• Revenue: Record revenue achieved in 2024.
• Net Yield: Increased by a record 10% in 2024, surpassing initial guidance by 450 basis points.
• Adjusted EBITDA: Record adjusted EBITDA for 2024, exceeding $2.45 billion.
• Adjusted EPS: Grew by 161% to $1.82 in 2024.
• Net Leverage Ratio: Decreased by 2 full turns to 5.3 times by the end of 2024.
• Adjusted Operational EBITDA Margin: Expanded by nearly 500 basis points to 35.5% in 2024.
• Adjusted ROIC: Improved by 320 basis points to just under 11% in 2024.
• Operating Cash Flow: Exceeded $2 billion in 2024.
• 2025 Net Yield Growth Projection: Expected to be approximately 3%.
• 2025 Adjusted EBITDA Projection: Expected to be $2.72 billion.
• 2025 Adjusted EPS Projection: Expected to be $2.05.
• 2025 Adjusted Net Cruise Cost Ex Fuel Growth: Targeted at 1.25%.
• 2025 Pricing Increase Projection: Projected at 4.5% for the full year.

• Warning! GuruFocus has detected 8 Warning Signs with NCLH.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) reported record financial performance in 2024, with significant top-line revenue and net yield growth.
• The company successfully rolled out Starlink Wi-Fi across its fleet, enhancing onboard internet speed and reliability.
• NCLH announced a historic fleet expansion program with 13 ships on order, including the debut of Norwegian Aqua and Oceania's Allura in 2025.
• The company achieved a record adjusted EBITDA margin expansion of nearly 500 basis points to 35.5%.
• NCLH's sustainability efforts were recognized with the ESG Leader Gold Award and an A rating from MSCI, highlighting its commitment to environmental and social impact.

Negative Points

• The company faces headwinds from a strong US dollar, which impacts foreign exchange rates and future earnings.
• NCLH's luxury brands are experiencing slower performance compared to its largest brand, indicating potential challenges in the luxury segment.
• The company anticipates a temporary moderation in growth in the first quarter of 2025 due to dry dock impacts and repositioning sailings.
• There is uncertainty regarding potential changes in US tax legislation that could affect the cruise industry.
• Occupancy rates are expected to be slightly lower in 2025 compared to 2024, partly due to repositioning cruises and changes in itinerary mix.

Q & A Highlights

Q: Can you provide more details on the booking trends across different brands and geographies? A: Harry Sommer, President and CEO, stated that they are pleased with the booking pace, particularly in Europe and Alaska, which have outperformed for the summer period. The luxury brands are slightly slower than expected, while the Norwegian Cruise Line brand is performing better. Overall, bookings are steady and where they need to be.

Q: How much of the 2024 cost savings were a pull forward versus overachievement? Is there more upside to the $300 million target? A: Harry Sommer noted that cost savings came quicker than expected, and Mark Kempa, CFO, added that they overachieved in year one but continue to see opportunities in 2025 and 2026. They are guiding cost growth below inflation, demonstrating confidence in their efficiency initiatives without impacting guest experience.

Q: Why is there an expected occupancy loss in 2025, and is there an opportunity to improve this? A: Harry Sommer explained that the occupancy loss in Q1 is due to dry dock and repositioning cruises, which naturally have lower load factors. For the rest of the year, a mix issue with longer itineraries and a shift in deployment accounts for the small change in occupancy.

Q: Can you elaborate on the demand for Europe and any geopolitical impacts on bookings? A: Harry Sommer mentioned that demand for Europe has been strong, not particularly related to the strong US dollar. The week of the election was challenging, but normal booking patterns resumed afterward. There have been no significant changes in booking behavior due to geopolitical events.

Q: How are you thinking about capacity growth and potential ship retirements? A: Harry Sommer stated that while they always consider market conditions, their oldest ships are from 1998 and 1999, and they believe ships can last 35 years or more. The fleet is well-maintained, and there are no imminent retirements planned. Mark Kempa added that recent financial activities provide flexibility for future decisions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.