What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-07 · 89 added, 67 removed, 334 unchanged (32% of the section changed)

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Solely for convenience, certain trademark and service marks referred to in this report appear without the ® or ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and service marks.

This report includes certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Yield, Net Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS.

Definitions of these non-GAAP financial measures are included below.

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● Adjusted EPS.

Adjusted Net Income (Loss) divided by the number of diluted weighted-average shares outstanding.

Adjusted Net Income divided by the number of diluted weighted-average shares outstanding.

● Adjusted Gross Margin.

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Net Cruise Cost Excluding Fuel adjusted for supplemental adjustments.

● Adjusted Net Income (Loss).

● Adjusted Net Income.

Net income (loss) adjusted for the effect of dilutive securities and other supplemental adjustments.

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The number of passengers carried for the period, multiplied by the number of days in their respective cruises.

● Prestige Class Ships.

Regent’s Seven Seas Prestige and one additional ship on order.

● Prima Class Ships.

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Non-GAAP Financial Measures

We use certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Yield, Net Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS, to enable us to analyze our performance.

We use certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Yield, Net Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS, to enable us to analyze our performance.

See “Terminology” for the definitions of these and other non-GAAP financial measures.

We utilize Adjusted Gross Margin and Net Yield to manage our business on a day-to-day basis because they reflect revenue earned net of certain direct variable costs.

We also utilize Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel

to manage our business on a day-to-day basis.

We also utilize Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel to

manage our business on a day-to-day basis.

In measuring our ability to control costs in a manner that positively impacts net income (loss), we believe changes in Adjusted Gross Margin, Net Yield, Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel to be the most relevant indicators of our performance.

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Adjusted EBITDA is not a defined term under GAAP nor is it intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income (loss), as it does not take into account certain requirements such as capital expenditures and related depreciation, principal and interest payments and tax payments and it includes other supplemental adjustments.

In addition, Adjusted Net Income (Loss) and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income (loss) and EPS.

We use Adjusted Net Income (Loss) and Adjusted EPS as key performance measures of our earnings performance.

In addition, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income (loss) and EPS.

We use Adjusted Net Income and Adjusted EPS as key performance measures of our earnings performance.

We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods.

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The amounts excluded in the presentation of these non-GAAP financial measures may vary from period to period;

accordingly, our presentation of Adjusted Net Income (Loss) and Adjusted EPS may not be indicative of future adjustments or results.

accordingly, our presentation of Adjusted Net Income and Adjusted EPS may not be indicative of future adjustments or results.

You are encouraged to evaluate each adjustment used in calculating our non-GAAP financial measures and the reasons we consider our non-GAAP financial measures appropriate for supplemental analysis.

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Update on Bookings

The Company continues to experience healthy consumer demand across all revenue streams and had record bookings during the three months ended March 31, 2024 leading to a continued record booked position for the next twelve months.

This strong demand is expected to almost fully offset the impact from the redeployed voyages related to the Middle East and Red Sea in 2024.

The Company continues to experience strong consumer demand as the majority of new bookings are pivoting to 2025 sailings.

As a result, the Company remains at the upper range of its optimal booked position on a 12-month forward basis.

Macroeconomic Trends and Uncertainties

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Our costs have been and may be adversely impacted by these factors.

We have used, and may continue to use, derivative instruments to attempt to mitigate the risk of volatility in fuel prices and interest rates.

an attempt to mitigate risks related to inflation, our supply chain department has negotiated contracts with varying terms, with a goal of providing us with the ability to take advantage of cost declines when they occur, and diversified our sourcing options.

We have used, and may continue to use, derivative instruments to attempt to mitigate the risk of volatility in fuel prices, foreign exchange rates and interest rates.

In an attempt to mitigate risks related to inflation, our supply chain department has negotiated

contracts with varying terms, with a goal of providing us with the ability to take advantage of cost declines when they occur, and diversified our sourcing options.

These strategies may not fully offset the impact of current macroeconomic conditions;

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We believe the increasing focus on climate change, including the Company’s recently established targets for greenhouse gas reductions, and evolving regulatory requirements will materially impact our future capital expenditures and results of operations.

We have set interim targets to guide us on our path to net zero and provide more details about them in our annual Sail & Sustain Report.

We expect to incur significant expenses related to these regulatory requirements and commitments, which may include expenses related to greenhouse gas emissions reduction initiatives, including modifications to our ships, and the purchase of emissions allowances, among other things.

We have set interim targets to guide us on our path to net zero and provide more details about them in our annual Sail & Sustain Report (which does not constitute a part of, and shall not be deemed incorporated by reference into, this Report).

We expect to incur significant expenses related to these regulatory requirements and commitments, which may include expenses related to greenhouse gas emissions reduction initiatives, including modifications to our ships, and will include the purchase of emissions allowances, among other things.

We have and may continue to be required to change certain operating procedures, for example slowing the speed of our ships, to meet regulatory requirements, which could adversely impact our operations.

We are evaluating the effects of global climate change related requirements, which are still evolving, including our ability to mitigate certain future expenses through initiatives to reduce greenhouse gas emissions;

We are also evaluating the effects of global climate change related requirements, which are still evolving, including our ability to mitigate certain future expenses through initiatives to reduce greenhouse gas emissions;

consequently, the full impact to the Company is not yet known.

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Quarterly Overview

Three months ended March 31, 2024 (“2024”) compared to three months ended March 31, 2023 (“2023”)

Three months ended June 30, 2024 (“2024”) compared to three months ended June 30, 2023 (“2023”)

● Total revenue increased 7.6% to $2.4 billion compared to $2.2 billion.

● Net income (loss) and diluted EPS were $17.4 million and $0.04, respectively, compared to $(159.3) million and $(0.38), respectively.

● Net income and diluted EPS were $163.4 million and $0.35, respectively, compared to $86.1 million and $0.20, respectively.

● Operating income was $341.6 million compared to $272.5 million.

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Adjusted Gross Margin increased 10.6% to $1.7 billion compared to $1.5 billion.

● Adjusted Net Income and Adjusted EPS were $69.5 million and $0.16, respectively, in 2024, which included $52.2 million of adjustments primarily related to losses on extinguishment and modification of debt and share-based compensation.

Adjusted Net Loss and Adjusted EPS were $(127.7) million and $(0.30), respectively, in 2023, which included $31.6 million of adjustments primarily related to share-based compensation.

● Adjusted Net Income and Adjusted EPS were $203.7 million and $0.40, respectively, in 2024, which included $24.2 million of adjustments primarily related to share-based compensation.

Adjusted Net Income and Adjusted EPS were $137.0 million and $0.30, respectively, in 2023, which included $46.3 million of adjustments primarily related to share-based compensation.

● Adjusted EBITDA improved 14.2% to $587.7 million compared to $514.8 million.

We refer you to our “Results of Operations” below for a calculation of Adjusted Gross Margin, Adjusted Net Income (Loss), Adjusted EPS and Adjusted EBITDA.

We refer you to our “Results of Operations” below for a calculation of Adjusted Gross Margin, Adjusted Net Income, Adjusted EPS and Adjusted EBITDA.

Results of Operations

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Three Months Ended

Six Months Ended

Passengers carried

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Three Months Ended

Six Months Ended

Total revenue

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Three Months Ended

Six Months Ended

Total cruise operating expense

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(2) Non-cash share-based compensation expenses related to equity awards, which are included in marketing, general and administrative expense and payroll and related expense.

Adjusted Net Income (Loss) and Adjusted EPS were calculated as follows (in thousands, except share and per share data):

Adjusted Net Income and Adjusted EPS were calculated as follows (in thousands, except share and per share data):

Three Months Ended

Six Months Ended

Net income (loss)

Effect of dilutive securities - exchangeable notes

Net income (loss) and assumed conversion of exchangeable notes

Non-GAAP Adjustments:

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Extinguishment and modification of debt (3)

Adjusted Net Income (Loss)

Diluted weighted-average shares outstanding - Net income (loss) and Adjusted Net Income (Loss)

Adjusted Net Income

Diluted weighted-average shares outstanding - Net income (loss) and Adjusted Net Income

(1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses, which are included in payroll and related expense and other income (expense), net.

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Three Months Ended

Six Months Ended

Net income (loss)

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(3) Non-cash share-based compensation expenses related to equity awards, which are included in marketing, general and administrative expense and payroll and related expense.

Three months ended March 31, 2024 (“2024”) compared to three months ended March 31, 2023 (“2023”)

Three months ended June 30, 2024 (“2024”) compared to three months ended June 30, 2023 (“2023”)

Total revenue increased to $2.4 billion in 2024 compared to $2.2 billion in 2023 primarily due to an increase in Capacity Days and improved pricing.

Gross margin per Capacity Day increased 53.4% and Adjusted Gross Margin increased 25.6% to $1.6 billion in 2024 compared to $1.3 billion in 2023 due to an increase in Capacity Days of 7.9% and reflects an increase in passenger ticket pricing and onboard spending.

The increase in Capacity Days was primarily related to the delivery of three new ships in 2023.

Total cruise operating expense increased 8.4% and Gross Cruise Cost increased 8.3% in 2024 compared to 2023 primarily related to the delivery of three new ships in 2023.

Total other operating expense increased 10.3% in 2024 compared to 2023 largely related to the delivery of three new ships and also reflects an increase in general and administrative costs related to a consulting project.

Gross margin increased 11.4% and Adjusted Gross Margin increased 10.6% to $1.7 billion

in 2024 compared to $1.5 billion in 2023 due to an increase in Capacity Days of 4.0% and reflects an increase in passenger ticket pricing and onboard spending.

The increase in Capacity Days was primarily related to the delivery of three new ships in 2023 partially offset by increased Dry-dock days in 2024.

Total cruise operating expense increased 5.1% and Gross Cruise Cost increased 4.2% in 2024 compared to 2023 primarily related to the delivery of three new ships in 2023 partially offset by a reduction in air costs largely due to changes in itinerary mix.

Total other operating expense increased 4.9% in 2024 compared to 2023 primarily related to an increase in depreciation expense from the delivery of three new ships in 2023.

Interest expense, net was $178.5 million in 2024 compared to $177.7 million in 2023.

Other income (expense), net was income of $1.9 million in 2024 compared to expense of $8.0 million in 2023.

The income and expense primarily relate to net gains and losses on foreign currency remeasurements.

Six months ended June 30, 2024 (“2024”) compared to six months ended June 30, 2023 (“2023”)

Total revenue increased to $4.6 billion in 2024 compared to $4.0 billion in 2023 primarily due to an increase in Capacity Days and improved pricing.

Gross margin increased 30.9% and Adjusted Gross Margin increased 17.4% to $3.3 billion in 2024 compared to $2.8 billion in 2023 due to an increase in Capacity Days of 5.9% and reflects an increase in passenger ticket pricing and onboard spending.

The increase in Capacity Days was primarily related to the delivery of three new ships in 2023 partially offset by increased Dry-dock days in 2024.

Total cruise operating expense increased 6.7% and Gross Cruise Cost increased 6.1% in 2024 compared to 2023 primarily related to the delivery of three new ships in 2023 partially offset by a reduction in air costs largely due to changes in itinerary mix.

Total other operating expense increased 7.5% in 2024 compared to 2023 primarily related to an increase in depreciation expense from the delivery of three new ships in 2023.

Interest expense, net was $396.6 million in 2024 compared to $348.9 million in 2023.

The increase in interest expense reflects higher losses in 2024 from extinguishment of debt and debt modification costs, which were $29.0 million in 2024 compared to $3.2 million in 2023.

Excluding these losses, interest expense increased primarily as a result of higher debt outstanding and higher rates.

Excluding these losses, interest expense increased primarily as a result of higher debt outstanding with the delivery of three ships in 2023.

Other income (expense), net was income of $20.0 million in 2024 compared to expense of $17.0 million in 2023.

The income and expense primarily related to net gains and losses on foreign currency remeasurements.

The income and expense primarily relate to net gains and losses on foreign currency remeasurements.

Liquidity and Capital Resources

As of March 31, 2024, our liquidity was approximately $2.4 billion, including cash and cash equivalents of $559.8 million and borrowings available under our $1.2 billion fully undrawn Revolving Loan Facility and $650 million

undrawn commitment less related fees.

As of June 30, 2024, our liquidity was approximately $2.7 billion, including cash and cash equivalents of $594.1 million and borrowings available under our $1.2 billion fully undrawn Revolving Loan Facility, €200 million commitment that can be used for future newbuild payments and $650 million undrawn commitment less related fees.

Our primary ongoing liquidity requirements are to finance working capital, capital expenditures and debt service.

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Pursuant to the third amended commitment letter, the Commitment Parties have agreed to purchase from NCLC an aggregate principal amount of $650 million of senior unsecured notes due five years after the issue date at NCLC’s option, which option is available through March 2025.

In connection with the execution of the third amended commitment letter, NCLC agreed to repurchase all of the outstanding $250 million aggregate principal amount of 9.75% senior secured notes due 2028 at a negotiated premium plus accrued and unpaid interest thereon.

In connection with the execution of the

third amended commitment letter, NCLC agreed to repurchase all of the outstanding $250 million aggregate principal amount of 9.75% senior secured notes due 2028 at a negotiated premium plus accrued and unpaid interest thereon.

Additionally, in April 2024, a €200 million commitment became available that can be used for future newbuild payments.

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There can be no assurance that the accuracy of the assumptions used to estimate our liquidity requirements will be correct, and our ability to be predictive is uncertain due to the dynamic nature of the current operating environment, including any current macroeconomic events and conditions such as inflation, rising fuel prices and higher interest rates.

We intend to refinance the $565.0 million 3.625% senior unsecured notes due in December 2024 prior to September 2024.

Within the next twelve months, we may pursue other refinancings in order to reduce interest expense and/or extend debt maturities.

We currently intend to refinance a portion of the $565.0 million 3.625% senior unsecured notes due in December 2024 during or prior to September 2024.

Within the next twelve months, we will pursue other refinancings in order to reduce interest expense and/or extend debt maturities.

There is no assurance that cash flows from operations and additional financings will be available in the future to fund our future obligations.

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Refer to Item 1A, “Risk Factors” in our Annual Report on Form 10-K for further details regarding risks and uncertainties that may cause our results to differ from our expectations.

At March 31, 2024, we were in compliance with all of our debt covenants.

At June 30, 2024, we were in compliance with all of our debt covenants.

If we do not continue to remain in compliance with our covenants, we would have to seek additional amendments to or waivers of the covenants.

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However, there is no guarantee that debt or equity financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations.

As of March 31, 2024, we had advance ticket sales of $3.8 billion, including the long-term portion, which included approximately $66.0 million of future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19.

We also have agreements with our credit card processors that, as of March 31, 2024, governed approximately $3.4 billion in advance ticket sales that had been received by the Company relating to future voyages.

As of June 30, 2024, we had advance ticket sales of $3.9 billion, including the long-term portion, which included approximately $64.5 million of future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19.

We also have agreements with our credit card processors that, as of June 30, 2024, governed approximately $3.5 billion in advance ticket sales that had been received by the Company relating to future voyages.

These agreements allow the credit card processors to require under certain circumstances, including the existence of a material adverse change, excessive chargebacks and other triggering events, that the Company maintain a reserve which would be satisfied by posting collateral.

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Any cash reserve or collateral requested could be increased or decreased.

As of March 31, 2024, we had cash

collateral reserves of approximately $51.3 million with credit card processors, which includes $19.8 million recognized in accounts receivable, net and $31.5 million recognized in other long-term assets.

As of June 30, 2024, we had cash collateral reserves of approximately $43.9 million with credit card processors, which includes $12.4 million recognized in accounts receivable, net and $31.5 million recognized in other long-term assets.

We may be required to pledge additional collateral and/or post additional cash reserves or take other actions in the future that may adversely affect our liquidity.

Sources and Uses of Cash

In this section, references to “2024” refer to the three months ended March 31, 2024 and references to “2023” refer to the three months ended March 31, 2023.

Net cash provided by operating activities was $807.2 million in 2024 as compared to $503.3 million in 2023.

In this section, references to “2024” refer to the six months ended June 30, 2024 and references to “2023” refer to the six months ended June 30, 2023.

Net cash provided by operating activities was $1.5 billion in 2024 and 2023.

The net cash provided by operating activities included net income (losses) and timing differences in cash receipts and payments relating to operating assets and liabilities.

Advance ticket sales increased by $742.4 million in 2024 and by $826.2 million in 2023.

Net cash used in investing activities was $255.2 million in 2024 and $236.4 million in 2023.

The net cash provided by operating activities includes the return of $500 million cash collateral from one credit card processor in 2023.

Net cash used in investing activities was $620.9 million in 2024 and $1.0 billion in 2023.

The net cash used in investing activities was primarily related to newbuild payments and ship improvements in 2024.

The net cash used in investing activities was primarily related to newbuild payments in 2023.

Net cash used in financing activities was $394.5 million in 2024 primarily due to repayments of newbuild loans and our 2028 Secured Notes.

Net cash used in financing activities was $513.4 billion in 2023 primarily due to debt repayments and a net decrease in our Revolving Loan Facility partially offset by the proceeds of $850 million from our various note offerings.

Net cash used in financing activities was $665.5 million in 2024 primarily due to repayments of newbuild loans and our 2028 Secured Notes partially offset by the proceeds from newbuild loan facilities.

Net cash used in financing activities was $592.3 million in 2023 primarily due to debt repayments and a net decrease in our Revolving Loan Facility balance, partially offset by the proceeds from newbuild loan facilities and $850 million from our various note offerings.

Future Capital Commitments

Future capital commitments consist of contracted commitments, including ship construction contracts.

Anticipated expenditures related to ship construction contracts (which includes two ships on order for Oceania Cruises that are expected to be cancelled, and excludes orders for four Norwegian Cruise Line ships, which are not yet effective) were $0.5 billion for the remainder of 2024 and $2.2 billion and $2.4 billion for the years ending December 31, 2025 and 2026, respectively, reflecting delays in certain scheduled ship delivery dates.

Anticipated expenditures related to ship construction contracts (which includes two ships on order for Oceania Cruises, currently scheduled for delivery in 2030 and 2031, that are expected to be cancelled, and excludes orders for four Norwegian Cruise Line ships, which were not effective as of June 30 ,2024) were $0.3 billion for the remainder of 2024 and $2.2 billion and $2.3 billion for the years ending December 31, 2025 and 2026, respectively, reflecting delays in certain scheduled ship delivery dates.

The Company has export credit financing in place for the anticipated expenditures related to ship construction contracts of $0.1 billion for the remainder of 2024 and $1.6 billion and $1.5 billion for the years ending December 31, 2025 and 2026, respectively.

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Expected delivery dates for our most recently announced newbuilds are preliminary and subject to change.

Orders announced after March 31, 2024 are in bold.

Gross Tons (1)

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Regent Seven Seas

Prestige Class

Seven Seas Prestige

Contract effective / financed (4)

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Regent Seven Seas

Prestige Class

Contract effective / financed (4)

Norwegian Cruise Line

Contract not yet effective / subject to financing (5)

Memorandum of agreement subject to Board of Director approval.

Financing is being negotiated.

Oceania Cruises

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Norwegian Cruise Line

Contract not yet effective / subject to financing (5)

Memorandum of agreement subject to Board of Director approval.

Financing is being negotiated.

Norwegian Cruise Line

Contract not yet effective / subject to financing (5)

Memorandum of agreement subject to Board of Director approval.

Financing is being negotiated.

Norwegian Cruise Line

Contract not yet effective / subject to financing (5)

Memorandum of agreement subject to Board of Director approval.

Financing is being negotiated.

(1) Berths and gross tons are preliminary and subject to change as we approach delivery.

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(5) We expect the four-ship Norwegian Cruise Line order to replace the separate, effective, two-ship order for Oceania Cruises.

The four-ship order for Norwegian Cruise Line is still being finalized and is subject to financing.

As of March 31, 2024, the combined contract prices, including amendments and change orders, of the five ships on order for delivery was approximately €5.8 billion, or $6.3 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2024.

The combined contract prices of the six new ships with contracts that became effective subsequent to March 31, 2024 (which includes the two ships on order for Oceania Cruises, which were scheduled for delivery in 2030 and 2031, respectively, but are expected to be cancelled, and excludes the orders for the four Norwegian Cruise Line ships, which are not yet effective) was approximately €5.3 billion, or $5.7 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2024.

The shipbuilding contracts related to the four-ship order for Norwegian Cruise Line are still being finalized.

The combined contract prices, including amendments and change orders, of the 11 ships on order for delivery (which includes the two ships on order for Oceania Cruises, which are currently scheduled for delivery in 2030 and 2031, respectively, but are expected to be cancelled, and excludes the orders for the four Norwegian Cruise Line ships, which were not effective as of June 30 ,2024) was approximately €11.0 billion, or $11.8 billion based on the euro/U.S.

dollar exchange rate as of June 30, 2024.

If the two ships on order for Oceania Cruises are cancelled, there will be incremental corresponding adjustments to the purchase price of other applicable newbuilds not to exceed €51 million.

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However, if any such events were to occur, it could result in, among other things, the forfeiture of prior deposits or payments made by us and potential claims and impairment losses which may materially impact our business, financial condition and results of operations.

Capitalized interest for the three months ended March 31, 2024 and 2023 was $10.1 million and $14.7 million, respectively, primarily associated with the construction of our newbuild ships.

Capitalized interest for the three months ended June 30, 2024 and 2023 was $13.2 million and $16.6 million, respectively, and for the six months ended June 30, 2024 and 2023 was $23.3 million and $31.3 million, respectively, primarily associated with the construction of our newbuild ships.

Material Cash Requirements

As of March 31, 2024, our material cash requirements for debt and ship construction were as follows (in thousands):

As of June 30, 2024, our material cash requirements for debt and ship construction (which includes the two ships on order for Oceania Cruises that are expected to be cancelled, and excludes the orders for the four Norwegian Cruise Line ships, which were not effective as of June 30 ,2024) were as follows (in thousands):

Long-term debt (1)

Ship construction contracts (2)

(1) Includes principal as well as estimated interest payments with Term SOFR held constant as of March 31, 2024.

(1) Includes principal as well as estimated interest payments with Term SOFR held constant as of June 30, 2024.

Includes exchangeable notes which can be settled in shares.

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(2) Ship construction contracts are for our newbuild ships based on the euro/U.S.

dollar exchange rate as of March 31, 2024.

As of March 31, 2024, we have committed undrawn export-credit backed facilities of approximately $5.3 billion which funds approximately 80% of our ship construction contracts.

Taking into account the six new ship orders with contracts that became effective subsequent to March 31, 2024 (which includes the two ships on order for Oceania Cruises that are expected to be cancelled, and excludes the orders for the four Norwegian Cruise Line ships, which are not yet effective), our material cash requirements for ship construction contracts are as follows (in thousands):

Ship construction contracts

The above presentation reflects the contractual delivery date in the fourth quarter of 2028 of the second Oceania Cruises ship announced subsequent to March 31, 2024.

dollar exchange rate as of June 30, 2024.

We have committed undrawn export-credit backed facilities of approximately $9.0 billion which funds approximately 80% of our ship construction contracts, with the exception of the two ships on order for Oceania Cruises that are expected to be cancelled.

The above presentation reflects the contractual delivery date in the fourth quarter of 2028 of the second new Oceania Cruises ship.

However, it is expected that this delivery date may be moved to early 2029.

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Substantially all of our ships are pledged as collateral for certain of our debt.

We believe we were in compliance with our covenants as of March 31, 2024.

We believe we were in compliance with our covenants as of June 30, 2024.

In addition, our existing debt agreements restrict, and any of our future debt arrangements may restrict, among other things, the ability of our subsidiaries, including NCLC, to make distributions and/or pay dividends to NCLH and NCLH’s ability to pay cash dividends to its shareholders.

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However, we do not believe that these restrictions have had or are expected to have an impact on our ability to meet any cash obligations.

We believe our cash on hand, the availability under the Revolving Loan Facility and undrawn commitment less related fees, expected future operating cash inflows and our ability to issue debt securities or additional equity securities, will be sufficient to fund operations, debt payment requirements, capital expenditures and maintain compliance with covenants under our debt agreements over the next 12-month period.

We believe our cash on hand, the availability under the Revolving Loan Facility and undrawn commitments less related fees, expected future operating cash inflows and our ability to issue debt securities or additional equity securities, will be sufficient to fund operations, debt payment requirements, capital expenditures and maintain compliance with covenants under our debt agreements over the next 12-month period.

Refer to “—Liquidity and Capital Resources—General” for further information regarding liquidity.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis