Norwegian Cruise Line Holdings Ltd.

Good morning, and welcome to the Norwegian Cruise Line Holdings first quarter 2021 earnings conference call. My name is Josh, and I will be your operator. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions for the session will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touchstone telephone. As a reminder to all participants, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Andrea DeMarco, Senior Vice President of Investor Relations, Corporate Communications, and ESG. Ms. DeMarco, please proceed.

Thank you, Josh, and good morning, everyone. Thank you for joining us for our first quarter 2021 earnings call. I'm joined today by Frank Del Rio, President and Chief Executive Officer of Norwegian Cruise Line Holdings, and Mark Kempe, Executive Vice President and Chief Financial Officer. Frank will begin the call with opening commentary, after which Mark will follow to discuss our financials before handing the call back to Frank for closing remarks. We will then open the call for your questions. As a reminder, this conference call is being simultaneously webcast on the company's investor relations website at www.nclhltdinvestor.com. We will also make reference to a slide presentation during this call, which may also be found on our investor relations website. Both the conference call and the presentation will be available for replay for 30 days following today's call. Before we discuss our results, I would like to cover a few items. Our press release with first quarter 2021 results was issued this morning and is available on our investor relations website. This call includes forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with cautionary statements contained in our earnings release. Our comments may also reference non-GAAP financial measures, a reconciliation to the most directly comparable GAAP financial measure, and other associated disclosures contained in our earnings release and presentation. And with that, I'd like to turn the call over to Frank Del Rio.

Thank you, Andrea, and good morning, everyone. As always, I hope that all of you joining us today, as well as your loved ones, remain healthy and safe. Today we will focus our commentary on the progress we have made thus far towards the resumption of cruising, the overall strength of the booking and pricing environment, and our efforts to bolster our liquidity and maximize financial flexibility as we methodically return our fleet to operation. Over a year since the suspension of voyages worldwide, our team at Norwegian is exhilarated that the time has finally come to where we shift our focus to what I like to call our great cruise comeback, even if the comeback starts from international ports. As you can see on slide four, our return to service plan is centered around three key phases. We developed our multi-layered sail-safe health and safety strategy, including mandatory vaccinations for all guests and crew at its cornerstone, which I will touch on in more detail later in the call. Second, last month we announced our initial voyage resumption plan with a two-pronged approach to restarting cruises from both within and outside of U.S. waters starting this summer. All three of our brands have now announced initial voyages embarking from both new and normally scheduled international ports, and we remain engaged in active dialogue with the CDC regarding a potential resumption of cruising from U.S. ports. Lastly is the phase relaunch of the remainder of our fleet, the timing of which will depend on several factors such as the global public health environment, port openings, travel restrictions, and the all-important CDC. Slide 5 further details our two-prong voyage resumption plan. Outside of the U.S., our long-awaited return to cruising will begin in July, first with three Norwegian cruise line vessels sailing from Athens and throughout the Greek Isles and new Caribbean home ports in Jamaica and the Dominican Republic. Oceana cruises will start in late August with voyages from Copenhagen, and Regent Seven Seas Cruises will resume from Southampton, England, beginning in September, with Seven Seas Splendor, our newest and most luxurious vessel, resuming her inaugural season. The response to our international voyage resumption has been overwhelming, and even sailings from our new Caribbean home ports are performing better than expected, despite the extremely condensed booking window. I can't thank our loyal guests, value travel partners, and all of our stakeholders enough for their patience and support over the past year as we prepare for our return to cruising. As for our work to restart voyages in the U.S., on April 5th, we submitted a comprehensive ironclad proposal to the CDC requesting authorization to resume cruising this summer with the robust and healthy safety strategy I just described and which includes 100% vaccination of all guests and crew. We and the rest of the cruise industry have since continued dialogue with the CDC. And just last week, the CDC issued additional clarification for its previously outlined technical guidance, which alleviated some of the pain points in the original safe 2A guidance. Even more importantly, we were pleased to see the CDC incorporate vaccines, our most powerful tool against COVID-19, into its guidance. creating two different pathways for the resumption of cruising from US ports. One for vaccinated voyages with a vaccination threshold of 95% for guests and 98% for crew, and one for non-vaccinated voyages that fall below this threshold. The vaccinated path, which is consistent with but falls short of our plan for 100% vaccination of guests and crew, has fewer hurdles to clear before return to cruising including the removal of the requirement for simulated voyages prior to revenue sailings and the relaxing of certain burdensome and costly testing requirements. In addition, yesterday, the CDC issued technical guidance for Phase 2B and 3, which covers simulated voyages and restricted voyages and the application process for a conditional sailing certificate. The guidance includes an operations manual for simulated and restricted voyages for which we need more clarity on whether the numerous and onerous requirements would apply to vaccinated voyages as well, or only to those that are not. Our team is working through the new guidance, but at first glance, however, it appears the path forward is a bit rockier and a bit steeper than originally expected. As time goes by, and given how long it takes to stand up a ship from cold layup, the urgent need for an acceptable and definitive agreement with the CDC is imperative, as a potential midsummer restart from U.S. ports could be in jeopardy. However, the CDC's recent willingness to engage with the industry in constructive dialogue has shown that they are committed to working with us to find an acceptable path forward, and we are certainly in a better place today than we were just 30 days ago. The progress we have made so far has been possible in part due to the incredible grassroots efforts undertaken across the cruise ecosystem to encourage elected officials to help resume cruising in the U.S., which supports thousands of jobs, families, and small businesses throughout the country. Through CLIA's Ready, Set, Sail platform and our own Safe to Sail advocacy campaign, we were able to send over 150,000 messages to elected officials throughout the United States. Thank you to all of you who have called, emailed, or tweeted your officials in support of the cruise industry. The wind is at our back, and now is the time to keep the positive momentum going with our advocacy efforts. So I encourage you to continue reaching out to your elected officials by texting CRUISE to 52886 and have your voices heard. Turning to slide six, we unveiled our robust and multilayered sales safe health and safety program, which includes mandatory vaccinations for all guests and crew as its cornerstone. We believe that vaccinations, combined with the dozens of science-backed preventive protocols, including universal COVID-19 testing that were developed by the Healthy Sail Panel, will provide one of, if not the safest vacation option available anywhere on land or at sea. Our protocols extend well beyond those of the already successfully reopened travel and hospitality sectors, including hotels, resorts, casinos, theme parks, restaurants, movie theaters, arenas, and airlines. SailSafe was developed in conjunction with our expert advisors, including the Healthy Sail Panel and our newly announced SailSafe Global Health and Wellness Council, chaired by former FDA Commissioner Dr. Scott Godley. The council, which is comprised of six public health and scientific experts featured on slide seven, will complement the work of the Healthy Sail Panel and provide Norwegian Cruise Line holdings with specific expert advice on the implementation and continuous improvement of our SailSafe program. Shifting to our booking trends, which you can see on slide eight, we continue to see the strongest demand we have ever experienced for future cruise vacations across all three of our brands, despite continued reductions of demand-generating marketing investments, the absence of a full complement of our all-important travel agent partners, and a virtual lockdown from many of our international source markets. Perhaps the best indicator of this pent-up demand is our booking volumes, which during what is probably the most unorthodox wave season in our industry's history accelerated considerably with bookings net of cancellations more than doubling versus the prior quarter. As I touched on at our last call, this demand coupled with the opening of Voyagers for sale further in advance continues to result in a significant expansion of the booking curve with the first quarter's curve nearly doubling versus the same time last year. Pent-up demand is particularly evident for 2022 voyages. For the first half of 2022, our load factor is meaningfully ahead of 2019, with pricing higher when excluding the dilutive impact of future cruise credits. Keep in mind that 2019 was a record year, which makes the strong booking trends we are experiencing even more impressive. In addition, approximately 70% of our booked position is comprised of new cash bookings with the remainders comprised of future cruise certificates. By the time summer 2021 comes around and the industry begins to resume operations, more than 50 million would-be cruises will have been left ashore. So the pent-up demand is real and it's deep. And you can see that in our growing advance ticket sales, which increased approximately $200 million in a gross basis in the quarter, or up approximately 40% versus the prior quarter's build. We believe we have reached an inflection point, as this is the highest gross bill since the beginning of the pandemic. And as we get closer to our resumption of cruising and begin phasing in the rest of our fleet, we expect this momentum to continue to accelerate sequentially. Another exciting milestone reaching the quarter was the naming of Vista, the first of two new 1,200-guest Allura-class ships for the Oceania Cruises brand, and the first new build for the line in over a decade, which you can see on slide nine. The upscale vessel, the seventh for the line, will set sail in early 2023, followed by a sister ship in 2025. Like her sister vessels, Vista will deliver the finest cuisine at sea and will introduce several unique firsts for the brand in the realm of dining and guest experience. More reveals of Vista's venues and experiences will begin later this month, in the lead up to the launch of sales for her inaugural voyages in September of 2021. I'll be back later to provide an update on our ESG efforts as well as provide closing remarks, but now I'd like to turn the call over to Mark for a financial update. Mark.