Norwegian Cruise Line Holdings Ltd.

for like yield would look like excluding the the load factor lift you know it's it's it's hard you know to sort of break things down into their components so I'll start out by saying that we believe a three and a half to four percent yield growth on a year-over-year basis is strong and we're very happy with it if you're asking whether they were modest impacts by the government shutdown hard not to believe that that's a a modest headwind to the business I wouldn't necessarily say the weather was a big deal. It was actually a relatively modest hurricane season as these go. We only had an impact to a handful of Bermuda cruises and one or two now to Jamaica, none of which had to be canceled, just rerouted. But maybe on the government shutdown, a little bit. But the macro environment continues to be strong, economy continues to grow, and employment rates continue to be low. The things that we measure, cruise intent, You know, future cruise sales on board the ship are all at or near record levels. So we're pleased. And, of course, you know, the proof's in the pudding. You know, I've gone out not just for Q3, but for the actual month of October, the month that just ended, that bookings were up over 20% year over year across all three brands. We think that's a pretty good setup. But we'll continue to move forward.

Okay. Thanks, guys. Really appreciate it.

Our next question is from Robin Farley with UBS. Please proceed. Did we lose you, Robin? Check and see if your line is muted.

I think we lost Robin.

Sorry. Our next question will now be from Matthew Boss with JP Morgan. Please proceed.

Great, thanks. So, Harry, maybe a two-part question. If you could elaborate on the progression of booking trends that you saw through the third quarter and into October, and then if you parse through the mix impact that you cited in the Caribbean, could you speak to underlying pricing trends across itineraries that you're seeing across both family and luxury?

Well, it's... I don't think there's been a material change. If you're asking whether we saw an acceleration July, August, September, October, all four of them were good months. I wouldn't necessarily say that one of them stood up or that things have decelerated in any way. Maybe a modest acceleration coming into October, but nothing that material. All four months were very good months for us. And on the pricing side, I'd make a similar comment. There's nothing that stands out. If you will, I think across the board we've seen strength. You know, I just want to echo Mark's comments, you know, on pricing. You just have to think about and feel a little bit different. We're seeing good pricing increases on the first and second in the cabin. You know, as we increase third and fourth, that naturally is a modest increase. headwind to overall average price, but still a benefit to yield margin and profitability. So I just want to emphasize that point. But across the board, nothing that stands out one way or another. We're seeing good strength everywhere.

And then maybe, Mark, as a follow-up, could you help break down the drivers of load factors in 2026 that you're expecting to exceed 2024, what you're embedding for the Caribbean relative to opportunity you see year over year in Europe?

Look, thanks, Matt. I think it's a couple things. Obviously, when we look at 26, we've clearly stated today that we expect to be at least 105% or better. That's clearly being driven by the increased family dynamic, which we have been very clear that we continue to go after. So I think you'll see some significant tailwinds in the first quarter where we called out at least a 200 to 300 basis point improvement. And then I think as we transition into the latter part of the year, when GFC launch comes online fully, you're going to start to see that accelerate in the latter part of Q3 and Q4 of next year. That combined with, I think, some further opportunity in Q3 and You know, all should contribute to a healthy increase in load factor year over year. We've said, we've committed, we want to get back to historical load factors and better. We're doing that not only organically, but by expanding our segment into the premium families, and we're starting to see evidence of that.

I just want to provide just a little bit more color because while the Caribbean is certainly the headline of the story for Q4 and Q1, when you go into the rest of the year, there are a few other modest tailwinds that will be helping us. On the NCL brand, we shifted from longer European itineraries to shorter European itineraries, primarily seven nights in the Med, which should allow for a slightly larger family market as well, which is consistent, of course, with the brand strategy. And we're also focused on, if you will, minimizing the number of single cabins that we take across all three brands, not just FriendSale, but for O'Shannon and Regent. I think, you know, 26 will certainly be a year where the entire cycle of the booking curve what was booked under what we consider to be good booking conditions. And I think we're looking for modest benefits in every single aspect of the business. So again, while the Caribbean is certainly the headline for Q4 and Q1, it is not the only initiative we're working on to improve occupancy load factor for next year.

It's great, Collar. Best of luck.

Thank you. Thank you.

Our next question is from Connor Cunningham with Milius Research. Please proceed.

Hey, everyone. Thank you. Maybe to just follow up on that a little bit more. So I understand that the customer dynamic kind of lingers into the first half of 2026, but it seems – Like, the mixed headwind becomes a tailwind when Great Stirrup Cay comes online, like the water park comes online. So, one, is that even right? And then, two, can you just talk about the ramp around Great Stirrup Cay as all the new investments start to come online in general? Thank you.

Yeah, look, Connor, I think you're absolutely right when we look at the second half of As we bring on GFC fully, we absolutely believe that's going to be a tailwind. And as a reminder, in our last call, prepared remarks in our last call, I think we had said that GFC was going to be around a 25-point tailwind to yield next year, in part at a full point on 2027. Recall that although we're passing about a third of our overall system-wide customers through the island next year, by the time the water park gets on, about two-thirds of that base will have already gone through the island. So we're not getting the full benefit in 2026, but we will certainly start to see that ramp up in the latter half. You know, I think when you think about Great Stirrup Cay and the announcements about the new amenities in the park, we have certainly seen and seen a heightened level of interest from the consumer. We've seen more website bookings, more intent to travel. I think that in part is why we've seen the 20% bookings increase as well. So it's creating excitement. That said, we view what's happening in the latter part of December as the first soft opening. Certainly, we're opening great amenities with one of the largest pools. In fact, I think it's about as large as an entire cruise ship, if I recall correctly. So we're getting buzz. We're getting momentum. And I think, as Harry said, as we start to see more word of mouth on that to the latter part of this year and into early next year, I think we're going to continue to see strength and momentum build out of that.

Okay. And then maybe I can ask a question on the cost side of the mixed dynamics. So it seems like that as occupancy moves up, you get economies of scale. I mean, that naturally makes sense to me. But like, are you seeing the cost offset that you would expect? Because at the end of the day, I think you're really got, you're out, your whole thought process is around the spread between unit costs and net yield. So just are you seeing the cost, you know, offset as yields are kind of partially, there's a modest headwind from the mixed dynamic?

Yeah, Connor, I think it's across the board. You know, we continue to see margin expansion. You know, we've expanded margin this year by more than 150 basis points or 200 points, 600 basis points in 2023. That's in part to almost everything we're doing. It's not only the mix, the better, more efficient, closer to home itineraries. But more importantly, it's also the muscle and the scale that we continue to get that we've been demonstrating over the last two years. So I think when you put all that together, we continue to flex that muscle. We continue to improve. And of course, in part, to some of that is the mix. But that's starting to come into play now. When you look at the last 18 to 24 months, that has not been a mixed issue. That just means we've simply been better at delivering a better unit cost overall system-wide. So we certainly are seeing the fruits of that. We're bearing fruit, and we expect to continue to see that into 2026 and beyond.

And I just want to emphasize, not cost at the expense of product. Our get satisfaction scores and our future onboard bookings continue at record levels. It is super critical to get that message across.

Okay, cool. Thank you.

As a reminder, this is Star 1 on your telephone keypad. If you would like to ask a question, our next question is from Ben Chaikin with Mizuho Securities. Please proceed.

Morning, Ben. Hey, good morning. Maybe the first question is maybe a three-parter. Maybe remind us or refresh us. You mentioned 26 costs or subinflation. What are, I guess, part one, what are some of the specific opportunities you see Next year, you know, remember at one point during the investor day, you went through a couple of kind of like critical examples. I'm not sure if there's anything you can share next year. Part two, is higher Caribbean exposure a net benefit to cost or how should we think about it? And then part three, how should we think about the impact of occupancy as there should be around? I think it's like 200, 250 basis points of growth. I guess mechanically, is there any rule of thumb you have on the translation between occupancy to net cruise cost? Thanks.

All right, then I'm going to see if I can get all three of these. I think the first was on the 2026 detail and the larger opportunity. Look, Ben, we've been clear. In this business, there is no silver bullet to just snap your fingers and find a large cost. It is a deliberate and methodical way of looking at the business from the entire development process to the product delivery. We are focused on a lot of little things, and over time, that flywheel starts to turn, and we find more efficiencies across the board. We're focused on everything. But again, we've been doing this in a very disciplined and methodical manner. I think when you talked about Caribbean capacity, is that a tailwind to cost? Absolutely. Sailing closer to home obviously gives you some benefits in terms of the ability to deliver the product at a better scale and at a better unit cost. But again, that's all just part of the broader mix. And I think on the last part in terms of the occupancy, when we think about increased occupancy from thirds and fourths, that's typically children or the teenage set. There's very little marginal cost related to that. Obviously, that brings in higher revenue. But I think even when you look at our third quarter where occupancy increased by a point, Fourth quarter, our occupancy is increasing by a point. We're not seeing any significant shifts in the cost basis for that. So I think that's just another benefit and overall tailwind is we bring more of that third and fourth guest to our mix. We'll continue to improve on our overall unit cost.

Okay, Scott, that's very helpful. And then just for 26, a quick one. Obviously, capacity growth is higher in 26 than 25. Is there anything abnormal on the DNA side specific to the island investments we should consider? Thanks.

No, I think when you look at DNA and I think when you look at it historically, whether you're doing it on a gross or net percentage of revenue, I think it's going to be pretty consistent. We've been very clear that our investments in Great Sterb K generally have been modest. Our largest investment, obviously, is the pier. where that was around $150 million plus, and I think that gets depreciated probably over at least 30 to 40 years. I don't have the exact number on. So I don't think you would expect to see any sort of uptick in DNA as a result of the island investments. I will remind you, we do have 7% capacity growth next year, so we will be taking on two new ships, Luna in March-April, and then Prestige in the latter part of December of 26th.

Our next question is from Vince Cipio with Cleveland Research. Please proceed.

Thanks. I wanted to dig into the yield setup a little bit more for next year, and there's been a lot of helpful commentary so far, but I guess I wanted to take it in parts. First, I imagine you have close to half of next year booked, a good amount of the first half. Like, the core trend line that you're seeing in like for like, you know, any way to describe it. And then the second part, there's obviously some moving pieces. You already laid out GSC should be accretive, which is great and helpful. But the two other ones I just wanted to clarify. The first, new hardware, like accretive, dilutive, or probably somewhat neutral. And then finally, you know, this shift to the Caribbean. A lot of, you know, helpful commentary on, you know, occupancy should benefit, maybe some cosmetic dilutive impact to per diem. For the end of the day, like, does the shift to the Caribbean, a tailwind, a headwind, or neutral to yield in 26 as you sit here today? Thanks.

So... Try to get through all three parts if I remember everything, Vince. And by the way, good morning. Thanks for joining us today. So you are right. We are about half booked for next year. That's about where we would be at the cycle at this time. When you ask about core trends, we have come up with our algorithm that on this type of measured capacity growth, we're looking for low to mid single-digit yield growths. And I believe that our book position right now confirms that that will be obtainable, which, of course, we need to obtain in order to hit our charging the core targets, which we forcefully reiterate again today that we'll obtain. In terms of the creativeness of new hardware, listen, any time a new ship comes on board, we saw it with Aqua this year. We're seeing it with Luna next year on the NCL fleet. We absolutely see a modest tailwind, but keep in mind it's one ship in a 34-ship fleet, so it's not going to be a tremendous tailwind at the NCLH level. Certainly on the Oceana and region side, we have a new ship for Oceana this year, Allura, a new ship for region coming on the very end of next year, won't really impact 26 months. Those also function as a modest tailwind, So overall, yes, new ships are accretive, but again, it's just one ship in the overall fleet. On Caribbean, we absolutely view this, when you say a tailwind or headwind to yield, I'll make the question a bit broader. We view it as a tailwind to margin, which is more important to us than a tailwind to yield. So, yes, we believe Caribbean are good yielding cruises, but the more important thing is that we can deliver Caribbean at a higher margin than we can deliver some of the exotic itineraries in places like Africa and South America and Asia that these ships have replaced, especially the shorter three- and four-day cruises.

It's a really helpful overview there. And then maybe one final one, just as you shift more Caribbean in the business, probably books a little bit closer in, I would imagine. And when you watch that trend line in close-in bookings over the last 60, 90 days, how would you characterize it?

So, yes, these Caribbean cruises, both in general and certainly the three- and four-day cruises, do book closer in. And I think that was one of the factors why we've seen record bookings in Q3 and October. Clearly not the only factor, but one of the factors. I'd say the bookings have been nothing short of incredible. I mean, you know, the demand we're seeing for close-in up until a week of sailing even has been unprecedented from at least recent history. So we're very, very pleased with the strength of the consumer and their ability to book across the entire length of the booking curve, including up to the day before cruise.

Great. Thank you.

Our next question is from Patrick Scholes with Truist Securities. Please proceed.

Good morning, everyone. Two questions. One, can you give us an update on the progress of finding a new brand president? And then secondly, can you talk a little bit about the changes in selling strategy with the Oceana brand, specifically recent unbundlings? Thank you.

Yes, thank you, Patrick, and good morning. Listen, I'm the brand president. We are conducting an extensive search. We have been very pleased with the caliber of world-class talent we've been able to attract for this search. I'll say we're pretty deep into it now. No announcement today or probably the next week or two, but I hope we're going to be able to see someone soon. The most important thing for us is to attract a world-class leader that can continue on with the brand promise as we've been evolving it certainly over the last few quarters. On top of the other wonderful talent we have with our new CMO, new chief commercial officer, new head of technology, and other excellent internal and external candidates that we've brought into the brand to help evolve and make things, make NCL even greater in the future. In terms of the promo strategy for Oceana, I saw a lot of write-ups on it, but honestly, it was a relatively modest change. We've run a series, I'll call them of different promotions over the last year, and we've gotten very good data on what it is that customers value and are willing to pay for, which is one of the core strategies to provide guests with things they value and are willing to pay for. So the promotion we aligned with on Oceana, not really different that much in nature to what we've been doing recently, but really allows us to optimize the construct for our guests and maximize yields and margins. I will say I've been incredibly pleased both with the level of bookings and the consistency we've been seeing on Oceana. I mean, it's become almost like clockwork, that and the region brand in terms of their weekly bookings and revenue. So I find that as encouraging as anything else.

Thank you. Our next question. is from Andrew Dioria with Bank of America. Please proceed.

Hi, good morning, everyone. Maybe, Harry, thinking about these brand changes a little bit more strategically, how do you think about the timeline for repositioning these brands? I guess I think about particularly for Norwegian, how long do you think it takes to change that, the way you describe it, the brand familiarity with families? How long until you reach your targeted run rate?

So I think with region, we're already there. I think because the brand changes there were relatively minor. I'd say with Oceana, we're probably about two-thirds along the journey with the evolution of the Oceana brand to luxury and to focus not just on food but on destination service experiences. things that our guests truly value. TicketNCL is a slightly longer runway. I think I mentioned in my prepared remarks that we're going to be launching some new brand campaigns in Q1 that will certainly help us along. Clearly, the shift to families and the reliance or the focus, I should say, on GSC has already come forward as witnessed by our Q4 and 26 occupancy. So it's already beginning to take hold. My guess is on NCL by the middle of next year, I think we would have reached the relative runway consistent with when the second set of amenities open up on GSE. So I think that puts us in a very good position for Q3 and Q4. Although to be clear, we're happy with Q1 and Q2 as well.

Got it. Okay, that's helpful. And last one for me, just, you know, Mark, on the balance sheet, you obviously completed a very opportunistic, you know, refi in the quarter. When you look across your cap structure today, I guess, what are your priorities right now? Thank you.

Yeah, good morning, Andrew. You know, first and foremost, what we've said is reducing leverage is our number one priority. And we continue to look for ways to do that. Of course, margin expansion is the number one driver of that, which results in significant free cash flow. And we continue to see that, expect to see that to ramp up over the course of the next 24 months. So, of course, as we look at the remainder of our capital structure in terms of what's left on the debt side, we're always looking to be opportunistic and we'll continue to do so. And we'll continue to strategically make opportunistic trades where it makes sense and improves our overall structure and ratings.

All right. So with that, I want to thank everyone for today's earning call. For those of you listening, for those of you who participated, particularly pleased with our record earnings. our record revenue, our record EBITDA, our record future book position in terms of new bookings, and all the other wonderful tailwinds that the brand is undertaking. We look forward to sharing the journey ahead with all of you. Thank you all very much. Have a great day.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.