Norwegian Cruise Line Holdings Ltd. · NYSE:NCLH
Norwegian Cruise Line — Investor Day (May 2024)
116 slides from Norwegian Cruise Line's investor day presentation, May 20, 2024
Slide 1: Charting a New Course
2024 Investor Day Charting a New Course May 20, 2024
Slide 2: Welcome
Welcome Sarah Inmon, Head of IR 2
Slide 3: Forward Looking Statements
Forward Looking Statements Some of the statements, estimates or projections contained in this presentation are “forward-looking statements” within the meaning of the U.S. federal securities laws intended to qualify for the safe harbor from liability established by the Private Securities Litigation R
Slide 4: Today's Presenters & Agenda
Today’s Presenters & Agenda Time Topic Speaker 9:00 Introduction Sarah Inmon, Head of IR Charting a New Course Harry Sommer, CEO Driving Top-line Revenue David Herrera, NCL President Sarah Inmon Harry Sommer Growth Head of Investor Relations President & Chief 10:00 Break & Corp. Comms. Executive Off
Slide 5: Charting a New Course
Charting a New Course Harry Sommer, CEO 5
Slide 6: Charting a New Course
Charting a New Course NCLH is a compelling long-term investment opportunity Great Industry. Great Brands. Great Future. Superior fleet and product, coupled with a clear strategy and strong underlying industry dynamics Focused on Execution Relentless focus on Net Yield accretion, cost management and
Slide 7: 2026 Targets
2026 Targets Adj. Operational Adj. EPS Net Leverage Adj. ROIC EBITDA Margin ~39% ~$2.45 Mid 4x 12% Approaching >30% CAGR Strengthening the Record levels historical margins from 2024 balance sheet 10% GHG Intensity1 Reduction from 2019 baseline (1) GHG intensity is measured by MTCO2e on a per Capacit
Slide 8: NCLH at a Glance
NCLH at a Glance 19 Ships | ~56,000 berths 7 Ships | ~6,300 berths 6 Ships | ~4,100 berths ~85% of annual bed days ~10% of annual bed days ~5% of annual bed days $9B+ $2.3B $1.42 2.9m 32 13 2024 Expected 2024 Expected 2024 Expected 2024 Expected Current Ships Current Ships Revenue1 Adj. EBITDA1 Adj.
Slide 9: Experienced, Energized and Aligned Management Team
Experienced, Energized and Aligned Management Team 30+ New to role in 2023 years New to team in 2023 Years = industry experience Harry Sommer President & Chief Executive Officer Brand Presidents 9+ 20+ 20+ years years years David Herrera Andrea DeMarco Frank A. Del Rio President, Norwegian Cruise Li
Slide 10: NCLH President & CEO: Harry Sommer
NCLH President & CEO: Harry Sommer 2023- Present President and CEO 2015- 2023 President Norwegian Cruise Line President International EVP International Business Development EVP and Chief Integration Officer 2009-2015 SVP and CMO SVP Finance and CIO CAO and Controller 30+ Years of Leadership Experien
Slide 11: Agenda
Agenda Strong industry dynamics Well-positioned & differentiated business Charting the Course 11 Norwegian Viva, Lisbon
Slide 12: Strong and Favorable Industry Dynamics
Strong and Favorable Industry Dynamics 1. Growing awareness 2. Strong consumer loyalty across demographics 3. Value and experience gap to land vacations 4. Accelerating demand with limited supply Seven Seas Splendor, Miami 12
Slide 13: Increasing Awareness and Preference for Experiences
1. Increasing Awareness and Preference for Experiences Favorable Dynamics The Opportunity Increasing appeal to new-to-cruise travelers Increase in new-to-cruise travelers from +12% Increasing web traffic 2021-20231 Vastly underpenetrated industry Growing traffic to cruise websites from Consumer pref
Slide 14: Consumers Have Strong Loyalty to Cruising
2. Consumers Have Strong Loyalty to Cruising Overall % of Passengers Cruise Passengers Who Plan To Cruise Again Planning to Cruise Again - – by Generation Higher than 2019 84% 84% 81% Avg. 82% 82% 74% 74% 79% Silent Generation Baby Boomers Gen-X Millennials Gen-Z Ave. Age 90 68 52 35 19 2019 Today C
Slide 15: Value and Experience Gap
3. Value and Experience Gap Pricing Gap of Land-Based vs. High Value Proposition Cruise Vacation Cruise Land-Based Visit multiple destinations Traveling to new city every day, seamlessly, unpacking once unpacking daily 40% Booking Book air 130 ~20% Single booking Book hotel Book transportation On Va
Slide 16: Accelerating Demand with Limited Supply
4. Accelerating Demand with Limited Supply Ocean-Going Cruise Passengers (Millions) 5.6% p.a. 40 30 5.3% p.a. 20 10 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2023F 2024F 2025F 2026F 2027F Future capacity growing only ~3% per annum vs. demand at ~6% Source: Cruise Industry News 2023 An
Slide 17: Agenda
Agenda Strong industry dynamics Well-positioned & differentiated business Charting the Course 17 Norwegian Encore, Alaska
Slide 18: What Sets Us Apart
What Sets Us Apart 3 2 4 Diversified itinerary mix Upscale guest Strong growth profile demographic 1 7 5 Clearly defined Proven brands A Strong Foundation and model Differentiated Business 18
Slide 19: Clearly Defined Brands
1. Clearly Defined Brands Why Norwegian Why Oceania Why Regent Cruise Line? Cruises? Seven Seas Cruises? • Freedom and flexibility to customize • The Finest Cuisine at Sea® • The World’s Most Luxurious Fleet® ideal vacation • Small ship luxury • All inclusive experience • Elevated guest experience w
Slide 20: Upscale Guest Demographics – Resilient Through Economic Cycles
2. Upscale Guest Demographics – Resilient Through Economic Cycles % of Guests Booked with High Net Worth1,2 Engaging with Target Guests ~93% ~94% ~66% 84% of Total Bookings from the United States/Canada2 (1) Based on internal data (2) Estimated for guests who booked in 2023. 20
Slide 21: Diversified Itinerary Mix
3. Diversified Itinerary Mix Prioritized to Optimize Economics 2026 Fleet Deployment % Maximizing Deployment for Highest Net Yield NCL Oceania and Regent Continually optimizing ~54% deployment: geography, length ~40% and consistency ~35% NCL brand leveraging strengths in Caribbean, Bermuda and ~24%
Slide 22: Diversified Itinerary Mix: Leveraging Strengths
3. Diversified Itinerary Mix: Leveraging Strengths Private Island Destinations in Advantages in Key Markets Eastern and Western Caribbean Alaska Hawaii Cabanas, Silver Cove, kayaking, ziplining, parasailing, snorkeling and more Newest fleet in the industry Only year-round deployment Developments in
Slide 23: Evolution of Newbuilds – Efficient and High ROI Vessels
4. Evolution of Newbuilds – Efficient and High ROI Vessels Prima Class Next Gen Prima Class Next Gen ”Methanol-Ready2” Prima Class New Class of Revolutionary Vessels1 ~143k gross tons ~156k gross tons ~169k gross tons ~200k gross tons ~3,200 guests ~3,500 guests ~3,800 guests ~5,000 guests Allura Cl
Slide 24: Fleet Expansion Program: Delivers Industry Leading Growth
4. Fleet Expansion Program: Delivers Industry Leading Growth Gross Capacity Growth (M)1 4% 37.2 CAGR 6% CAGR 29.7 28.0 26.2 23.5 24.5 22.7 2023 2024E 2025E 2026E 2027E 2028E 2 2036E Capacity of ships over 30-years old (1) NCLH expects a four ship Norwegian Cruise Line order to replace a separate, ef
Slide 25: A Proven Model: Capacity Additions Translate to Financial Contributions
5. A Proven Model: Capacity Additions Have Translated to Outsized Financial Contributions Capacity Days Gross Revenue Adjusted EBITDA Net Cash Provided by (M) ($B) ($B) Operating Activities ($B) 7% 11% 13% 15% CAGR CAGR CAGR CAGR $6.5 $1.8 19.2 $1.9 14.7 $4.3 $1.2 $1.0 2015 2019 2015 2019 2015 2019
Slide 26: Sail & Sustain
Sail & Sustain Moving towards our sustainability goals, while being a responsible steward and creating shareholder value 26
Slide 27: Agenda
Agenda Strong industry dynamics Well-positioned & differentiated business Charting the Course 27 Oceania Marina
Slide 28: We Have a Bold Vision to Inspire Guests, Team Members and Other Stakeholders
We Have a Bold Vision to Inspire Guests, Team Members and Other Stakeholders 28
Slide 29: Our Evolution
Our Evolution From… …To People Founder-led culture Collaborative environment with new management team Focus investment on experiences that guests value and Product Product at all costs are willing to pay for Industry leading growth profile with Platform Securing future growth focusing on efficient l
Slide 30: Executing on Our Charting the Course Strategic Pillars
Executing on Our Charting the Course Strategic Pillars P EOPLE GUEST-CEN T RIC LONG-TERM EXCEPTIONAL EXCELLENCE PRODUCT GROWTH PERFORMANCE OFFERING PLATFORM Sail & Sustain to drive positive impact on society 30
Slide 31: Pillar #1: People Excellence
Pillar #1: People Excellence PEOPLE Foster a culture based on innovation, collaboration, transparency and passion while EXCELLENCE supporting our team members to reach their full potential Main Initiatives Results Be an employer of choice Foster new culture Develop talent both shoreside and shipside
Slide 32: Pillar #2: Guest-Centric Product Offering
Pillar #2: Guest-Centric Product Offering GUEST-CENTRIC Deliver vacations that our guests value, providing digital and other tools to make it PRODUCT OFFERING easier for them to curate their experience throughout the customer journey Main Initiatives Net Yield Growth Low to Deliver exceptional onboa
Slide 33: Pillar #3: Long-Term Growth Platform
Pillar #3: Long-Term Growth Platform LONG-TERM Expand only into offerings that matter most to our current and future guests that GROWTH PLATFORM deliver meaningful experiences and improve returns Main Initiatives Growing Fun and Sun1 as Fleet Expands Larger more efficient vessels to drive Adjusted R
Slide 34: Pillar #4: Exceptional Performance
Pillar #4: Exceptional Performance EXCEPTIONAL Focus on pricing optimization, cost excellence and operating responsibly PERFORMANCE to generate enhanced returns Main Initiatives Adj. Operational EBITDA Margin Instill operational and cost excellence and better ~39% leverage scale 30.7% Enhance revenu
Slide 35: Our Earnings and Return Algorithm
Our Earnings and Return Algorithm Sub- Low to mid-single inflationary Adj. Operational digit Net Yield Cost EBITDA Growth Margin +5% Capacity CAGR Strong Adj. EPS Growth Disciplined Capital Allocation Increasing Adj. ROIC Lower Net Leverage 35
Slide 36: 2026 Targets
2026 Targets Adj. Operational Adj. EPS Net Leverage Adj. ROIC EBITDA Margin ~39% ~$2.45 Mid 4x 12% Approaching >30% CAGR Strengthening the Record levels historical margins from 2024 balance sheet 10% GHG Intensity1 Reduction from 2019 baseline (1) GHG intensity is measured by MTCO2e on a per Capacit
Slide 37: Executing Strategic Pivot – Delivering Industry Leading Growth
I N SUM M ARY: CO M PELLI NG I NVESTM ENT THESI S Executing Strategic Pivot – Delivering Industry Leading Growth Charting a New Course Unique Growth Profile in the Industry New strategic focus ‒ Performance driven management team FASTEST growing capacity ‒ Powerful yield drivers SIGNIFICANT Adj. Ope
Slide 38: Driving Top Line Revenue Growth
Driving Top Line Revenue Growth David J. Herrera, President Norwegian Cruise Line 38
Slide 39: Agenda
Agenda NCL today Driving top line growth 39 Norwegian Bliss, Alaska
Slide 40: NCL – Who We Are
NCL – WHO WE ARE Norwegian Cruise Line Today 85% 2.5M1+ 19 8 400+ 50+ Of total bed days Guests Number of Ships on Global Departure at NCLH carried ships in our fleet order2 destinations Ports (1) Expected guests carried in 2024. (2) NCLH expects a four ship Norwegian Cruise Line order to replace a s
Slide 41: Providing An Unparalleled Experience
Providing An Unparalleled Experience Desired Destinations Value Centric Packaging Broad Generational Appeal Premium and Unique Offerings Elevated Experience Freedom and Flexibility NCL is committed to understanding exactly what our guests want on their vacation. And then we aspire to give them even
Slide 42: Agenda
Agenda NCL today Driving top line growth FPO Image – DG, this one can be more business specific on the ship; maybe a smaller group. Still having fun, high end excursion or meal? 42 Norwegian Encore Sugarcane Mojito Bar
Slide 43: Executing on Our Charting the Course Strategic Pillars
Executing on Our Charting the Course Strategic Pillars P EOPLE GUEST-CEN T RIC LONG-TERM EXCEPTIONAL EXCELLENCE PRODUCT GROWTH PERFORMANCE OFFERING PLATFORM Sail & Sustain to drive positive impact on society 43
Slide 44: Guest-Centric Product Offering
Guest-Centric Product Offering G U E S T- C E N T R I C Deliver vacations that our guests value, providing digital and other tools to make it PRODUCT OFFERING easier for them to curate their experience throughout the customer journey Main Initiatives Net Yield Growth Low to Mid-Single Digits Rigorou
Slide 45: Multiple Levers to Drive Pricing and Net Yield Higher
Multiple Levers to Drive Pricing and Net Yield Higher 5 4 Maximize spend 3 throughout Data-driven 2 marketing customer journey Enhanced 1 revenue strategy Optimized deployment management Newbuild design with richer cabin mix 2015-2019 2024-2026 45
Slide 46: Newbuild Design with Richer Cabin Mix
1. Newbuild Design with Richer Cabin Mix Ticket Pricing – Inside Cabin vs NCLH Premium Cabins Balcony+ (Balcony+ as a % of Total) 65% 64% 2x 63% 62% 61% 60% 59% Inside Balcony+ 2015 2016 2017 2018 2019 2023 2026E 46
Slide 47: Optimizing Deployment
2. Optimizing Deployment Geography – Shorter Length – Consistency – Bucket List and More Fun & Expands Addressable Market Repeat Itineraries Improve Sun Efficiencies and Guest Experience Capacity Days (M) Average Itinerary Length (days) Top 10 Embarkation Ports as % of Total 12 9 New capacity 80% 8
Slide 48: Optimizing Deployment – Private Island Positioning
2. Optimizing Deployment – Private Island Positioning Universal Great Stirrup Harvest Orlando CocoCay Cay (GSC) Caye (HC) Tahiti More Theme Park More Upscale Focused on a well-balanced and elevated experience mirroring brand positioning 48
Slide 49: Optimizing Deployment – Monetizing Great Stirrup Cay
2. Optimizing Deployment – Monetizing Great Stirrup Cay One of highest rated New pier New revenue Guests Expected destinations 2025 generating amenities 2023 Guests 2026 ~400k ~700k 49
Slide 50: Enhanced Revenue Management
3. Enhanced Revenue Management From… …To Booking Curve Focused on matching prior year Adherence to optimal booking curve booking pace Targeted offers to attract right guests Promotions Promotions available to all guests on specific products Inventory Segmenting guest base – right guest in Focused on
Slide 51: Data-Driven Marketing Strategy
4. Data-Driven Marketing Strategy Guest segmentation and targeting +77% +39% • Identify and categorize potential guests based on demographics, preferences and behaviors Personalized marketing campaigns • Tailor marketing campaigns to specific customer segments to increase engagement and conversion r
Slide 52: CruiseNext and CruiseFirst Certificates
4. CruiseNext and CruiseFirst Certificates CruiseNext Certificate Sales CruiseFirst Certificate Sales +60% +166% 2014 2015 2016 2017 2018 2019 2022 2023 2024F 2021 2022 2023 2024F CruiseNext and CruiseFirst increasing customer loyalty, improving bookings and onboard revenue 52
Slide 53: Maximize Spend Throughout Customer Journey
5. Maximize Spend Throughout Customer Journey During Cruise Pre Cruise Additional Experiences At Booking Upsells & Upgrades • Casino Packaging Offers – • Land, hotel & excursions • Shopping • Thermal suites & Spa +29% • Personalized air • Cruise Next Certificates Free @ Sea • Free @ Sea+ package • B
Slide 54: Multiple Levers to Drive Pricing and Net Yield Higher
IN SUMMARY Multiple Levers to Drive Pricing and Net Yield Higher 5 4 Maximize spend 3 throughout Data-driven 2 marketing customer journey Enhanced 1 revenue strategy Optimized deployment management Newbuild design with richer cabin mix 2015-2019 2024-2026 54
Slide 55: Delivering a World Class Experience Efficiently
Delivering a World Class Experience Efficiently Patrik Dahlgren, EVP Vessel Operations 55
Slide 56: Agenda
Agenda New approach Delivering a world class experience efficiently Going forward 56
Slide 57: Delivering Exceptional Guest Experience – More Efficiently
A NEW APPROACH Delivering Exceptional Guest Experience – More Efficiently Higher Past Exceptional Guest Experience Costs Going Forward Lower Lower Higher Innovation / Productivity Reducing costs does not equate to diminishing the guest experience 57
Slide 58: New Approach to Operations
New Approach to Operations Key Areas of Focus: Sourcing Diversifying sourcing and adopting direct-to-source approach where appropriate Processes Improved analytics and streamlined decisions and operations Labor Leverage data to gain insight into shipside labor productivity and implement Productivity
Slide 59: Agenda
Agenda New approach Delivering a world class experience efficiently Going forward 59 Oceania Grand Dining Room
Slide 60: Executing on Our Charting the Course Strategic Pillars
Executing on Our Charting the Course Strategic Pillars P EOPLE GUEST-CEN T RIC LONG-TERM EXCEPTIONAL EXCELLENCE PRODUCT GROWTH PERFORMANCE OFFERING PLATFORM Sail & Sustain to drive positive impact on society 60
Slide 61: Exceptional Performance
Exceptional Performance EXCEPTIONAL Focus on pricing optimization, cost excellence and operating responsibly PERFORMANCE to generate enhanced returns Main Initiatives Excellent Guest Satisfaction Instill operational and cost excellence through new culture and supported by transformation office Bette
Slide 62: Case Study: Training Stewards to be More Efficient
Case Study: Training Stewards to be More Efficient From… …To Closet Coffee/Glass Desk TV Closet Coffee/Glass Desk TV Cart Cart Bathroom Sofa bed Bed Bathroom Sofa bed Bed • Stateroom stewards fleetwide score: 79 • Stateroom stewards fleetwide score: 80 • Cleanliness of stateroom: • Cleanliness of st
Slide 63: Case Study: Optimizing Onboard Entertainment
Case Study: Optimizing Onboard Entertainment From… …To Broadway • Cast: 42 • Cast: 21 • Revenue cabins used by cast: 11 • Revenue cabins used by cast: 0 • Guest Satisfaction Score: • Guest Satisfaction Score: Optimization of entertainment to improve guest satisfaction and increase ship ROI 63
Slide 64: Case Study: Data Driven Menu Optimization
Case Study: Data Driven Menu Optimization Removing Lower Satisfaction Items Improving Quality and Efficiency Entrees: 6 Entrees: 5 Appetizers: 7 Appetizers: 11 Optimized menu to most popular items, improving service, guest satisfaction and lowering food costs and waste 64
Slide 65: Case Study: Optimizing ROI on Existing Assets
Case Study: Optimizing ROI on Existing Assets with What Guests Value Norwegian Joy Revenue Enhancements Additional 24 Balcony New Thermal Redesigned Haven Premier Expanded Vibe Staterooms Suite Owner’s Suites Beach Club We have added 200+ guest cabins fleetwide through similar enhancements in 2024 6
Slide 66: Several Catalysts Provide Runway to Lower Fuel Costs
Several Catalysts Provide Runway to Lower Fuel Costs Catalysts Consumption Per 1K Capacity Days Sourcing Bunkering Optimization Fuel Mix Operational Refinements Energy Efficiency 2019 2023 2024E 2026 E Targeting lower fuel consumption across fleet 66
Slide 67: Sail & Sustain: Executing on Our Commitments
Sail & Sustain: Executing on Our Commitments Fuel LED Lighting and HVAC Optimization Achieved target to test HVAC upgrades and LED lighting projects deployed biodiesel on 20% of fleet, across several vessels to drive energy efficiency with plans to expand to 40% for 2024 Water ~89% of freshwater con
Slide 68: Agenda
Agenda New approach Delivering a world class experience efficiently Going forward 68 Regent Seven Seas
Slide 69: Focused on Multiple Workstreams to Deliver Significant Savings
GOING FORWARD Focused on Multiple Workstreams to Deliver Significant Savings Workstreams Progress Goal Fuel bunker optimization Fuel procurement Sub Logistics network redesign inflationary Food direct to processors cost growth Food sourcing Entertainment offerings Port & waste services Hotel consuma
Slide 70: New Approach to Operations – A Balanced Focus on ROI and ROEx
IN SUMMARY New Approach to Operations – A Balanced Focus on ROI and ROEx Return on Return on Investment Experience 70
Slide 71: Achieving Financial Excellence
Achieving Financial Excellence Mark Kempa, CFO 71
Slide 72: Entering a New Growth Era
Entering a New Growth Era 2015 to 2019 2022-2023 2024 – 2026 Strong Growth Record Great Cruise Comeback Charting a New Course • Moderate and consistent capacity • Return to normalized operations • Laser focused on Adj. Operational growth drives outsized Net Yield and • Focus on getting to full occup
Slide 73: Agenda
Agenda Proven business model Driving growth and revenue Laser focused on cost management Path to Net Leverage reduction Clear roadmap ahead 73 Norwegian Bliss
Slide 74: Track Record of Disciplined Capacity Growth
Track Record of Disciplined Capacity Growth Capacity Days (Millions) 7% CAGR 18.8 19.2 17.4 16.4 14.7 2015 2016 2017 2018 2019 Norwegian Encore, Alaska 74
Slide 75: And Top-line Growth Outpacing it…
And Top-line Growth Outpacing it… Adj. Gross Margin ($B) 10% $4.9 CAGR $4.7 $4.2 $3.8 $3.3 2015 2016 2017 2018 2019 75
Slide 76: To Create Strong Profitability
To Create Strong Profitability Adjusted EBITDA ($B) 12% CAGR $1.9 $1.9 $1.7 $1.4 $1.2 2015 2016 2017 2018 2019 76
Slide 77: And a Strong and Proven Financial Platform
And a Strong and Proven Financial Platform Adj. EBITDA Adjusted EPS Net Leverage Adj. ROIC Operating Margin +240 15% +140 (1.7x) bps CAGR bps 10.5% 39.1% $5.09 5.1x 36.7% 9.1% 3.4x $2.88 Expanded Grew Faster Improved Increased 2015 2019 2015 2019 2015 2019 2015 2019 1. Certain of the above items rep
Slide 78: Agenda
Agenda Proven business model Driving growth and revenue Laser focused on cost management Path to Net Leverage reduction Clear roadmap ahead 78 Norwegian Epic, Corfu
Slide 79: Capacity Growth Remains Moderate Compared to Past
Capacity Growth Remains Moderate Compared to Past 7% 5% 3% 2015-2019 2023-2026E 2027-2036E # Ships 27 36 45 # Ships 30 years+ - - 16 Norwegian Prima, Fincantieri Ship Yard 79
Slide 80: Moderate Capacity Growth Helps Drive Faster Net Yield Growth
Moderate Capacity Growth Helps Drive Faster Net Yield Growth Capacity Growth Net Yield Growth 7% Low to Mid-Single Digits 5% 3% 2015-2019 2023-2026E 2015-2019 2024-2026 E 80
Slide 81: Growth Driven by More Efficient Ships with Richer Cabin Mix
Growth Driven by More Efficient Ships with Richer Cabin Mix Ships in Service Ships On Order Cabin Richness (Q2 2024) (2025-2026) (Balcony+) 19 2 ~2,950 Berths ~3,550 Berths +9% (+21%) 7 1 ~900 Berths ~1,250 Berths +10% (+37%) 6 1 ~690 Berths ~850 Berths +2% (+23%) 81
Slide 82: Multiple Levers to Drive Pricing and Higher Net Yield Across All Brands
Multiple Levers to Drive Pricing and Higher Net Yield Across All Brands 5 4 Maximize spend 3 Rigorous throughout 2 ROI centric customer Enhanced revenue journey 1 marketing strategy Optimized management deployment Newbuild design with richer cabin mix 2015-2019 2024-2026 82
Slide 83: Agenda
Agenda Proven business model Driving growth and revenue Laser focused on cost management Path to Net Leverage reduction Clear roadmap ahead 83 Norwegian Cruise Line
Slide 84: Structured Approach to Right Sizing Costs and Leveraging Scale
Structured Approach to Right Sizing Costs and Leveraging Scale… Change in Culture Transformation Office Set the Bending the Execute Cost North Star Cost Curve Road Map Measure what matters 84
Slide 85: …Leads to Achieving Significant Savings
…Leads to Achieving Significant Savings Growth with Inflation Adj. NCC Target: ex Fuel: Flat $5 Dry Dock Sub-Inflation $154 Cost Growth 2023 2024E 2026E Multi-year Savings Initiative Plan Underway to Bend the Cost Curve 85
Slide 86: Multi-year Plan Expected to Deliver $300M Savings
Multi-year Plan Expected to Deliver $300M Savings ~$300M Fuel Marketing, Estimated Run Ship Operating Selling, Admin. Rate Cost Savings Costs 2026 2023 STRONG Cost Savings Program Well Under Way 86
Slide 87: Significant Improvement in Cruise Operating Leverage
Significant Improvement in Cruise Operating Leverage Approaching 2.0 historical levels 1.8 1.0 0.0 2015 - 2019 2022 - 2023 2024E 2026E Oceania Vista Returning to Historical Operating Leverage For illustrative purposes. Cruise Operating Leverage is calculated Adjusted Gross Margin divided by Adjusted
Slide 88: Agenda
Agenda Proven business model Driving growth and revenue Laser focused on cost management Path to Net Leverage reduction Clear roadmap ahead 88 Seven Seas Splendor
Slide 89: Our Algorithm for Adj. Operational EBITDA Margin Improvement
Our Algorithm for Adj. Operational EBITDA Margin Improvement… Low to Sub- inflationary Adj. Operational mid-single EBITDA digit Net Yield Cost Margin Key to algorithm is ~2.5 ppt spread between Net Yield and cost growth Simple algorithm, executable plan, with experienced management team 89
Slide 90: Translates to Strong Operating Cash Flow Generation
...Translates to Strong Operating Cash Flow1 Generation Low to Sub- inflationary Adj. Operational mid-single EBITDA digit Net Yield Cost Margin +5% Capacity CAGR ~$7B of Expected Operating Cash Flow1 from 2024 – 2026 (1) Net Cash Provided by Operating Activities 90
Slide 91: Path to Net Leverage Reduction
Path to Net Leverage Reduction 1 2 3 4 Strong Disciplined Expanding Meaningful Operating Capital Cash Float Net Leverage Cash Flow1 Allocation Opportunity Reduction (1) Net Cash Provided by Operating Activities 91
Slide 92: Expect Strong Operating Cash Flow in 2024-2026
1. Expect Strong Operating Cash Flow1 in 2024-2026: ~$7B $2.5B $2.1B $1.5B 20232 2024E 2025E & 2026E Average ~$7B of Operating Cash Flow1 (1) Net Cash Provided by Operating Activities (2) 2023 excludes $0.5B of returned cash collateral from one credit card processor. 92
Slide 93: Disciplined Capital Allocation in 2024-2026
2. Disciplined Capital Allocation in 2024-2026 ~$3.2B ~$1.5B Scheduled Debt Amortization2 Newbuild Capex ~$7B Expected Cumulative Operating Cash Flow 2024 - 20261 ~$1.8B Potential for Investment & Maintenance Accelerated Debt Capex Repayment (1) Net Cash Provided by Operating Activities. (2) Conside
Slide 94: Differentiated and Efficient Debt Maturity Profile
2. Differentiated and Efficient Debt Maturity Profile As of 3/31/20241 (in $B) Non-ECA debt expected to be refinanced Non-ECA debt expected prior to maturity3 to be refinanced prior to Non-ECA debt expected December maturity3 to be settled in shares3 $0.9 $0.9 $1.0 2024 2 20252 2026 2 Export Credit
Slide 95: Record Advance Ticket Sales Growth – Expanding Float
3. Record Advance Ticket Sales Growth – Expanding Float Total Advance Ticket Sales ($B) >80% $3.8 $3.2 $2.1 $1.7 $1.4 2017 2018 2019 2023 Q1 2024 Q1 2026E Norwegian Joy Significant Expansion Over Next Few Years = Underappreciated Opportunity 95
Slide 96: Reduce Net Leverage, Strengthen Balance Sheet
4. Reduce Net Leverage, Strengthen Balance Sheet Strong Net Leverage Reduction Track Record 2026 Net Leverage Target 6.8x 7.3x ~3x reduction1 5.1x ~5.7x 4.3x Mid 4s 3.7x 3.3x 3.4x 2014 2015 2016 2017 2018 2019 2023 2024E 2026E 1- Assumes no voluntary prepayment of debt Expect Significant Reduction i
Slide 97: Agenda
Agenda Proven business model Driving growth and revenue Laser focused on cost management Path to Net Leverage reduction Clear roadmap ahead 97 Norwegian Escape, Santorini
Slide 98: Raising Full Year 2024 Guidance: Adj. EPS +7.5% vs. Q1 Guidance
Raising Full Year 2024 Guidance: Adj. EPS +7.5% vs. Q1 Guidance Initial New Q1 Guidance Guidance Guidance Net Yield1 Growth ~5.4% ~6.4% ~7.2% Adjusted Net Cruise Cost ex. ~$159 ~$159 ~$159 Fuel per Capacity Day1 Adjusted EBITDA ~$2.20B ~$2.25B ~$2.30B Adjusted EPS2 $1.23 $1.32 $1.42 15.5% Increase (
Slide 99: Clear Roadmap Ahead
Clear Roadmap Ahead Record Adj. ROIC by 2026 Strong Adj. EPS Growth Adj. Operational EBITDA Margin Expansion Goals and expectations as of May 20, 2024 99
Slide 100: Adj. Operational EBITDA Margin Expansion Roadmap
Adj. Operational EBITDA Margin Expansion Roadmap ~39% Historical Adj. Operational >300 Right-sized EBITDA bps ~34.0% Margin Costs 30.7% Net Yield Growth 2023 2024E 2026E Expect ~800 bps improvement over 2023 100
Slide 101: Clear Path to Expected Adj. EPS Growth
Clear Path to Expected Adj. EPS Growth >30% ~$2.45 CAGR Target Adj. Capacity EPS 5% CAGR +103% ~$1.42 Right-sized Costs Net Yield $0.70 Growth 2023 2024E 2026E Translated to +30% CAGR in Adj. EPS Growth 101
Slide 102: Expect Record Adj. ROIC by 2026
Expect Record Adj. ROIC by 2026 Pathway to 2026 Target 12% Disciplined Capex Expanding 10% Cash Float Right-sized 8% Costs Net Yield Growth 2023 2024E 2026E Expect 400 bps Improvement from 2023 102
Slide 103: 2026 Targets
2026 Targets Adj. Operational Adj. EPS Net Leverage Adj. ROIC EBITDA Margin ~39% ~$2.45 Mid 4x 12% Approaching >30% CAGR Strengthening the Record levels historical margins from 2024 balance sheet 10% GHG Intensity1 Reduction from 2019 baseline Simple algorithm, executable plan, with experienced mana
Slide 104: Executing Strategic Pivot – Delivering Industry Leading Growth
I N SUM M ARY: CO M PELLI NG I NVESTM ENT THESI S Executing Strategic Pivot – Delivering Industry Leading Growth Charting a New Course Unique Growth Profile in the Industry New strategic focus ‒ Performance driven management team FASTEST growing capacity ‒ Powerful yield drivers SIGNIFICANT Adj. Ope
Slide 105: Bold New Future
Bold New Future Harry Sommer, CEO
Slide 106: We Have a Bold Vision to Inspire Guests, Team Members and Other Stakeholders
We Have a Bold Vision to Inspire Guests, Team Members and Other Stakeholders 106
Slide 107: Executing on Our Strategy
EXECUTING ON OUR STRATEGY PEOPLE GUEST-CENTRIC LONG-TERM EXCEPTIONAL EXCELLENCE PRODUCT OFFERING GROWTH PLATFORM PERFORMANCE Sail & Sustain STRONG FINANCIAL TARGETS 2026 Adj. Operational Adj. EPS Net Leverage Adj. ROIC EBITDA Margin ~39% ~$2.45 Mid 4x 12% Approaching >30% CAGR Strengthening the Reco
Slide 108: Definitions and Non-GAAP Information and Reconciliation
DEFINITIONS AND NON-GAAP INFORMATION AND RECONCILIATION 108
Slide 109: Non-GAAP financial measures should not be used as a substitute for GAAP
Non-GAAP financial measures should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing operating performance, financial position or cash flows. The Company does not provide certain estimated future results on a GAAP basis because the Comp
Slide 110: Definitions
DEFINITIONS Adjusted EBITDA. EBITDA adjusted for other income (expense), net and other supplemental adjustments. Adjusted EPS. Adjusted Net Income (Loss) divided by the number of diluted weighted-average shares outstanding. Adjusted Gross Margin. Gross margin adjusted for payroll and related, fuel,
Slide 111: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Adjusted Gross Margin, Net Per Diem, and Net Yield were calculated as follows 2015 2016 2017 2018 2019 (in thousands, except Passenger Cruise Days and Net Per Diem Data): Total rev enue $4,345,048 $4,874,340 $5,396,175 $6,055,126 $6,462,376 Less: Total cr
Slide 112: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Twelve Months Ended December 31, Adjusted EBITDA is calculated as follows 2015 2016 2017 2018 2019 2023 (in thousands): Net income $427,137 $633,085 $759,872 $954,843 $930,228 $166,178 Interest expense, net 221,909 276,859 267,804 270,404 272,867 727,531
Slide 113: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Twelve Months Ended December 31, Net Debt and Net Leverage were calculated as follows 2014 2015 2016 2017 2018 2019 2023 (in thousands): Long-term debt $5,503,076 $5,767,697 $5,838,494 $5,688,392 $5,810,873 $6,055,335 $12,314,147 Current portion of long-t
Slide 114: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Twelve Months Ended, Adjusted EPS was calculated as follows 2015 2016 2017 2018 2019 2023 (in thousands, except share and per share data): Net income $427,137 $633,085 $759,872 $954,843 $930,228 $166,178 Non-cash deferred compensation (1) $10,154 $3,167 $
Slide 115: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Cost Year Ended Dec. 31, Excluding Fuel were calculated as follows 2023 (in thousands, except Capacity Days and per Capacity Day data): Total cruise operating expen
Slide 116: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) ROIC was calculated as follows 2015 2019 2023 (in thousands): Adjusted EBITDA $1,226,915 $1,935,020 $1,860,731 Less: Depreciation and Amortization $432,114 $646,188 $808,568 Add: Redployment of Norwegian Joy (1) - $23,578 - Add: Contract termination expen
Norwegian Cruise Line Holdings — Investor Day (May 2024) on 6ix