Royal Caribbean Cruises Ltd.

and only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone keypad. I would now like to introduce Blake Vanyer, Vice President, Investor Relations. Mr. Vanyer, the floor is yours.

Good morning, everyone, and thank you for joining us today for our first quarter 2025 earnings call. Joining me here in Miami are Jason Liberty, our Chief Executive Officer, Naftali Holtz, our Chief Financial Officer, and Michael Bailey, President and CEO of the Royal Caribbean Brand. Before we get started, I'd like to note that we will be making forward-looking statements during this call. These statements are based on management's current expectations and are subject to risks and uncertainties. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release issued this morning as well as our filings with the SEC for a description of these factors. We do not undertake to update any forward-looking statements as circumstances change. Also, we will be discussing certain non-GAAP financial measures, which are adjusted as defined, and a reconciliation of all non-GAAP items can be found on our investor website and in our earnings release. Unless we state otherwise, all metrics are on a constant currency adjusted basis. Jason will begin the call by providing a strategic overview and update on the business. Naftali will follow with a recap of our first quarter, the current booking environment, and our outlook for 2025. We will then open the call for your questions. With that, I'm pleased to turn the call over to Jason.

Thank you, Blake, and good morning, everyone. I am pleased to share our strong first quarter results and updated outlook for the year. During the first quarter, we delivered over 2 million unforgettable vacations at exceptional guest satisfaction scores and achieved financial results that exceeded our expectations. Likewise, wave season was the best in our company's history, putting us in a strong book position for the remainder of the year and for 2026. Clearly, consumers continue to choose our vacations because we consistently deliver the best experiences and provide value to our guests. As we look across the current macro landscape, we recognize that there is heightened uncertainty. However, research, including the direct surveying of our customers, continue to show that the propensity to cruise remains encouraging. The combination of the world-class experiences we deliver, continued strong secular tailwinds, and the persistent value gap to land-based vacation positions us well to navigate the current environment. I'll touch more on this in a little bit. We are certainly not immune to macro volatility, but what we're seeing on the ground in our bookings and the real-time spending occurring on our ships is that consumers are still prioritizing experiences, planning to spend more on them this year, and are seeking value that we are well-positioned to offer. At this point, it's still too early to determine how exactly the current macro environment could impact the broader economy or consumer behavior. What I want to emphasize is that we are focused on what we can control, delivering the best vacation experiences for our guests, optimizing revenue, managing costs, and executing on our long-term strategies. Over the past several years, we have taken decisive steps to strengthen our balance sheet and we continue to do so. We are in a very strong financial position, investment-grade balance sheet, strong cash flow generation, robust liquidity, and minimal near-term maturities, and we remain focused on maintaining financial flexibility. We are confident in our growth strategy and the incredible opportunity ahead of us, continuing to win a greater share of the growing $2 trillion vacation market as we further progress DELIVERING THE VACATION OF A LIFETIME INTO A LIFETIME OF VACATIONS. WE ALSO CONTINUE TO INVEST IN THE FUTURE OF OUR FLEET, OUR PRIVATE DESTINATION PORTFOLIO, AND THE GUEST EXPERIENCE. WE DO THIS ALL WITH THE BEST TALENT, AND I WANT TO THANK THE ENTIRE RURAL CRIMEA GROUP TEAM FOR THEIR PASSION, DEDICATION, AND COMMITMENT TO DELIVERING THE BEST VACATION EXPERIENCES RESPONSIBLY AND FOR DRIVING STRONG FINANCIAL RESULTS. Now moving to our results and outlook. We are very pleased with our first quarter results, which exceeded our expectations. Yields grew 5.6%, and we saw better-than-expected close-in bookings across all itineraries. Adjusted earnings per share of $2.71 in the first quarter was 23 cents higher than our guidance. Better revenue and favorable timing of expenses contributed to the better-than-expected earnings performance. Naftali will elaborate more on the first quarter results shortly. Now I'll provide some insight into the demand environment and wave season. During the first quarter, bookings outpaced last year across all products, resulting in the best wave season in the company's history. In the month of April, bookings for 2025 are outpacing last year, with close-in bookings trending particularly well. Our book position is in line with prior years at higher APDs. Onboard spending and pre-cruise purchases continue to exceed prior years, driven by increased participation in onboard activities and experiences at higher prices. All commercial channels are generating quality demand with particular strength and are direct to consumer channels. As always, we continue to possess a nimble and flexible sourcing model both geographically and demographically, with the ability to source quality demand all over the globe. We continue to be thrilled by the reception of our spectacular new ships, the enthusiasm for Star of the Seas, our second icon class ship, and Celebrity XL, the latest addition to the edge class lineup, have exceeded expectations, driving strong pricing and load factors. As we look at our current and potential consumers, we remain encouraged. While broader consumer spending moderated, vacation spend continued to grow as consumer sentiment around leisure vacations remained positive. Our customers continued to be engaged and excited about vacations. In research fielded in April, 7 out of 10 consumers told us that they intend to spend the same or more on leisure travel over the next 12 months. with spend on travel continuing to outpace major material purchases. And for 9 out of 10 consumers surveyed, value for money is crucial when making vacation plans. And this is where we continue to excel. Furthermore, when financial concerns impact lifestyle or spending, travel is not the first place consumers indicate they will pull back. Cruisers are more financially secure more likely to protect their travel budgets during times of uncertainty. We are very well positioned to deliver great vacations from multiple locations close to home for millions of people in the U.S., offering them extraordinary value through a range of itinerary options from three to ten days from Florida, Texas, California, the Northeast, and the Northwest. Our vacation experiences remain an attractive value proposition and leading guest satisfaction compared to other vacation alternatives. Consumers recognize that our brands offer superior value for money versus alternative options. That value is made up of our unique ability to give guests the opportunity to visit a variety of destinations in one trip, the convenience of having everything in one place, plus our high-quality onboard amenities and services and pricing that includes meals, accommodations, and entertainment. Now, let me provide an update on our outlook for 2025. Let me note that our guidance ranges are expanded compared to those we would typically provide and are based on current demand trends while also considering the complexity of the macro environment based on what we know today. Capacity is expected to grow 5.5% in 2025, driven by the introduction of Star of the Seas and Celebrity Excel, as well as the full year benefit of ICON, Utopia, and Silver Ray. Yield growth is expected to be in the range of 2.6% to 4.6%, supported by the incredible appeal of our new ships, the performance across our existing fleet, and the continued success of our private destinations. Full year adjusted earnings per share guidance is now expected to grow approximately 28% and be in the range of $14.55, to $15.55. We are benefiting from better than expected first quarter performance and favorable foreign exchange and fuel rates. While we remain cognizant of macroeconomic uncertainties, recent booking trends, discipline cost management, and a strong balance sheet positions us well to deliver another year of strong earnings growth and cash generation. Our proven formula, of moderate capacity growth, moderate yield growth, and strong cost control continues to drive superior financial performance. And we remain focused on executing our perfective performance program, targeting a 20% compound annual growth rate in adjusted earnings per share through 2027, and return of invested capital in the high teens. We are relentlessly focused on delivering and innovating the best vacation experiences on the planet. And a key differentiator for us is our powerful commercial flywheel, where each guest experience fuels deeper loyalty and more engagement, which enables us to give guests the vacation experiences they want so they keep coming back. It starts with our exceptional portfolio brands, each a category leader, designed to cater to the diverse needs of our global guest base. We amplify that strength with industry-leading ships, exclusive private destinations, and continuous innovation that elevates every aspect of the guest journey. Over the next three years, we will introduce seven game-changing new ships, including Star of the Seas and Celebrity XL in 2025. We'll launch Celebrity River in 2027 and expand from two to seven exclusive destinations. We deepen customer relationships through data, personalization, and a frictionless experience that makes planning and enjoying a vacation seamless. Our unified loyalty programs connect all our brands under one ecosystem, encouraging repeat travel and unlocking more opportunities to engage across ocean and river cruising, along with our exclusive destinations. The ecosystem is working. Members of our loyalty programs accounted for nearly 40% of our bookings last year, with cross-brand bookings increasing. Loyalty members are more likely to book direct spend 25 percent more per trip than non-members on the digital front bookings and our app have doubled so far this year and loyalty members are more likely to book in the app than non-loyalty members over the last 10 years we've improved the rate at which guests rebook within three months by 1.7 times and increased net promoter score by 15 points These results have translated into 50 plus percent net yield growth over that time period, and we're just getting started. Looking ahead, we are incredibly energized by the momentum we're building. These ambitious initiatives reinforce our flywheel and strengthening our ecosystem as we turn the vacation of a lifetime into a lifetime of vacations. I am incredibly proud of the teams at the Royal Caribbean Group for their passion, and relentless focus on delivering great vacation experiences for our guests. We are executing from a position of strength, and I remain optimistic about our ability to capitalize on the many opportunities that lie ahead. And with that, I will turn the call over to Naftali. Naft?

Thank you, Jason, and good morning, everyone. I will start by reviewing first quarter results, which were above our expectations. Adjusted earnings per share, were $2.71, 9% higher than the midpoint of our guidance. We had a great first quarter that was driven by better-than-expected pricing on close-in demand and 8 cents per share of favorable timing of expenses. We finished the quarter with a net yield increase of 5.6% in constant currency compared to the first quarter of 2024, 60 basis points above the midpoint of our initial guidance in late January. Most of our yield growth was driven by strength in ticket pricing versus 24. Net cruise costs, excluding fuel, increased 0.1% in constant currency, 175 basis points lower than our initial guidance, driven entirely by timing of expenses that will roll into the second quarter and some of the rest of the year. Adjusted EBITDA margin was 35%, 360 basis points better than last year, and operating cash flow was $1.6 billion. As Jason mentioned, we had a record weight season and our book load factor is in line with prior years and at higher APDs. Bookings in the month of April continued at a higher pace than last year, including strength in close in demand and cancellation levels remain normal. The Caribbean represents 57% of our deployment this year and 49% of capacity in the second quarter. In 2025, we offer Caribbean sailings from nine U.S. home ports, Miami, Fort Lauderdale, Tampa, Port Canaveral, Galveston, Baltimore, Cape Liberty, San Juan, and New Orleans, and a variety of sailing lengths. Our leading hardware and destinations strengthen our competitive position in this market. with the introduction of Star of the Seas in late August, Celebrity XL in November, and the opening of Royal Beach Flat Paradise Island by the end of this year. Europe will account for 15% of capacity for the year and 20% of capacity in the second quarter. Alaska is expected to account for 6% of total capacity and 9% in the second quarter. We have also some of the best hardware in the region with Celebrity Edge, two quantum-class ships, and Silver Nova. Now, let me talk about our guidance for 2025. Our proven formula for success, moderate capacity growth, moderate yield growth, and strong cost discipline is expected to drive significant earnings growth and higher cash flow generation this year. Moving to revenue guidance. We are increasing our guidance for the year compared to our prior one in January. We did expand our typical guidance ranges to account for the broader external factors and the complexity of the current macroeconomic environment. For the full year, we expect yield growth of 2.6% to 4.6%. As a reminder, first quarter yield growth disproportionately benefited from both the timing of dry docks and new hardware, a full quarter of ICON in addition to Utopia and Silver Ray. The cadence of yield growth throughout the year, as expected, is driven by the introduction of Star of the Seas and Celebrity Excel in the third and fourth quarters, respectively. The impact of the timing of new ship deliveries on yield growth in the second half of this year is a headwind of approximately 140 basis points. Full year net cruise costs, excluding fuel, are expected to be negative 0.1% to up 0.9%, 10 basis points lower than our prior guidance, as we remain focused on efficiency, enhancing margins, and maximizing cash flow. While we manage our costs more on a yearly basis, the cadence of our cost growth varies throughout the year. This is driven by timing of dry docks, ship deliveries, and the ramp-up of costs related to our acquisition of the Costa Maya port and other destinations. Second and third quarter cost growth is expected to be higher than the first and the fourth quarter, with the third quarter being most impacted by 280 basis points from these headwinds. We anticipate a fuel expense of $1.14 billion for the year, and we are 59% hedged at below market rates. We are benefiting from the current low fuel rates and have capitalized on this opportunity by executing hedges for the upcoming years at very favorable rates. Based on current fuel prices, currency exchange rates, and interest expense, we expect adjusted earnings per share between $14.55 and $15.55. The $0.55 increase compared to our prior guidance is driven by a 37-cent benefit from FX and fuel rates for the remaining of the year, a 5-cent benefit from a lower share count due to share repurchases, with the remainder attributed to the outperformance in the first quarter. We also expect 15% growth in adjusted EBITDA and 210 basis points growth in gross EBITDA margin. This positions us to accelerate our cash flow generation, which allows us to continue investing in our strategic initiatives, maintaining investment-grade balance sheet metrics, and expanding capital return to shareholders. Now, let me comment on second quarter guidance. In the second quarter, we expect capacity will be up 6% year-over-year and a net yield growth of 4.3% to 4.8%. Roughly half of the yield increase is driven by new hardware, and the rest is driven by higher rates and load factors on like-for-like hardware. Net cruise costs, excluding fuel, are expected to be up 3.7% to 4.2%. This includes higher dry dock days in the first half of the year compared to last year, and 140 basis points impact from first quarter cost timing shifts. Taking all this into account, we expect adjusted earnings per share for the quarter to be $4 to $4.10. Turning to our balance sheet, we ended the quarter with a strong $4.5 billion in liquidity. We're in a very strong financial position and will continue to further strengthen the balance sheet. During the quarter, S&P global ratings upgraded our credit rating to investment grade, reflecting the strength of our financial position consistent performance, and disciplined capital allocation strategy. We are very pleased with this acknowledgement of the strong trajectory of the business and our commitment to strengthening the balance sheet. Also during the quarter, we exchanged $213 million of our outstanding convertible notes for cash and stock. This transaction reduced our fully diluted share count by 1 million shares. We have $110 million left outstanding that we plan to settle at maturity. During the quarter, we also repurchased 1 million shares under our $1 billion share repurchase program. As of March 31st, we have $759 million available for repurchases under the current authorization. We will continue to opportunistically buy back shares while ensuring a strong balance sheet. We have very limited maturities left this year, all related to ship amortization payments that we plan to repay with cash flow. We also expect to further reduce leverage to below three times by the end of 2025. In closing, we remain committed and focused on our mission to deliver the best vacation experiences responsibly as we work to deliver another year of solid returns. With that, I will ask our operator to open the call for a question and answer session.

At this time, if you would like to ask a question, press star followed by the number one on your telephone keypad. We ask that you limit yourself to one question and one follow-up, then re-enter the queue for any additional questions you may have. Our first question comes from the line of Matthew Voss with J.P. Morgan. Please go ahead.

Thanks, and congrats on a nice quarter. Thank you. So, Jason, could you speak to drivers of the better than plan performance in the first quarter, maybe elaborate on business in April and just walk through the company specific initiatives and continued investments that you have that you think could insulate results and win multi-year market share?

Sure, Matt. Hope you're doing well. So I think just starting off in the first quarter, we have seen this kind of continuous trend that inside of a quarter, we see kind of an uplift in demand as we get very close in. And not only do we see an uplift in demand, we're also able to raise our pricing during that period of time. And there are also high quality customers that are also spending well on the ship. So the driver in the Q1 is really just really strong close in demand that we've seen. And you've heard us talk about in April and in the second quarter, we're seeing that continuous trend. The interesting thing about the trend is, of course, our revenue management tools take those things into account and then try to predict in the next quarter that it's going to be at a certain level. And it keeps elevating, which I know is probably counterintuitive to some of the reporting around consumer competence and so forth that's out there. I think the reason for that is several factors, one of which is we're obviously incredibly focused on our flywheel, you know, How do we get our guests to come with us more frequently? So the investments we've made in loyalty, the investments we've made, even in our app and online, so that it makes it easier and easier, whether it's through us or through our travel partners to do business with us, gets easier and easier. And then we're getting more and more reps out of those investments that we're making. I think behind that is also, and we've seen this for a while, is just a flight to quality. when you're delivering an exceptional vacation experience with net promoter scores that are above 70, you get a very strong advocacy and you get customers that want to continue to sail with you. And I think that's why we're seeing, again, another, we saw an outperform quarter in Q1, and why I also think we're bucking some of the trends that are very intuitive when you look at consumer confidence and so forth. The combination, I think, of what we're delivering combined with the value gap to land-based vacation, which, as everyone on this call has heard me over time, is frustrating to have that gap. But in times like this, and we've seen this in other markets when there's economic concerns, that value gap is actually a pretty good buffer for us delivering our vacation experiences and our guests willing to pay for those experiences and for us to meet our financial expectations. I also think when we think about the longer-term opportunity, the investments we're making, obviously our destination portfolio has been exceptionally successful. We're going to basically be adding a destination or two over the next several years. That's going to drive tremendous value for our shareholders. It's a great margin on business for us, and it also enhances the guest experience. We have a lot of great ships coming online that are, you know, are very, very well received as are very focused and designed to who the customer of today and the customer of tomorrow is. We've got a lot of investments on the technology side. So obviously our yield management program has a tremendous amount of AI inside of it, and that gets smarter and smarter. We're installing a new travel platform that will be centered around the customer instead of being centered around a cabin. And then we have a lot of other, I would say, modernization activities and so forth that are taking some of the great learnings from the newer ships and rolling them back on to some of our legacy fleet. So we're really excited. We all appreciate that there is some noise in the environment, but we are seeing, I think, all things considered, very strong consumer trends for our businesses.

That's really great color. And then maybe, Naftali, if you could just walk through the areas of this year's guidance where you embedded expanded assumption ranges tied to the current macro backdrop. And just multi-year, any change in thinking to your outlined 20% earnings growth CAGR based on anything that you've seen to date?

Yeah. Hi, Matt. So really, if you look historically, at this time of the year, we actually narrowed the range. So we started roughly around 50, sorry, 100 basis points on yield in the beginning of the year. And this point, we are around 50. So we kept it at 100. So that's really where the difference is. Obviously, cost is something that we feel we can control very well. So that hasn't changed. And obviously, the earnings, we've expanded that range. No, obviously, we just announced Perfecta just a couple of weeks ago. And so we feel very good about, as Jason said, about the long-term opportunity to continue to win share for a very, very large and exciting $2 trillion vacation market. We continue to invest on our strategies. We believe our strategies work. And so we feel that we are also in a great financial position to continue to capitalize on that opportunity.

That's the block.

Our next question comes from the line of Ben Chaikin with Mizuho. Please go ahead.

Hey, good morning. Thanks for taking my questions. You know, you have NASA opening in December. Naftali, I think on the last call you said this is the greatest weekend in the history of cruise. Any updated thoughts on the pricing of that day pass?

Thanks. Hey, Ben. It's Michael. Yeah, the greatest weekend since in the world is of course utopia of the seas sailing out of port canaveral to perfect day and soon to be the royal beach club so and we are absolutely delighted with the performance of that product it has been outstanding so very pleased with that and it truly is the greatest weekend in the world The Beach Club pricing strategy, we have a big event that we're hosting in New York City in a couple of weeks. And we'll be talking about the destination portfolio and sharing some of the images and concepts that will be coming alive in the coming years. And particularly, we'll be talking about the Royal Beach Club in Nassau. And we'll be talking during that presentation about how we're thinking about pricing. We're very, as Jason mentioned, I'm now super excited about this portfolio that we've got coming online over the next few years. And the first one out of the gates, of course, is the Royal Beach Club Nassau.

Understood. I appreciate that. And then one maybe clarification. Why are the new ships a headwind in 3Q and 4Q? I think you mentioned 140 basis points in 2H to yield. I guess simplistically, I would have thought the ships are a positive. Is this just Basically like test cruises, ramping up APCDs without the associated full revenue ramp.

Yeah, let me just clarify. So it's really about timing of when these ships enter into service. And, you know, we broadly say second, sorry, third quarter, but really that there's timing into it. So if you think about Utopia, it entered pretty early in July. Star is actually entering towards very late in August. And so you have both lower APCDs as well as less of a, you know, impact from the load factors ramping up. So that's really the headwind that is mostly on Q3. Now, Q3 also on an absolute dollar is the highest in the second half, so it weighs a little bit more on the second half of the year. Understood. Thank you very much.

Sure. Our next question comes from the line of Stephen Wisinski with Stifel. Please go ahead.

Hey, guys. Good morning. So, Jason, if we go back to revised... guidance for the rest of the year. You know, I guess I would say I'm probably a little surprised you guys didn't take a, you know, a more conservative view around onboard spending and or, you know, close-in pricing. And, you know, I know you mentioned, you know, the feedback that you've gotten from, and your data from your customer base, you know, does remain positive, but clearly, you know, onboarding close-in can change very quickly. So I guess my question is, you know, if there was going to be some pressure from your customer base, do you think the The low end of your guidance is now set low enough that even if there was going to be some pressure, it would capture that. And look, I know that's kind of a tough question because we have no clue how bad spending levels would have to be before it goes outside that range. But I want to get your kind of feedback there or take on that.

Yeah, look, I think there's obviously there's a lot of companies that are doing different things with, you know, there's a heightened level of uncertainty that's out there. When we're guiding, Steve, the best that we can do is look at how we're trading each and every day and also how our customers are spending and where we see resistance and where we don't see resistance in what we're doing. I think that when we look at how we've guided for the balance of the year, obviously, we needed to update for Q1. We needed to update for FX and fuel, but we did not update for the back half. And so typically what you would see is when we see trends like we saw in the first quarter, you would start to think about how that's going to impact the balance of the year. So I think we've tried to take a little bit more of a conservative position that's informed by how we see our guests trading with us each and every day. And then we've tried to extend that range to think about how we look at a maybe a softer side and maybe a more optimistic side, you know, to help kind of investors understand how we see the range of it. As you mentioned, you know, there is uncertainty, and so things could change, obviously. But I think we feel, I mean, we're, you know, we're over 86% booked for the year. So I think we have pretty good visibility. We see really no change in cancellation rates. We see no real change in how our consumers are acting outside of that. They are a little bit more short-term focused, and we see that in the elevation of bookings for the second quarter.

Okay, gotcha. That's good color, Jason. And then second question, one of the questions we get a lot from investors is around discounting and what we would call kind of promotional work in order to drive demand. You know, as we think about bookings, and maybe not so much for this year, but as we think about, you know, into 2026 and beyond, can you maybe help us think about, you know, how you would attack, you know, using lowering pricing versus other tools in order to stimulate demand if there was going to be a slowdown in bookings? And then, you know, Jason, I'm not sure you mentioned this in your prepared remarks, but can you give us some color around what you're seeing so far for 2026 and maybe how you're booked for next year versus, you know, what you would call your optimal, you know, book position?

Sure. So first and foremost, you know, we are very religious about price integrity. You know, we've been through different cycles before and ensuring that we have a high level of price integrity we think is very important. And I think the combination of all the tools that we have in place, having that kind of global yield management platform and being able to source from different parts of the world and different parts of the U.S. on a dime, I think positions us really, really well. But I would say, Steve, that what we generally view is that we have a pretty good holster of different promotional tools and so forth that we use and we engage all the time in the marketplace. But I think we would lead with price integrity and and we would obviously want to focus on making sure that whatever we're putting into the marketplace does not have something that we believe will impact the integrity of our brands or how we're managing revenue into the future. I did comment on 2026, you know, that, so one, you know, the booking window is about a week shorter, but that's really being driven by close in demand, and our book position, for 2026, I said at this point, is in line with same time last year on a volume standpoint. And of course, obviously we have, and that's on a percent. So we, you know, obviously we have more capacity next year and at higher prices.

Okay. Gotcha. Thanks, guys. Appreciate it. Thanks, Steve.

Our next question comes from the line of Lizzie Dell with Goldman Sachs.

Please go ahead. Hi there. Thanks for taking the question. Congrats on a good set of earnings. Just curious, in terms of the inventory you still have to fill for 4Q and for 2026, has there been any difference in terms of like the type of bookings, whether that's like Europe versus U.S. itineraries or different brands, you know, strength in contemporary versus premium, short duration, drive-to, anything like that that you would call out that's kind of different than usual trends?

There's really nothing specific, Lindsay, that I would call out what we're seeing by market. Obviously, some of the things that you mentioned, that you read out there about things a little bit softer for markets like Canada. That's there, but for us, it's very immaterial to our business. But when we look at whether it's sourcing from whether it's North America, Europe, or Asia, for the products that they source to, we feel very good in terms of their booking activity. And I think we've also been studying, obviously, we have brands that are in different segments And so we're looking at, is there any behavioral change in the family market? Is there any behavioral change in the luxury market? Um, you know, cause there are different consumers, you know, they have different balance sheets. Um, and they do tend to act and behave differently, but from what we can see so far, um, um, you know, and so far meeting, you know, as of, as of an hour ago, you know, they, you know, they continue to, um, you know, be focused on their vacation experiences, making sure that they planned and they're getting the vacation experience that they're, that, that they want. I think there's just a general recognition that there is this value gap and potentially they're trading more for a more known all-inclusive experience, which is why I think we're seeing trends that are more favorable than what we might see with other travel peers.

Got it. That makes sense. And then I guess just thinking about the makeup of the yield outlook for this year, obviously you've been getting such great premiums on the new ships. It's been a big driver i'm curious any color you can share of like the contribution of new ship premiums versus like for like pricing whether you distill a bit of private island maybe less so this year but in that but just you know is like for like pricing still up year on year and just any way to kind of think about the relative contribution of each of those kind of blocks i suppose.

Yeah, so, hey, Lizzie. So I said that in the first quarter it was roughly half and half between like for like and new hardware. It's pretty consistent throughout the year except for the third quarter, as I mentioned, because of the timing of the new ship, start of the seas, that obviously is a little bit less so and mostly like for like. So it's pretty consistent, excluding that piece in the third quarter.

Got it. Thank you. Our next question comes from the line of Brant Montour with Barclays. Please go ahead.

Good morning, everybody. Thanks for taking my question. Just to follow up on the near-term demand commentary, you guys see a lot of data from your loyalty program now that your loyalty program is 40% of your business. You can track customers and where they're going in the system. Are you seeing anyone trade down between ships, between brands, just looking for more value within the system?

I'll just be crisp about it. No, Brent. They're continuing to behave how they normally behave. We've even been watching, you know, it's not just about the booking in itself. It's also the journey they go through when they're researching and so forth. Are they looking for alternatives that are less, and we're not seeing that either occurring at this point.

Okay. Thanks for that, Jason. And then another question, sort of recession scenario type of question, but your load factors are in line with prior years for this year, for next year. One of your larger peers is running their booked position ahead of prior years. And so the question is, you know, if you go into a slower bookings environment, would you be willing to – how much would you be willing to flex your load factors in order to protect price, and if that's something that you'd even need to do or if there's other levers you could pull?

Well, I don't think – I mean, you know, it's tough to deal with hypotheticals. I think that we're obviously focused on optimizing – our revenue, but at the same time maintaining price integrity. So I don't have any answer on how much load factor we would give up. I think what we've been trying to do is actually increase our load factor. We've been outfitting our legacy ships with more capabilities to take on more load factor. Our new ships are able to take on more load factor. And so we're trying to maximize that. And it's not about load factor to get more people in. It's actually to bring more value to the vacation experience for our guests, especially our families and multi-generational. Instead of having to buy two cabins, they're able to maybe get their family members into one cabin because we've been able to increase the load factor inside that cabin. And, of course, because of the demand that we have and the flywheel that we have and the loyalty system we have, we're able to kind of maintain that momentum and get more and more reps out of our loyalty guests. And so that's, you know, I don't really know what the hypothetical answer to it is, but I lean into that we do look to obviously maximize our load factor, but also not at the sacrifice of price integrity.

Got it. Makes sense. Thanks, everyone.

Our next question comes from the line event, CPO with Leland Research. Please go ahead.

Thanks. Maybe as a follow-up to Brant's, You know, it sounds like your April bookings were quite strong. There has been some reports out there of a little choppier April. So just be curious, you know, what you see out in the marketplace. You have, you know, new leadership across all three major cruise lines going through what potentially might be some choppy waters. You know, jury's still out. But up to this point in time, how do you think the industry has been navigating through the last 30 to 60 days from a pricing perspective?

Yeah. Well, I'm about three and a half years into this. I don't know how new I am. If you can call me young, that would be great as well. I mean, first of all, you're also dealing, I think, with a set of of industry leaders that, while they might, you know, be relative, if three and a half years is new, then, you know, I guess the other ones might be a little bit newer. But we've been in this industry for a long time and might continue to see, I think, pretty rational behavior, everyone generally leading with price integrity. And I think that's, you know, it's tough to get a read on it because I think there's been a lot of high-quality demand that the industry is continuing, you know, to see. And I think it goes back to what we keep pressing on is that this isn't about share or I think volume in the cruise industry. This is about how small cruise is to the broader travel and leisure industry. And the focus, and I think we're all collectively focused, though I can't speak for the others, is how do we close that gap to land-based vacation? And how do we get that extra rep from land onto our ships? And I think that's That's kind of what the vision and the focus is, less about stealing share from each other on the cruise industry side. And I think that combined with the value gap, I think, is why you're seeing a difference in behavior. I just want to comment on what you referred to on the choppiness. I mean, everybody gets their sources from different places, but I think you should take our commentary – around April to describe what we're seeing. And that may be, you know, seen differently by different channels as well. But I just wanted to make that point.

Yeah, that's really helpful clarification. And then maybe for NOS, just around capital allocation, they recently announced the share repurchase plan. Just thoughts as you balance what you're seeing on the macro front with you know, returning capital versus showing up the balance sheet. How are you thinking about that and any change to the capex plans in light of what you're seeing out there?

Yeah. So first, I'll start by saying that we feel very good about financially and this balance sheet and where we are. We have made, as you know, a lot of effort over the last couple of years to make sure that we get to the place where the balance sheet is um is is strong so investment grade uh you know now rated um we have a very strong liquidity we're generating very healthy cash flows. And so we feel pretty good about where we are. And so as we look at the opportunity, we feel that there's so much opportunity to kind of win the share of the $2 trillion market. And we do want to continue to invest. We are very confident with our strategies. And we have a very well articulated and defined capital investment over the next couple of years. And obviously, it's articulated in perfecta. So that we will continue to do, and I think the balance sheet is very good to support that. We do acknowledge that also there is supplemental to the investment because we are focused on growth and we are a growth company. But we do appreciate that there is excess cash flow. So we've restarted the dividend. We've increased it three times since the summer of 2024. We feel we're in a very good spot right now offering competitive dividend and we'll continue to evaluate as things come by. And then the share repurchases are opportunistic. And so we did feel that this quarter, we had an opportunity to recapture some shares. And we've done that. And we'll continue to evaluate it opportunistically. And of course, it's important to know that we are very focused on the balance sheet. So, you know, we will not compromise the balance sheet for that. But we feel in a very good position. And we'll continue to evaluate those share repurchases. Awesome. Thanks.

Our next question comes from the line of Robin Farley with UBS. Please go ahead.

Great, thank you. Just circling back to your comment that the month of April, you said bookings for 2025 are outpacing year over year. And just thinking about what that might imply about 2026 bookings, I know you said the load factor for 26 is in line with the same time last year, but is it fair to say it's still above sort of historic ranges, right? So even if maybe the focus of bookings from the consumer today is on the close-in more than 2026. Is it fair to say there's, you know, still room for that load factor to come down? In other words, if, you know, you can sort of wait out a little bit of uncertainty here if the consumer's, you know, waiting a little bit to be more aggressive with 2026? Thanks.

Yeah, sure. So our commentary around April represents, you know, our future bookings. So I'll leave it there as it relates to whether it's 26 or 27, because we are booking some things for 27 at this point in time. And I think on the load factor or the booked position for 2026, Robin, the way that I would look at this is, you know, you heard me say this in the beginning of this year. I said it towards the end of last year and also towards the end of of 2023 is I think we always have some level of regret that we're too booked going into the calendar year, and we leave revenue on the table. So I think we feel very good being booked in line with same time last year. Our revenue management models say that's where we should be booked. And of course, we're booked at higher rates. Yeah, load factors are a little bit lower. That's okay, because it is substantially higher on a book position than if you were to look back in, you know, the 2000, you know, 15 and, you know, 10 years ago, you know, the book position is much higher. But we typically do have a level of regret that we would have had an opportunity to grab more revenue or optimize more revenue if we would have waited a little bit longer.

Great. No, it totally makes sense. Thank you. And then maybe just one quick follow up. Just noticed that capacity growth rate in 2026 is just like slightly lower growth rate than it was previously. Is that just sort of dry dock scheduling or like a ship delivery changing by a few weeks, something like that?

Yes, Robin, it's really a rounding. And this is exactly what you said, some of the refinement of dry docs, some of the specific entry points of the new hardware. And it's not 100 basis points. It's much smaller. It's close to 30 basis points.

Oh, okay, great. Yeah, it shows up as like a point in the release. So, no, that's really helpful. Exactly. Thank you. Thanks.

Our next question comes from the line of Connor Cunningham with Milius Research. Please go ahead.

Hi, everyone. Thank you. You shared some great survey stats, I thought, at the beginning of the call. And I think you mentioned that 9 in 10 people that you survey cite the relative value of cruising in general. So I was curious, you know, we're early days in the potential downturn here from an economic standpoint. Like, how has that moved up your consumer's priority list versus like other secular opportunities that you see within the space. I'm just trying to understand how much more insulated your outcomes could be relative to other forms of travel that are out there citing, you know, more difficult backdrop in general.

Thank you.

Yeah. Hey, Connor. Yeah, I mean, your value is always an important consideration. It is at a higher level than what we have historically seen, but it's only moved up, you know, a position or two on that list. You know, I think that one of the things that, you know, that we've been trying to close is that value gap to land-based vacation and the appreciation of so much more you get out of a cruise experience than you do by land-based. And I think it's, but it does serve in times like this when there's maybe a greater level of uncertainty. It does help us, you know, navigate, you know, some of, you know, maybe some of those concerns that might be out there from the consumer perspective. Because they know how much value they get out of it. They have a sense on the bookends on what it will cost them and their family or friends to be able to do it. And they know they're going to get a great experience out of it. And I think those are the combination of them being able to build memories and experiences with their friends and family, which are very high on that list. Visiting locations that they haven't been before is very high on that list. And value for money is very high on that list. And it's a little bit elevated versus what we've seen in the past.

Okay. And then maybe just going back to the, to the cap allocation commentary, I'm just trying to, I know it's early days on the buyback and you guys conviction level continues to improve basically every quarter. And you have a, you know, pretty robust outlook for the next couple of years. So why, why wouldn't we be leaning in really hard on the buyback in general? It just seems like there's a mismatch in what you're communicating at times to what the market is doing. So just any thoughts there on why, why we wouldn't lean in or maybe you would. Thank you.

Yeah. Yeah. So I think, I think the main driver of it, I think just to, just to, I think to be clear about it is that, you know, we're, we're still saddled a little bit with some, some of the covenants from during COVID because we lost a lot of equity in the, in the, you know, in the, in the balance sheet in the P&L that's still being built up. And so there's still some net worth, you know, covenants that we have to manage around. And so it's, you know, that $1 billion announcement for the year is based, you know, meant to be kind of smoothed out, not because of the opportunity that might lay in front of us on the stock side, but some of it has to do with just the timing of that net worth calculation and the cushion that's on top of that. you have to make sure that we don't take on some type of an issue. That's really the driver on why we would not have bought more as an example. And then we take advantage of opportunities that we did with the converts that Naf and his team did that allowed us to grab some more of those shares. What I will tell you is all the dilution that we had to incur, which again is a fraction of others, is very personal to us, and we're focused on how do we recapture it as soon as we can.

Okay, appreciate the detail. Thank you.

Our next question comes from the line of James Hardiman with Citi. Please go ahead.

Hey, this is Sean Wagner. I'm for James. The growth in occupancy is increasingly noteworthy. How should we be thinking about occupancy in the context of the 2025 guide and And I guess that opportunity going forward as you add the ICON class ship every year with what we know about the load factors on those ships.

Yeah, so I think we've articulated in the past that you know, we feel that there's a great opportunity for both for existing ships, right? So retrofitting some of the rooms with some higher ability to take bigger occupancy and capacity. And then also with the newer ships, they are accretive to our overall average load factor. And so we have icons, we have utopia, right? These are much higher occupancy. than the average. So as we continue to add those shifts, that will inch up the load factor. And at the end of the day, we're trying to maximize yield, right? And that's both load factor and price.

Okay. And for the 2025 guidance, what is your assumed occupancy for the year?

Yeah, we don't really... kind of guide on occupancy just on yield, but it's consistent with kind of how we're trending here.

Okay. Fair enough. And I guess, what are you assuming for your equity income line in the context of the full year guide? Do you expect that growth to keep up with the EBIT growth or as far as variability from here forward, do you expect that to flex up and down commensurate with your full year guidance?

Yeah, I think it's really consistent throughout the year, so there's nothing specific to call out.

Okay. Thank you very much.

Our final question comes from the line of Xian Zhou with BNP Paribas. Please go ahead.

Hi, guys. Thanks for the question. On 1Q, you kind of beat the net yield guidance, and then 2Q looks like a nice guidance as well on net yields. but the full year net yield guidance on constant currency may be up just a little bit. I'm just curious how you're thinking about 2H and if that's changed at all versus 90 days ago.

Yeah, no, as you can see, we haven't really changed our yield guidance for the year. It was up slightly, basically taking into account the outperformance in the first quarter. And so we made the comments around the first quarter where we disproportionately benefited from timing of new hardware. If you remember last year, ICON came in. during the first quarter and was ramping its load factors. We did not have Utopia, so there's a lot of contribution from that timing in the first quarter. And then on the third quarter, I made these comments earlier that there's also a headwind this year from the timing of Star entering into service and just the year-over-year comp, both from ABCDs as well as just the load factor ramp up. there's kind of that cadence throughout the year. And there are the things that we're trying to point out of how they are trying to impact. But, you know, if you kind of normalize for that, it's pretty consistent throughout the year. And, you know, our formula is very clear, right? Moderate capacity growth, moderate yield growth, strong cost control. That's our formula for success. That's how we were managing the business. And so that's pretty consistent this year.

Great, thanks. And then maybe just on another follow-up on the booking trend, any kind of differences between returning customers versus new customers? Are you seeing any differences there? You mentioned kind of strong loyalty. But, yeah, I'm curious, any other thoughts?

No, I think the only thing that we would – the reason why we pointed out the point on the loyalty side is we're getting more reps out of our loyalty customers. And some of that is also just cross-branded. opportunities that are being enabled by our loyalty program. But demand from new to cruise and first to brand is exceptionally high. There's just a creation of greater competition for our inventory because of the successful activities that are coming from our loyalty program.

Great. Thanks, guys. Good luck.

And I'll now turn the conference back over to Naftali Holtz, CFO, for closing remarks.

Thank you.

We thank everyone for your participation and interest in the company. Blake will be available for any follow-ups. We wish you all a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.

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