• Net Yields: Increased 1.2% above expectations.
• Adjusted EBITDA: $453 million, above guidance.
• Trailing 12-Month Margin: 35.5%, a 280-basis-point improvement over last year.
• Adjusted EPS: $0.07, slightly below guidance due to a $0.05 FX headwind.
• Occupancy: 101.5%, down year over year due to increased dry dock days.
• Net Per Diem Growth: 4.3%.
• Adjusted Net Cruise Costs Excluding Fuel: Increased 3% to $169.
• Full Year Net Yield Growth Outlook: Revised to a range of 2% to 3%.
• Full Year Adjusted EBITDA Guidance: Maintained at $2.72 billion.
• Full Year Adjusted EPS Guidance: Unchanged at $2.05.
• Net Leverage: Temporarily increased to 5.7 times, expected to decline to approximately 5 times by year-end.

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

Release Date: April 30, 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) met or exceeded guidance across all key metrics for the first quarter of 2025.
• Net yields increased by 1.2% above expectations, contributing to an adjusted EBITDA of $453 million, surpassing guidance.
• The delivery of the new ship, Norwegian Aqua, was on time and on budget, showcasing successful fleet expansion.
• Enhancements at Great Stirrup Cay, including a new pier and resort-style amenities, are expected to drive higher guest satisfaction and incremental yields.
• The revamped NCL app has been successful, with over 800,000 guests logging in during the quarter, boosting pre-cruise revenue and customer engagement.

Negative Points

• Adjusted EPS ended the quarter at $0.07, slightly below guidance due to a $0.05 FX headwind.
• There was some choppiness in bookings for Q3, particularly for European itineraries, impacting occupancy.
• The company is prioritizing price over load factor, which may limit occupancy growth in the short term.
• Macro-economic uncertainties and potential geopolitical shifts pose risks to future booking trends.
• Despite strong onboard spending, there is a need to maintain disciplined cost control to offset potential top-line pressures.

Q & A Highlights

Q: Could you elaborate on recent changes in the booked position for 2025 and early 2026? How does this compare to historical levels, and what have you contemplated in your updated guidance for volumes and pricing over the balance of the year? A: Harry Sommer, President and CEO, explained that there was some choppiness in bookings, particularly for Q3 European itineraries, due to hesitancy among Americans for long-haul trips. However, recent weeks have shown a return to normal booking and pricing levels. The company is focusing on maintaining price over occupancy, believing that demand will return to normal. For 2026, bookings are ahead of historical levels, and the company remains optimistic about future pricing and yield.

Q: Have you seen any notable change with recent onboard spending, and how do you plan to maintain EBITDA forecasts for this year? A: Mark Kempa, CFO, noted that onboard spending remains strong, with guests continuing to spend at solid levels. The company is not cutting costs indiscriminately but is focusing on removing waste and gaining efficiencies without sacrificing guest experience. The cost-saving initiatives are on track to meet or exceed the $300 million target, and the company remains confident in achieving its 2026 targets.

Q: Can you break down the booking trends for the Norwegian brand versus the luxury brands? Is the choppiness more tied to your luxury brands? A: Harry Sommer stated that all three brands are experiencing similar booking patterns, with some pressure on Q3 Europe. The recent Oceania promotional work is not indicative of deeper discounting but rather a marketing strategy. Overall, there is no significant difference in performance between the brands.

Q: How does your inventory management philosophy change during periods of booking softness? A: Harry Sommer emphasized the importance of maintaining price integrity, especially for future periods. While there may be some closer-in discounting for specific problem areas, the company is committed to keeping prices stable to ensure a strong foundation for future growth.

Q: What are your thoughts on the ROI of investments in Great Stirrup Cay, and should we expect more marketing of the island? A: Harry Sommer confirmed that the investments in Great Stirrup Cay are expected to meet or exceed long-term ROI goals. The enhancements make the island more marketable and are anticipated to drive both cruise pricing and onboard spend. The company plans to increase marketing efforts to promote the island's new features and improved accessibility.

Q: Why do you think there's American hesitation to go to Europe this summer, and are you seeing any hesitancy for 2026 bookings? A: Harry Sommer acknowledged the challenge in understanding the exact reasons for American hesitancy towards Europe but noted that it might be related to macroeconomic uncertainties. However, there are no challenges observed for 2026 bookings, and the company remains confident in its future outlook.

Q: How do you view the balance between higher occupancy and lower relative pricing for sun and fun itineraries in 2026? A: Harry Sommer believes that the net effect will be a yield tailwind, with a modest increase in yield and a significant cost tailwind due to the lower operational costs of these itineraries.

Q: What is your approach to marketing and cost efficiencies in light of current booking trends? A: Harry Sommer stated that the company is increasing its marketing spend to drive demand and maintain pricing levels. Mark Kempa added that cost efficiencies are being achieved through system-wide improvements, focusing on eliminating waste and gaining efficiencies without impacting the guest experience.

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