guidance year our combined XX% the of line perspective, headwinds $X.XX Cuba, of

headwind, approximately on Looking another have at for expectations for the net up XX yield XX August growth basis not to would we've from versus for by metrics for now XX, basis increased be net basis other as-reported yield impact growth to X% guidance key or X.XX%. Slide points despite If this the X.X% outlook an operating increased Dorian. on points year our

Dorian as-reported due yield is on well, increase been as XXX Pearl guidance and Cuba have the items. approximately point be fuel growth X% the mentioned for or cost versus X.XX% primarily approximately impacts basis to excluding previously not to up an and is cruise The would basis. Adjusted previous if net expected X%. net from And

to our increased we price expense, and $XXX anticipate approximately ton expected program our tons, of overall hedges hedge fuel be with the to net portfolio. environment during metric at per our continue on consumption fuel on we the XXX,XXX Slide quarter metric of Looking fuel focusing XX, strengthen

fuel regulations amount our the net of expense new expect still XXXX small IMO typical of While to continue effect end X% higher total X% uncertainty into range there to going a X, revenue. our we is January of with on in hedges connection gross be of on the of to

MGO This from approximately as consistent an by XX% in is previous in is shift consumption higher to growth volume with well capacity our increase driven in the related pricing, primarily XXXX. from to as expectations XX% and

for guidance in provide want XXXX, takes provide while too some Looking items to to ahead it to the and and early still a keep to is broader we puts few outlook mind.

earlier, sailings disclosed mentioned loss XXXX first year to of the the This premium to impacts for First our Cuba pricing $X.XX the previously in that of share in regarding Cuba, to full as half range year. the diminishes the $X.XX the due expected Frank the topline per of the impact garnered.

Bliss command. stepping Second, and from down her first lapping inaugural premium pricing Norwegian sailings the quarter customarily is seasons that inaugural successful second of

impact Lastly, offset the from Splendor benefit the which Seas to Seven by Encore. accretive was Norwegian of dilutive yields expected

the And extended terms versus Spirit in and approximately two will of each Norwegian Pride including have a higher dry XXXX, in days second in docks, America days dry-dock quarter of XX dockings of quarter. the number for first XXXX of

of terms In drag. cadence net half Cuba aforementioned alone heavily puts a with growth. first yield takes the weighted providing point and XXX to basis The for the are

the as yield deliver. goes footsteps yield growth XXXX is year. that be All-in-all XXXX expected in we of and she expected As net second steady growth typical below is first quarter to another it's of and a the aim record to follow range to result, net normally as

Day. the speed achieving continue over remain we've be on solid headwinds offset strong our few While to business to work laid fundamentals trajectory we full toward multiple ahead targets to last quarters, have do out that we at our the XXXX were our weathered a Investor and

XX. valuations executed on $XXX current third repurchases in advantage share returns of million the shareholder and slide We in on took Focusing quarter.

to of million beginning shares to the our shares XXXX. is billion $X returned program We X% allocation or since of $X related This have to XXXX. midpoint by approximately our XX under million billion the represents more of capital the billion of over speed total total. ahead $X.X end that XXXX equates $XXX of outstanding targets target in full half now than of the our and Of

return Our Board efficient the capital of through repurchases. most our is to to shareholders Directors continue way opportunistic to share believe that

such our to of will begin until reflect capital. use return to the continue company, the and As method vehicle value market this to the as we valuations primary proper

to more goal balanced to a will dividend have and to eventually a Board. Our allocation evaluate approach implementation capital is we of continue our potential with the

By or times can expect for at to the continues of the as since at Norwegian XXXX the to slide you year-end, the debt we elevate As rapidly earnings approximately to the we the Encore modestly balance three end on little it and have delivery net with sheet nearly strengthen by of in leverage see four quarter. delevered XX, acquisition where we with of quarter. due leverage benefit Prestige associated in no the turns have primarily

Excluding that to three approximately be is debt leverage expected times at year-end.

and net amortization. our next generation scheduled through four debt strong primarily expect quarters, over earnings leverage the decline We to to continue

to is earnings underappreciated, the earnings to accretion, to further Frank, shareholders while expected us strong feel the call turning addition cash Splendor back provides, generation accelerate well also metric flexibility Seas the cash meaningful business returns. as realize capital model in vastly our future capital and our discuss investments from This like Before provides powerful prudent of cash an for making to growth enhance I'd profile, generation. to we industry, incremental Seven Encore the continue to to Norwegian the positive our to continue to power core coupled as with as intensive extremely operating return our fleet. the one we generation is Despite the

to With commentary. that, call hand I'll closing the over Frank provide back to

Frank Del Rio

Alaska that Earlier have the comments, us presence has Mark. strengthen significant further high-yielding market. mentioned this which make we you, the our to I growing Thank to my let enthusiasm in for cruise investments in market,

projects the guest-facing arrival the and other by our our key continue port to both developing we Bliss, in renovating Norwegian terminal at cultivate will at various Pier partnership Seattle to in with we facilitate partnerships that solidified their region, and growing XX aimed infrastructure the Port presence. of ports of Prior

the Cove customer-facing itinerary-enhancing in pier purchase and include Our Point as leg development last a projects Icy new parcel all pier our attractions a of onshore enhanced Strait in Greater last the at in the the Ward waterfront frontier our explore and give up a which competition. and give Ketchikan, they Juneau on in second all Huna; experiences of brands will guests of a of

onboard investing early are to guest with with the history. the enter next experience revitalization the last dock the bow Edge entering We dry ships, in is extensive Norwegian our stern Spirit program also year, Norwegian to renovation in most company's the ship

Australia. her updated ship guest being the with her throughout Asia next venue venues exotic the will public take Africa, to experience every with on area recent of elements newbuild sophisticated stay look with the onboard and completely touch and aspect sail Norwegian launches feel revitalized prepare for her The travelers itineraries will consistent level, Spirit that to our new a and and which and every

ship immersive highest-yielding the of benefit a APAC with packed unmatched in The region. our better a strategic region value an new than newbuild the strategy offering of prices guest of will itineraries in and at the sourcing combination fraction global attracting

As our like brief summarized on I'd give I a up slide XX. initiatives ESG to my update on remarks, are close which

continue As Here stated and earlier, reactivated provide equipment I to the recently program and our of assist. needed we we supplies, wherever Bahamas the aid delivering aid Starts substantial food, can monetary Hope in to Hurricane wake Dorian,

Seven first year, and bottle-free. with its to plastic next Cruises water continue partnered year with recyclable X front, recently single-use our Regent environmentally-friendly plastics onboard and this Earlier reduce of partnership Norwegian reusable making we Vero with fleet bottles water Seas JUST vessels. make significant line Goods across go Cruise to Cruises replace the On all strides Oceania plastic bottles cruise our and global January efforts Line environmental Water major by single-use in its to announced Norwegian to their

corporate Holdings Lastly, Forces. Line for of Today, Norwegian to executives greater on Women's comprised on female Forum of its Armed the from Board morning New to with Board was of honored Norwegian's women Cruise by backgrounds Directors. XX% the the governance officers in front. This representation ranging York senior its commitment

Our diversity, gender. beyond however, well commitment extends to

also and we both compete directors backgrounds, diverse complex are our And today environment. committed diversity. XX% which global increasingly to enhance social We our believe from in better will professional ability truly of to come an

which turning you our I'll takeaways to this Q&A, slide call call. to Before for XX, key over the contains refer

Hurricane drove versus First, earnings beat guidance on from strong on and despite top demand outperformance the line impacts Dorian.

Second, into the XXXX. for year business core of strong and the fundamentals our remain remainder well

And XXXX call open a answers. our Lastly, questions targets. with we and Operator? for remain I'd to to on full the speed ahead strong achieve trajectory that like

Operator

Thank Instructions] first question Hendrix And you Felicia Mr. Andrea Barclays. is our ahead. Please go [Operator from with

Felicia Hendrix

good getting starting Hi, sounded to earlier just pricing the year back Frank the around into everybody. your quarter with fourth year. for you third and and remainder quarter, next you, for commentary of morning bullish

look So since August. us if XXXX, as talk could you changed last about in have I was what may wondering you towards you updated

but mentioned you year couldn't prepared think XXXX? you've was acceleration I in or your this remarks seen tell of that remainder demand, I in to an the that if referring

Frank Del Rio

Felicia. is XXXX. No. primarily just about into XXXX done It's

as I into year-over-year. last So of we excuse XX% six window the And to seen demand quarter-over-quarter has acceleration -- XXXX. have business mentioned the overall our XXXX four over an booking expanded really weeks into me,

particularly at prices. is that strength X.X% to and drive indication of in higher industry on able as company of of think an increase the as capacity I load overall And our good the both and we're

prices, raise year-end load unusually is face high you window, I win can't the is an trifecta extend can that of what capacity your enough booking your increase a in what growth. stress that

happy performance. very with So we're our very,

all be We what year itineraries coming fine-tune and and continue this tremendous we our with be year. we to performance lower-yielding regions higher-yielding next roost expect to to regions. And year to couldn't from away another it's just happy our home

Felicia Hendrix

And helpful. revenues just to in as stronger that a did outlook up Caribbean follow that That's also Great. you're highlight fourth quarter. by then your seeing the the driven

versus now in the But of you've low where terms for the was booking you You you in pricing XXX in normalized? fourth much now relative first your that and mention the windows just seen -- as into basis any wondering window normal the that quarter is booking is or look Bahamas and And following due to did yield. and to the booking at the are of first pricing impact half? terms points quarter I'm Dorian of net leading

Frank Del Rio

Yes.

Bahamas are pricing. higher separately deployments is ourselves and we So it's from and load, issue short-term as both the good deployments you core the issue Caribbean higher because mentioned Cuba. from a eastern western strong that Bahamas Caribbean impacts of the distance

picture, Remember, Bahamas. a was that went ship Havana the also going when the came Cuba to into to

being And cruises. cruises Cuba and And being now out factors. calling we sailings the Bahama of back way cruises. to by those the them cruises. they're calling are And Bahama impacted so cruises with instead the Bahama of Bahama stopped Well several Cuba

of the year time One Cuba. we fact last were this in

day, year-over-year because demand price. such of in the are pricing, so terms night and Cuba's comparisons And high a at

would. you strong, the which than the destination. was of effects booking, more capacity we so in the had region the And because two, Number our shortened Cuba/Bahamas will attractiveness Dorian, we the if of normally in Cuba case

we move regions be higher-yielding such and those those into as Mediterranean mentioned the and of markets in as Alaska vessels Eastern the prepared out my Caribbean, been had moving been remarks, had into we As XXXX, Bahamas and I in that the in will Asia.

it the points. down of the effect to is diminished, effects basis we the sequentially, Cuba saw in dragging pricing is XXX But So of as tune forward move yes the of you in our QX, as temporary Bahamas disappear. Dorian is what release,

Mark Kempa

exactly That's to on that. And right. just add

up points at Caribbean. If about actually XXX, impact guidance our and yield, coming was But we're XXX look excluding of from all implied flat. our you basis the primarily the QX prior that's Dorian,

strength in So the view. core seeing market again, that forward in we're

Felicia Hendrix

Okay.

the So it hear about Dorian quarter, won't anymore the first sounds in we like?

Frank Del Rio

as much. Not

Felicia Hendrix

you. Thank Okay.

Operator

Research. question Wolfe Jared from our is next Thank Shojaian from And you.

open. Your line is

Jared Shojaian

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

think or So mean just I on that a side any some more a about question to to guess I for the booking there terms raised risk Is Have expanding. date the pricing you taking even year windows continues now two thought ago policies? some raise position know thoughts and on days. you. I expand, of I of XXX decisions obviously, just your -- Frank forward right you the longer? guess in booked deposit your the but I pricing not deposit to

explored. that as you you that's I really something Can about that and that have more have of nonrefundable see not And your into? guys where side. just competitors the you focused you how could area on then an some talk expand know opportunity

Frank Del Rio

Good morning, Jared.

know call, work our I happen for day, a hour we doesn't margin, brands every it very, chance. wide in in across the always but we happens industry, very by in every It opportunities yields every prices onboard. raise by stress to because of you As have and in something three and already we looking do. the highest not That only ticket

ask if strategy, of we're is And we in combination versus stimulate focused me means the it on that so dollars marketing marketplace we That's anything all the we're that's demand primary prices. doing we go-to-market which focus to our if invest have you that do. on the when or reducing

believe itinerary on prices we're combination why booking of season: looking itineraries. three-month up. July, is optimization a curve August. us, that window, the take whenever ships are It's Alaska bullish Why constantly to And booking June, be so Alaska? allows for our we higher-yielding we and we used moving to the always

incredible seeing we're season very high-yielding on there now only six-month April ticket, now a and but leaving not in -- high-yielding, October. until So on not very, we're It's we're onboard. of getting

we're lowest-yielding And to out customer never out that. to because so have of to guests itineraries continue that areas take refurbishment Spirit been past going to Africa, to huge exotic advantage more Australia, Island areas we've historically marketplace, never those base, the sending Asia, our files a Canary before. our sailed those taking we're the her after of her and of doing one We're winter areas

process prove per yields, the of our years So that the earnings last more occupancy, five all marketing or revenue, I higher share, selling works. help lower and philosophy costs, performance four things more strategy think that these over that higher that

Jared Shojaian

is Okay, a for unit unit up? why X%. about thank on ex-fuel is at cost, talk dry X% versus, it? at to that next about headwinds, maybe a historically Pearl out approach an ex-fuel that to took the at marketing you. out year for XXX know starting and higher at you've marketing year points question I look the subtract a I cost then X% why basis you is costs docks talked If Cuba, point this year, out year. year this then for growing as X% look And to you're year X% in it right maybe to not up called next what call year that's can X% the with normal a all and calling Dorian, unusual maybe XXXX, This you And you that's the still but incremental Mark hitting X% just you're X% range.

little So that a better? me bit can you about help think

Mark Kempa

Yes.

So, thanks Jared.

marketing the with side. start me Let

So, listen, have we stated a we've go-to-market strategy. publicly

X see to We in return marketing minimum dollars that. through are hopefully afraid that to get net spend a on greater to yield and And think our not going Xx coming we're performance. when I you

to continue expectations our We strong just and through It's the our by revenue, It's outperform pricing. guidance and front. beat across happenstance. beat strong not that's and onboard ticket

Yes, in we're far see the early. makes as some XXXX, we as it's into driving do are where bottom So should to benefits XXXX. bit that's as do as more afraid forward long And we're costs And again, not it elevated look XXXX. sense benefit as to we'll incremental our we continue to something line. a and rolling

have we're on stance higher we you plans to But X% give on we're to business we'll to and still think can everything do about XXXX. now -- that for dry by thinking more better to outperform going call. guidance year, that our do as the with that our next finalizing that. in But maintain our February for side cost additional operating days dock we're -- to we're still our going about I we in it's about XX going we're Yes, X% days

Jared Shojaian

Okay, you. thank

Operator

next Steve with Stifel. from our And question you. is Wieczynski Thank

is line open. Your

Steve Wieczynski

guys. good Hey, morning,

to So, bit little very had gave good a quarter around obviously and one more. into month that And yield already by dig a is guidance. want very, basis kind I after your guess beat XXX first, is belt you the under which question the that's beat the third when you strong little your a you of bit, guidance I yield points,

they the can little more performed a how So so last you quarter third understand months, why me two help well? bit the

Mark Kempa

is this Mark. Steve, Yes. Sure.

So, whatever onboard again I the pricing. to as I in don't inventory said spending. revenue sell want don't underscore books power. at were want you it we extremely commentary, that my we revenue And able I to at on time, the But onboard -- had good guys strong

make at our the in of I every was year-over-year, somewhere I you it basis, If revenue X% -- onboard that of you on look when a and as Joy, incremental up the onboard adjust transfers all allocation at revenue the say you to have think this look quarter, core mid-single-digits. was to for the up GAAP X% if reported as that from zone well our we benefit

is to coming to the mine. continue that. week-in, that tell We And through always day-in, continue business. we we really strength I and the strong our that's So, see in coal you that canary that see week-out guys and watch

And they that. continue combining continues more that the be is to a surprised. pleasantly that hone we're ever extremely not where step before around for initiatives wallet on consumer's to ship getting us lot our of they we're well alive So, strategies spend consumer and -- we that many our beneficial and has money. to and afraid pre-cruise with are The our of --

Steve Wieczynski

I pretty seeing where all say yields quarters? and as Mike. load out that, X.X% up kind next look we to Thanks is you already your understand right let's to consensus But forward X.X%, I If And understand you're our next around Okay. upbeat said at I now. commentary is year And what which look apologize. is, you're to here right I hovering if of guess are guess to fair it that trying pricing are year, are now, say bless I'm four in obviously not factors going number. we what

normal first normal or don't I the about you remind talked can answer below this, you going Mark range your you're but And or second quarter range expectation. your quarter, expectation what think us is? being to

Mark Kempa

when the you it's a brand typically advise yield higher look combined X% And X% we it. growth. that consolidate a for We Sure. obviously each aim expectation for brands, you at when individual company a of bit that to equates each yield of

look a -- said I first looking about we drag. -- which So, basis over as XXX the point Cuba half rolling you we've when are at is

first expect still be that It would half. see not to X% range basis, full to somewhat will comfortable model we're going achieve year-over-year the that for again than and a targets. we're within those that year I you're lower growth that X% But So, going to that. on we'll

Steve Wieczynski

all And quarters Mark, right four is say you load in up now? factors that pricing -- did sorry, and

Mark Kempa

Yes.

we up in You are thought for said I remarks XXXX. are pricing all correct. that that quarters in XXX% prepared load his in four had Frank and

Frank Del Rio

all-- Across

Mark Kempa

point. Good

Steve Wieczynski

I I that. missed guys. it. Thanks apologize appreciate if Really

Operator

Please next ahead. question with Montour JPMorgan. go And Brandt our you. from comes Thank

Brandt Montour

Good my questions. morning taking Thanks everyone. for

of thinking half, about on the pile going to it's question. the first slightly I'm Caribbean to kind but just in So, this, different

of If impact, time you versus like pricing any of would looking out? be in Dorian in year-over-year what were book kind able and to Cuba and would the this terms volume magnitude look where out strip you

Frank Del Rio

would our apologize, I I if Sorry, look it's think very -- Dorian, difficult we was hear asking but you Cuba your Brandt, that so stripped like to question? out that what is you're outlook and

Brandt Montour

Apologies.

if up Dorian -- in you of first price, like magnitude? stacks how the stripped in Caribbean terms the Hurricane out the half book and the Just volume in

Frank Del Rio

- Yes. was similar basis when we're that have we that just business. of on book volume to. adjusting a I last That talk both significant on four we question, the said a all up we are because in for Cuba We you like and about price -- and for quarters

first So in we are -- up that on a load similar basis, and half.

So...

Brandt Montour

– then those more like you ultimate pricing longer-term you say guys upside upside on details lot guys give any to from color the of your Alaska, capacity, enhancement you us that recently. Can sort there? the And and you only Okay. announced of let's projects the a in not but onboard from that said obviously have around extra on

Frank Del Rio

capacity, much continue as market that to additional market Well goes time we're going to allocate testing can seeing and we by. how the

we have the XX,XXX. XXXX, -- Norwegian we ago over the will ship. for So years three last X,XXX we three In example three, years had passenger brand

doubled we've a period. our So capacity over almost X-year we're Alaska - in almost

be the wouldn't If don't done we we're we were done. And we investments think making we thought making. we're that

finalize it's think get as we've to presence going strong and got that a we in as a Alaska these I investments. stronger So think we anyone

that is you got huge there. Department. one we As years. you Parks can't example slotted you for another are fortunate the were have is. know to is area. win is and by this tell Alaska very destination that Glacier granted Bay I We -- I sort U.S. the XX that for how visit XX best people deployment The the a our of years. a It's It strategy cornerstone Alaska number to of in want permits

it and advantage we to we as and ships incredibly to to strong take very now as we're the that capacity so and itineraries make adding Alaska strong it's to And sure want our largest bring And we much to region. have can. berth of again onboard for prices ticket the pricing our

Brandt Montour

be should about If those one in I returns announced? more here, we sneak how that great. could That's projects just you thinking on

Frank Del Rio

they think is for a destination-centric again. region. pay over over and Alaska I themselves Well

percent to has be got if to little a have and you come going by capabilities. leadership to programs to will. through give a role in and struggle later. I'm developing we're the taking you very -- It's the ticket in land You've net But got yields ROI, to come all these hard I the not place that answer flown land our bit

Mark Kempa

Alaska the proper the of positioning, frontier left is a around speak. consumer there's space so right? to we ports, this have in not strategic It's We go Brandt making to. to know to, wants that lot go the sure to last destinations

that get of there. a we yields premium securing We for long-term So out we know basis. are

those difficult come specific line we the that top through will we're that just doing. -- to initiatives but from the So see in returns measure

Brandt Montour

a Got it. Thanks lot guys.

Operator

our Harry Curtis ahead. you. Please Thank with next And Instinet. comes question go from

Harry Curtis

It on two -- sounds to I a it's the Good tale -- the of first first follow-up or wanted like everyone. drag. quarter Mark's morning, the halves. on comments about half

second reason do when you don't those in typically visibility. kind made were of much have much visibility bed how have the fell comments can you the the stock, share out think with of, So us I that half? you was

second half. And so question some about there the is

have? help us that details might it with you do what So to share

Mark Kempa

have I'm the I'll But XX% remarks We even and jump going visibility our brands prepared second will to XXXX. I look the our at are have. we've Sure. Frank sold tremendous for we books. in off half turn start always premium mentioned on that year sure here. in And think

we that's Our to remarks because from of to reality. difficult And a the as don't were in terms rolling around see comps back very expect really benefit you over cadence be that. we're At half from first yield half some will and high give just half Cuba. half, in the just second first

just form yield to half, are expect going half our be expect or of not implying we to would that It's X%. that. of So be full our a front story. we out fully any X% to fashion range We second in guidance year

Frank Del Rio

because not of comparisons. And but performance, year-over-year of because

half months Cuba of XXXX has five First and zero. in XXXX has

Harry Curtis

that Thank you clarification. for

about to talked you deposit coming. decent amount capacity question, a Second new and growth probably of is that tied the

you are So, of sense well? a deposit fleet growth if encouraging your on core to as give us able as that looks

Frank Del Rio

Yeah.

our up balance mentioned, sheet, XX.X%. you're ticket I As about is talking advanced if the will which sales, is on what you liability,

is the growth are One, capacity deposits XXXX the only by forward outperforming capacity XX%. Our growth X.X%.

we're reason why broader part than So, adjusted the that. growth, yes, obviously up is of XX.X%. for But Encore it's capacity much

comfort goes face that type per last the at were brand. we're lot if selling per number or at that you prices. this year a or outperforming just we vessel of you it's XX% you of on more give look to a can't higher get the capacity ship than by time ought I per But

stretched the point fact our booking is that XX% year-over-year. Another by data has window

underlying can't I stress enough look, So business. the the strength of

and weakness -- for brands. because to cruising said, the cruising be I And a weakness of see going We heck had QX, Cuba We've for last again, I'll the QX. quarter of of in enthusiasm effects no consumer's and is have a in year. no and on decline of QX that and say because see Dorian. XXXX measurable like we three we our in

Harry Curtis

Thanks, everyone.

Frank Del Rio

for Operator, question. we have more one time

Operator

Thomas ahead. Allen go Stanley. Please And our question Morgan you. Thank from next with is

Thomas Allen

me Thanks fitting in. for

question. one just So

talked X% in confident net yield feeling in XXXX. kind to still you where question, growth prior the of Just about X% that

And onboard are next of about that to mid-single-digit earlier you talked year? growth you. think currently. gives You to to kind the to about seeing see to also growth kind need and Thank onboard growth? of X% Do takes to continue continue that X% what reach

Mark Kempa

Yes.

So can look consumer can We can it we get at from earlier, How extract do? Frank looking we as of we a that punch what onboard we more growth said consumer? forward day-out, in ecosystem dollars that in don't guidance. our day-in the our we're earlier terms How -- bake into pre-sell?

our at look most from the majority majority XX know, that has you revenue come the the in continues a to if outperform. history, our good I fact quarters, and of onboard last, beats eight to don't vast So

typically to the we that of X% we around surprised have revenue do continue onboard model we're great So and we somewhere neighborhood on while and pleasantly visibility it.

know. never You just

numbers. X% our to X% win, don't part need Sometimes hit we your that the sometimes growth to was casino the lose. continued player But they question? – can What X% of second

Thomas Allen

I will to it mean you what think X% what but that influence but about takes color? -- gives any other answered basically any and

Mark Kempa

No.

reach booking helps ability the going again is differentiator earlier that on a really I outperform. strong us be to for think before ever our go and to ship. consumer item a a key it's and consumer key in us continue the continued the they That cycle to

Thomas Allen

Thank you.

Frank Del Rio

for Well, time your and thanks support. everyone

we Take As answer to care. any other may have. you will always today available be later questions

Operator

call. today's concludes this conference And

now disconnect. may You