Norwegian Cruise Line Holdings Ltd.

Good morning and welcome to the Norwegian Cruise Line Holdings second quarter 2024 earnings conference call. My name is Donna and I will be your operator. At this time, all participants are on 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 touchtone telephone. As a reminder to all participants, this conference call is being recorded. I will now turn the conference over to your host, Sarah Inman. Ms. Inman, please proceed.

Good morning, everyone. Thanks for joining us for our second quarter 2024 earnings and business update call. I'm joined today by Harry Sommer, President and CEO of Norwegian Cruise Line Holdings, and Mark Kempa, Executive Vice President and CFO. As a reminder, this conference call is being simultaneously webcast on the company's investor relations website at www.nclhltd.com backslash investors. Throughout the call, we will refer to a slide presentation that can 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 begin, I would like to cover a few items. Our press release with second quarter 2024 results was issued this morning and is available on the 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 the cautionary statement 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 are contained in our earnings release and presentation. With that, I'd like to turn the call over to Harry. Harry?

Well, thank you, Sarah, and good morning, everyone. We appreciate you joining us today for our second quarter 2024 earnings call. This is an exciting time for Norwegian Cruise Line Holdings. The second quarter has surpassed our expectations with results exceeding guidance on all key metrics, allowing us to increase our full-year guidance for the third time this year. At our Invest Your Day, we emphasize our unwavering commitment to balancing return on experience, what we call ROX, and return on investment, or ROI. This strategy is clearly yielding results. We are witnessing robust demand, with strong pricing and booking volumes, leading to record-breaking advanced ticket sales. This demand, coupled with our onboard offering and high-quality service, has led to strong get satisfaction scores while we continue to effectively control costs. These indicators affirm that our strategic approach is positioning us for sustained long-term success on our well-defined path forward for continued growth to achieve our charting the course strategy, which includes ambitious 2026 financial and sustainability targets. Today, I'm excited to discuss some of our key milestones for the second quarter and the factors that drove our enhanced guidance for the remainder of 2024. We're thrilled to see how the pillars and initiatives under our Charting the Core strategy are moving the needle for our business. As these are strongly underpinned by our global sustainability program, SAIL and Sustain, we're also excited to share the progress outlined in our recent sustainability report. Later in the call, I will hand it over to Mark who will provide more color on our second quarter performance and updated outlook for 2024. We kicked off the second quarter with impressive momentum, continuing the positive trends from the beginning of 2024 and proudly executing on our exceptional performance pillar. As you can see on slide four, our second quarter results beat guidance across the board. Adjusted EBITDA grew 14% and adjusted EPS was up 33%. Notably, we hit our year-end target of decreasing net leverage by one and a half turns a full six months early. As we move forward, we remain committed to further deleveraging with a clear focus and attaining a 2026 target of mid-four times. These strong results also allowed us to raise our full-year revenue and earnings guidance. We now expect to end the year with adjusted operational EBITDA margin of 34.5%, a full 400 basis point improvement over 2023, which puts us well on the way to our 2026 target of approaching historical margin levels of 39%. We also increased our adjusted EPS guidance for the full year to $1.53, an approximate 120% increase over 2023, and an impressive step forward towards our 2026 target of $2.45. And lastly, we are on track to achieve double-digit adjusted ROIC by year end. This acceleration in our financial results speaks volumes about our team's dedication and hard work. Turning to slide five, I want to emphasize how our long-term growth platform pillar is set to deliver measured capacity growth and optimize our fleet to drive strong financial returns. Historically, capacity growth has driven outsized revenue and adjusted IBA growth, and we expect this trend to continue with the incorporation of larger and more efficient state-of-the-art vessel store fleet, which I'll now give some updates on. Turning to slide six, we are currently focused on our next two new ships being delivered in 2025, both currently scheduled for an on-time delivery. Our first milestone in the quarter was the float out of Norwegian Aqua, which we celebrated with our partner Fincantieri Norwegian Aqua, the first ship in the next generation Prima Plus class is an evolution of the previous Prima class ship and will be 10% larger This space allows for more innovative offerings including the world's first ever hybrid roller coaster and water slide the Aqua Slide Coaster We are also building a digital sports complex with an interactive LED floor and our most expansive 360-degree outdoor promenade, the Ocean Boulevard. We cannot wait for Aqua to make her debut in April 2025. Most recently, we also celebrated the float-out of Oceana's Allura at the Fincantieri Shipyard in Genoa. This marked the transition of the vessel from dry dock to fitting out berth, initiating the final stages of construction. Allura will redefine luxury with its designer-inspired interiors, including opulent suites, sophisticated lounges, and exceptional new dining venues. Scheduled to enter service in the Mediterranean in July 2025, she will follow her normal summer season with winter voyages in the Caribbean. Oceana was also busy this quarter with the return to service of Marina after an extensive refurbishment. This all-encompassing rejuvenation includes the addition of three new dining options and reimagined penthouse suites. And just as we add more capacity and new features on existing ships, we are also excited for enhancements to our destination and home ports. We're increasing our sailing to exciting destinations, such as Bermuda and Great Surf Cay, where we plan to complete construction of our two-ship pier towards the end of next year. We'll also be adding a new home port to our roster in 2025, Jack's Port in Jacksonville, Florida. And in April 2026, NCL will make its return to Philadelphia after a 17-year hiatus. With the addition of Philadelphia, NCL will now service seven of the top 10 largest metropolitan regions in the United States. We are excited about our deployment, and our guests are as well, as shown by our booking trends, which you can see on slide seven. The company continues to experience strong consumer demand. In the second quarter, we continue to see strong bookings with our 12-month forward book position at the upper end of our optimal range on strong pricing. During the second quarter, we observed continued strength in onboard revenue as well, which was driven by our guests' continued enjoyment of our shore excursion and onboard amenities, including specialty restaurants and communications services, which had been bolstered by the continued implementation of Starlink across the fleet. Additionally, pre-booked onboard revenue for capacity day showed solid growth, increasing by 15% as more guests opted for pre-cruise purchases. And as we've seen from prior experience, higher pre-cruise spend typically results in higher overall spend throughout a guest's cruise journey. As a result, our net yield grew 6.3% during the second quarter, surpassing our guidance by a full 200 basis points. During the second quarter, about 3% of our capacity was originally scheduled to be in the Middle East region, with high team percentages on our Oceana and Regent brands scheduled to be in that region. The cancellation of these itineraries resulted in a very short resale cycle. Despite the setback, results for this quarter were strong enough to offset this, underscoring the robust demand environment for cruises and the agility and effectiveness of our teams to overcome difficult challenges. Without a doubt, our financial performance exceeded our expectations, and we're therefore raising our yearly net yield growth guidance, increasing 100 basis points from 7.2% to 8.2%. It is worth noting that our occupancy guidance remains essentially unchanged as we're already guiding to full shifts, so the entire increase in our guidance is on the back of stronger pricing. we are anticipating strong pricing growth across all four quarters in 2024. Turning to slide eight, to continue cementing our leading position beyond 2024, I am excited to announce that our second quarter advance ticket sales surpassed the first quarter, increasing 11% year over year and reaching a new all-time high of $3.9 billion. This success was driven by robust pricing, a dynamic deployment mix, coupled with increased pre-sale packages and capacity growth. Now moving on to what is at the core of our Charting the Core strategy, our sustainability program, SAIL and Sustain. In June, we were pleased to result our annual sustainability report. On slide nine, we summarized some of our main 2023 highlights, which underscore our commitment to integrating sustainability into our overall business approach. So noticeable accomplishments include achieving our 2024 target to equip 50% of our fleet with shore power technology a full year early. We remain on track to equip 70% of our fleet with this technology by 2025. In fact, we recently celebrated the launch of shore power at Port Miami, making it the first major cruise port on the U.S. East Coast to offer shore power at five of its terminals, including our own terminal B, the Pearl of Miami. We also reached our goal of testing 20% of our fleet with biodiesel blend by expanding tests to four more ships throughout 2023. Our new target is 40% of our fleet to test biodiesel by 2024. Finally, doubling down on our people excellence pillar, we continue diversifying our sourcing, having spent over $635 million with small businesses and businesses with minority, women, veteran, or economically disadvantaged qualifications in 2023. And most recently, Forbes named us as the best American employer for women, a milestone we are particularly pleased with. Our journey does not stop here. We remain dedicated to advancing towards our sale and sustained targets going forward, maintaining high standards of operational excellence, and creating lasting value for our business and various stakeholders through sustainable practices. I couldn't be more proud of our entire team for all of these impressive accomplishments. With that, I'll turn it over to Mark to walk you through our financial results and outlook. Mark.