Norwegian Cruise Line Holdings Ltd. 10-Q

Item 1. Financial Statements Norwegian Cruise Line Holdings Ltd. Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 Revenue ​ ​ ​ ​ Passenger ticket ​ $ 1,944,921 ​ $ 1,733,594 ​ $ 5,006,811 ​ $ 4,420,909 Onboard and other ​ 861,657 ​ 802,443 ​ 2,363,474 ​ 2,142,559 Total revenue ​ 2,806,578 ​ 2,536,037 ​ 7,370,285 ​ 6,563,468 Cruise operating expense ​ ​ ​ ​ Commissions, transportation and other ​ 564,614 ​ 546,026 ​ 1,501,863 ​ 1,462,565 Onboard and other ​ 211,753 ​ 188,694 ​ 515,496 ​ 470,271 Payroll and related ​ 337,430 ​ 323,862 ​ 1,012,289 ​ 936,237 Fuel ​ 164,934 ​ 170,893 ​ 537,632 ​ 530,003 Food ​ 78,096 ​ 87,839 ​ 239,850 ​ 271,575 Other ​ 182,112 ​ 165,432 ​ 573,987 ​ 476,123 Total cruise operating expense ​ 1,538,939 ​ 1,482,746 ​ 4,381,117 ​ 4,146,774 Other operating expense ​ ​ ​ ​ Marketing, general and administrative ​ 358,001 ​ 325,365 ​ 1,074,241 ​ 1,013,600 Depreciation and amortization ​ 218,428 ​ 204,608 ​ 663,762 ​ 596,513 Total other operating expense ​ 576,429 ​ 529,973 ​ 1,738,003 ​ 1,610,113 Operating income ​ 691,210 ​ 523,318 ​ 1,251,165 ​ 806,581 Non-operating income (expense) ​ ​ ​ ​ ​ ​ ​ ​ Interest expense, net ​ ( 175,216 ) ​ ( 181,201 ) ​ ( 571,865 ) ​ ( 530,150 ) Other income (expense), net ​ ( 34,146 ) ​ 12,060 ​ ( 14,113 ) ​ ( 4,938 ) Total non-operating income (expense) ​ ( 209,362 ) ​ ( 169,141 ) ​ ( 585,978 ) ​ ( 535,088 ) Net income before income taxes ​ 481,848 ​ 354,177 ​ 665,187 ​ 271,493 Income tax benefit (expense) ​ ( 6,916 ) ​ ( 8,309 ) ​ ( 9,466 ) ​ 1,170 Net income ​ $ 474,932 ​ $ 345,868 ​ $ 655,721 ​ $ 272,663 Weighted-average shares outstanding ​ ​ ​ ​ Basic ​ 439,697,135 ​ 425,398,415 ​ 433,790,997 ​ 424,087,517 Diluted ​ 514,878,919 ​ 511,585,445 ​ 514,002,031 ​ 460,819,375 Earnings per share ​ ​ ​ ​ Basic ​ $ 1.08 ​ $ 0.81 ​ $ 1.51 ​ $ 0.64 Diluted ​ $ 0.95 ​ $ 0.71 ​ $ 1.37 ​ $ 0.62 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 3 Table of Contents Norwegian Cruise Line Holdings Ltd. Consolidated Statements of Comprehensive Income (Unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 Net income ​ $ 474,932 ​ $ 345,868 ​ $ 655,721 ​ $ 272,663 Other comprehensive income (loss): ​ ​ ​ ​ Shipboard Retirement Plan ​ 94 ​ 63 ​ 283 ​ 191 Cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ Net unrealized gain (loss) ​ ( 56,078 ) ​ 57,885 ​ ( 7,668 ) ​ 34,833 Amount realized and reclassified into earnings ​ 2,630 ​ ( 6,563 ) ​ ( 3,853 ) ​ ( 13,890 ) Total other comprehensive income (loss) ​ ( 53,354 ) ​ 51,385 ​ ( 11,238 ) ​ 21,134 Total comprehensive income ​ $ 421,578 ​ $ 397,253 ​ $ 644,483 ​ $ 293,797 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 4 Table of Contents Norwegian Cruise Line Holdings Ltd. Consolidated Balance Sheets (Unaudited) (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 332,521 ​ $ 402,415 Accounts receivable, net ​ 200,841 ​ 280,271 Inventories ​ 145,056 ​ 157,646 Prepaid expenses and other assets ​ 500,815 ​ 472,816 Total current assets ​ 1,179,233 ​ 1,313,148 Property and equipment, net ​ 16,743,936 ​ 16,433,292 Goodwill ​ 135,764 ​ 98,134 Trade names ​ 500,525 ​ 500,525 Other long-term assets ​ 1,226,545 ​ 1,147,891 Total assets ​ $ 19,786,003 ​ $ 19,492,990 Liabilities and shareholders’ equity ​ ​ Current liabilities: ​ ​ Current portion of long-term debt ​ $ 1,653,460 ​ $ 1,744,778 Accounts payable ​ 172,937 ​ 174,338 Accrued expenses and other liabilities ​ 1,067,532 ​ 1,058,919 Advance ticket sales ​ 3,144,586 ​ 3,060,666 Total current liabilities ​ 6,038,515 ​ 6,038,701 Long-term debt ​ 11,751,743 ​ 12,314,147 Other long-term liabilities ​ 860,415 ​ 839,335 Total liabilities ​ 18,650,673 ​ 19,192,183 Commitments and contingencies (Note 11) ​ ​ Shareholders’ equity: ​ ​ Ordinary shares, $ 0.001 par value; 980,000,000 shares authorized; 439,702,246 shares issued and outstanding at September 30, 2024 and 425,546,570 shares issued and outstanding at December 31, 2023 ​ 440 ​ 425 Additional paid-in capital ​ 7,898,982 ​ 7,708,957 Accumulated other comprehensive income (loss) ​ ( 519,676 ) ​ ( 508,438 ) Accumulated deficit ​ ( 6,244,416 ) ​ ( 6,900,137 ) Total shareholders’ equity ​ 1,135,330 ​ 300,807 Total liabilities and shareholders’ equity ​ $ 19,786,003 ​ $ 19,492,990 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 5 Table of Contents Norwegian Cruise Line Holdings Ltd. Consolidated Statements of Cash Flows (Unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2024 2023 Cash flows from operating activities ​ ​ Net income ​ $ 655,721 ​ $ 272,663 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ Depreciation and amortization expense ​ ​ 726,877 ​ 649,958 (Gain) loss on derivatives ​ ​ ( 712 ) ​ ​ 9,338 Loss on extinguishment of debt ​ 29,175 ​ 2,801 Provision for bad debts and inventory obsolescence ​ 3,668 ​ 3,640 Gain on involuntary conversion of assets ​ ​ ( 4,605 ) ​ ​ ( 4,583 ) Share-based compensation expense ​ 65,570 ​ 96,254 Net foreign currency adjustments on euro-denominated debt ​ 6,811 ​ ( 2,027 ) Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable, net ​ 72,341 ​ 80,064 Inventories ​ 12,160 ​ ( 18,120 ) Prepaid expenses and other assets ​ 26,244 ​ 437,465 Accounts payable ​ ( 8,388 ) ​ ( 60,971 ) Accrued expenses and other liabilities ​ ( 25,154 ) ​ ( 139,188 ) Advance ticket sales ​ 90,859 ​ 419,420 Net cash provided by operating activities ​ 1,650,567 ​ 1,746,714 Cash flows from investing activities ​ ​ Additions to property and equipment, net ​ ( 967,516 ) ​ ( 2,102,698 ) Cash paid on settlement of derivatives ​ ​ — ​ ​ ( 118,610 ) Acquisition, net of cash acquired ​ ​ ( 27,322 ) ​ ​ — Other ​ ​ 9,164 ​ ​ 14,678 Net cash used in investing activities ​ ( 985,674 ) ​ ( 2,206,630 ) Cash flows from financing activities ​ ​ Repayments of long-term debt ​ ( 1,268,605 ) ​ ( 2,629,681 ) Proceeds from long-term debt ​ 688,901 ​ 2,989,183 Proceeds from employee related plans ​ — ​ 5,307 Net share settlement of restricted share units ​ ( 22,058 ) ​ ( 25,271 ) Early redemption premium ​ ( 19,166 ) ​ — Deferred financing fees ​ ( 113,859 ) ​ ( 145,051 ) Net cash provided by (used in) financing activities ​ ( 734,787 ) ​ 194,487 Net decrease in cash and cash equivalents ​ ( 69,894 ) ​ ( 265,429 ) Cash and cash equivalents at beginning of period ​ 402,415 ​ 946,987 Cash and cash equivalents at end of period ​ $ 332,521 ​ $ 681,558 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 6 Table of Contents Norwegian Cruise Line Holdings Ltd. Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Ordinary ​ Paid-in ​ Comprehensive ​ Accumulated ​ Shareholders’ ​ ​ Shares Capital Income (Loss) Deficit Equity Balance, June 30, 2024 $ 440 ​ $ 7,878,363 ​ $ ( 466,322 ) ​ $ ( 6,719,348 ) ​ $ 693,133 Share-based compensation ​ — ​ ​ 20,638 ​ ​ — ​ ​ — ​ ​ 20,638 Net share settlement of restricted share units ​ — ​ ​ ( 19 ) ​ ​ — ​ ​ — ​ ​ ( 19 ) Other comprehensive loss, net ​ — ​ ​ — ​ ​ ( 53,354 ) ​ ​ — ​ ​ ( 53,354 ) Net income ​ — ​ ​ — ​ ​ — ​ ​ 474,932 ​ ​ 474,932 Balance, September 30, 2024 ​ $ 440 ​ $ 7,898,982 ​ $ ( 519,676 ) ​ $ ( 6,244,416 ) ​ $ 1,135,330 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Ordinary ​ Paid-in ​ Comprehensive ​ Accumulated ​ Shareholders’ ​ Shares Capital Income (Loss) Deficit Equity Balance, December 31, 2023 $ 425 ​ $ 7,708,957 ​ $ ( 508,438 ) ​ $ ( 6,900,137 ) ​ $ 300,807 Share-based compensation ​ — ​ 65,570 ​ — ​ — ​ 65,570 Issuance of shares under employee related plans ​ 4 ​ ( 4 ) ​ — ​ — ​ — Common share issuance for NCLC exchangeable notes ​ ​ 11 ​ ​ 146,517 ​ ​ — ​ ​ — ​ ​ 146,528 Net share settlement of restricted share units ​ — ​ ( 22,058 ) ​ — ​ — ​ ( 22,058 ) Other comprehensive loss, net ​ — ​ — ​ ( 11,238 ) ​ — ​ ( 11,238 ) Net income ​ — ​ — ​ — ​ 655,721 ​ 655,721 Balance, September 30, 2024 ​ $ 440 ​ $ 7,898,982 ​ $ ( 519,676 ) ​ $ ( 6,244,416 ) ​ $ 1,135,330 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 7 Table of Contents Norwegian Cruise Line Holdings Ltd. Consolidated Statements of Changes in Shareholders’ Equity - Continued (Unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Ordinary ​ Paid-in ​ Comprehensive ​ Accumulated ​ Shareholders’ ​ ​ Shares Capital Income (Loss) Deficit Equity Balance, June 30, 2023 $ 425 ​ $ 7,661,646 ​ $ ( 507,330 ) ​ $ ( 7,139,520 ) ​ $ 15,221 Share-based compensation ​ — ​ 23,563 ​ — ​ — ​ 23,563 Issuance of shares under employee related plans ​ — ​ 2,689 ​ ​ — ​ ​ — ​ ​ 2,689 Net share settlement of restricted share units ​ — ​ ( 48 ) ​ — ​ — ​ ( 48 ) Common share issuance for NCLC exchangeable notes ​ ​ — ​ ​ 10 ​ ​ — ​ ​ — ​ ​ 10 Other comprehensive income, net ​ — ​ — ​ 51,385 ​ — ​ 51,385 Net income ​ — ​ ​ — ​ ​ — ​ ​ 345,868 ​ ​ 345,868 Balance, September 30, 2023 ​ $ 425 ​ $ 7,687,860 ​ $ ( 455,945 ) ​ $ ( 6,793,652 ) ​ $ 438,688 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Ordinary ​ Paid-in ​ Comprehensive ​ Accumulated ​ Shareholders’ ​ Shares Capital Income (Loss) Deficit Equity Balance, December 31, 2022 $ 421 ​ $ 7,611,564 ​ $ ( 477,079 ) ​ $ ( 7,066,315 ) ​ $ 68,591 Share-based compensation ​ — ​ 96,254 ​ — ​ — ​ 96,254 Issuance of shares under employee related plans ​ 4 ​ 5,303 ​ — ​ — ​ 5,307 Common share issuance for NCLC exchangeable notes ​ ​ — ​ ​ 10 ​ ​ — ​ ​ — ​ ​ 10 Net share settlement of restricted share units ​ — ​ ( 25,271 ) ​ — ​ — ​ ( 25,271 ) Other comprehensive income, net ​ ​ — ​ — ​ 21,134 ​ — ​ 21,134 Net income ​ — ​ ​ — ​ ​ — ​ ​ 272,663 ​ ​ 272,663 Balance, September 30, 2023 ​ $ 425 ​ $ 7,687,860 ​ $ ( 455,945 ) ​ $ ( 6,793,652 ) ​ $ 438,688 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ ​ 8 Table of Contents Norwegian Cruise Line Holdings Ltd. Notes to Consolidated Financial Statements (Unaudited) Unless otherwise indicated or the context otherwise requires, references in this report to (i) the “Company,” “we,” “our” and “us” refer to NCLH (as defined below) and its subsidiaries, (ii) “NCLC” refers to NCL Corporation Ltd., (iii) “NCLH” refers to Norwegian Cruise Line Holdings Ltd., (iv) “Norwegian Cruise Line” or “Norwegian” refers to the Norwegian Cruise Line brand and its predecessors, (v) “Oceania Cruises” refers to the Oceania Cruises brand and (vi) “Regent” refers to the Regent Seven Seas Cruises brand. References to the “U.S.” are to the United States of America, and “dollar(s)” or “$” are to U.S. dollars, the “U.K.” are to the United Kingdom and “euro(s)” or “€” are to the official currency of the Eurozone. We refer you to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Terminology” for the capitalized terms used and not otherwise defined throughout these notes to consolidated financial statements. 1. Description of Business and Organization We are a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. As of September 30, 2024, we had 32 ships with approximately 66,400 Berths. The Company expects to add thirteen additional ships to our fleet from 2025 through 2036. We have four Prima Class Ships on order with currently scheduled delivery dates from 2025 through 2028. We have one Allura Class Ship on order for delivery in 2025. We also have orders for three new classes of ships: four Oceania Cruises ships with deliveries currently scheduled from 2027 through 2031, two Prestige Class Ships with deliveries currently scheduled in 2026 and 2029 and four Norwegian Cruise Line ships with deliveries currently scheduled from 2030 through 2036. The orders for two of the new class of Oceania Cruises ships currently scheduled for delivery in 2030 and 2031 are expected to be cancelled. ​ ​ 2. Summary of Significant Accounting Policies Liquidity As of September 30, 2024, we had liquidity of approximately $ 2.4 billion, including cash and cash equivalents of $ 332.5 million, borrowings available under our $ 1.2 billion undrawn Revolving Loan Facility, a € 200 million commitment that can be used for future newbuild payments and a $ 650 million undrawn commitment of senior unsecured notes issuable by NCLC less related fees (see Note 8 – “Long-Term Debt” for further information regarding our commitments). We believe that we have sufficient liquidity to fund our obligations and expect to remain in compliance with our financial covenants for at least the next twelve months from the issuance of these financial statements. We will continue to pursue various opportunities to refinance future debt maturities to reduce interest expense and/or to extend the maturity dates associated with our existing indebtedness and obtain relevant financial covenant amendments or waivers, if needed. Basis of Presentation The accompanying consolidated financial statements are unaudited and, in our opinion, contain all normal recurring adjustments necessary for a fair statement of the results for the periods presented. Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire fiscal year. Historically, demand for cruises has been strongest during the Northern Hemisphere’s summer months. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023, which are included in our most recent Annual Report on Form 10-K filed with the SEC on February 28, 2024. 9 Table of Contents Earnings Per Share Basic earnings per share is computed by dividing net income by the basic weighted-average number of shares outstanding during each period. Diluted earnings per share is computed by dividing net income and assumed conversion of exchangeable notes by diluted weighted-average shares outstanding. A reconciliation between basic and diluted earnings per share was as follows (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 Net income - Basic EPS ​ $ 474,932 ​ $ 345,868 ​ $ 655,721 ​ $ 272,663 Effect of dilutive securities - exchangeable notes ​ ​ 14,965 ​ ​ 17,510 ​ ​ 48,323 ​ ​ 13,809 Net income and assumed conversion of exchangeable notes - Diluted EPS ​ $ 489,897 ​ $ 363,378 ​ $ 704,044 ​ $ 286,472 Basic weighted-average shares outstanding ​ 439,697,135 ​ 425,398,415 ​ 433,790,997 ​ 424,087,517 Dilutive effect of share awards ​ 3,333,627 ​ 3,676,562 ​ 3,201,373 ​ 2,594,108 Dilutive effect of exchangeable notes ​ ​ 71,848,157 ​ ​ 82,510,468 ​ ​ 77,009,661 ​ ​ 34,137,750 Diluted weighted-average shares outstanding ​ 514,878,919 ​ 511,585,445 ​ 514,002,031 ​ 460,819,375 Basic EPS ​ $ 1.08 ​ $ 0.81 ​ $ 1.51 ​ $ 0.64 Diluted EPS ​ $ 0.95 ​ $ 0.71 ​ $ 1.37 ​ $ 0.62 ​ Each exchangeable note (see Note 8 – “Long-Term Debt”) is individually evaluated for its dilutive or anti-dilutive impact on EPS as determined under the if-converted method. Only the interest expense and weighted average shares for exchangeable notes that are dilutive are included in the effect of dilutive securities above. During the nine months ended September 30, 2023, the 2024 Exchangeable Notes, 2025 Exchangeable Notes and 2027 2.5% Exchangeable Notes were anti-dilutive. Share awards are evaluated for a dilutive or anti-dilutive impact on EPS using the treasury stock method. For the three months ended September 30, 2024 and 2023, a total of 2.5 million and 3.8 million shares, respectively, and for the nine months ended September 30, 2024 and 2023, a total of 6.1 million and 54.4 million shares, respectively, have been excluded from diluted weighted-average shares outstanding because the effect of including them would have been anti-dilutive. Foreign Currency The majority of our transactions are settled in U.S. dollars. We remeasure assets and liabilities denominated in foreign currencies at exchange rates in effect at the balance sheet date. The resulting gains or losses are recognized in our consolidated statements of operations within other income (expense), net. We recognized a loss of $ 32.1 million and a gain of $ 15.7 million for the three months ended September 30, 2024 and 2023, respectively, and losses of $ 16.5 million and $ 4.2 million for the nine months ended September 30, 2024 and 2023, respectively, related to remeasurement of assets and liabilities denominated in foreign currencies. Remeasurements of foreign currency related to operating activities are recognized within changes in operating assets and liabilities in the consolidated statement of cash flows. Depreciation and Amortization Expense The amortization of deferred financing fees is included in depreciation and amortization expense in the consolidated statements of cash flows; however, for purposes of the consolidated statements of operations they are included in interest expense, net. Accounts Receivable, Net Accounts receivable, net included $ 4.9 million and $ 20.1 million due from credit card processors as of September 30, 2024 and December 31, 2023, respectively. 10 Table of Contents Recently Issued Accounting Guidance In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 includes additional disclosures on an interim and annual basis and requires that the disclosures be applied to public entities that have a single reportable segment. These provisions are effective for fiscal years beginning after December 15, 2023 and interim periods after December 15, 2024. ASU 2023-07 shall be applied retrospectively unless it is impracticable to do so. We do not expect the adoption of ASU 2023-07 to have a material impact on our consolidated financial statements other than the expanded footnote disclosure. ​ In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information as well as certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024 and should be applied on a prospective basis. We are evaluating the impact of ASU 2023-09 on our notes to the consolidated financial statements. ​ 3. Acquisition ​ On April 25, 2024, Norwegian acquired 100 % of the voting equity interest of Independent Maritime Advisors Ltd. (“IMA”), a consulting company specializing in project management for newbuilds and vessel conversions for $ 37.5 million, which consisted primarily of cash and also included deferred consideration and the settlement of a pre-existing relationship. Norwegian acquired IMA to bring newbuild project management and supervision in-house and optimize the overall capital outflow for newbuild expenditures, which generates synergies that create goodwill. ​ The preliminary purchase price was allocated as follows (in thousands): ​ ​ ​ ​ ​ Assets, other than goodwill ​ $ 4,302 Goodwill ​ 37,630 Liabilities ​ ( 9,088 ) Total consideration allocated, net of $ 4.7 million of cash acquired ​ $ 32,844 ​ As of September 30, 2024, the measurement period pertaining to the acquisition remains open and is subject to further adjustment. The acquisition includes deferred consideration, which is currently considered probable of payment in full; however, if new information arises, a change in consideration could impact our goodwill or liabilities. The acquisition of IMA does not have a material impact on the Company’s consolidated statements of operations. ​ 4. Revenue Recognition Disaggregation of Revenue Revenue and cash flows are affected by economic factors in various geographical regions. Revenues by destination were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 North America ​ $ 1,315,224 ​ $ 1,234,852 ​ $ 4,052,094 ​ $ 3,817,082 Europe ​ 1,439,473 ​ 1,284,421 ​ 2,519,770 ​ 2,245,868 Asia-Pacific ​ 50,294 ​ 15,972 ​ 565,823 ​ 311,524 Other ​ ​ 1,587 ​ ​ 792 ​ ​ 232,598 ​ ​ 188,994 Total revenue ​ $ 2,806,578 ​ $ 2,536,037 ​ $ 7,370,285 ​ $ 6,563,468 ​ 11 Table of Contents North America includes the U.S., the Caribbean, Canada and Mexico. Europe includes the Baltic region, Canary Islands and Mediterranean. Asia-Pacific includes Australia, New Zealand and Asia. Other includes all other international territories. Segment Reporting and Geographic Concentration We have concluded that our business has a single reportable segment. Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced guests who make reservations through the U.S. Revenue attributable to U.S.-sourced guests has approximated 84 - 87 % of total revenue over the preceding three fiscal years. No other individual country’s revenues exceed 10% in any given period. Contract Balances Receivables from customers are included within accounts receivable, net. As of September 30, 2024 and December 31, 2023, our receivables from customers were $ 107.0 million and $ 126.4 million, respectively, primarily related to in-transit credit card receivables. ​ Future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19 are approximately $ 63.2 million. The future cruise credits are not contracts, and therefore, guests who elected this option are excluded from our contract liability balance; however, the credit for the original amount paid is included in advance ticket sales. ​ Our contract liabilities are included within advance ticket sales. As of September 30, 2024 and December 31, 2023, our contract liabilities were $ 2.2 billion. Of the amounts included within contract liabilities as of September 30, 2024, approximately 40 % were refundable in accordance with our cancellation policies. Of the deposits included within advance ticket sales, the majority are refundable in accordance with our cancellation policies and it is uncertain to what extent guests may request refunds. For the nine months ended September 30, 2024, $ 2.1 billion of revenue recognized was included in the contract liability balance at the beginning of the period. ​ ​ ​ 5. Leases Operating lease balances were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance Sheet location September 30, 2024 December 31, 2023 Operating leases ​ ​ ​ Right-of-use assets Other long-term assets ​ $ 764,481 ​ $ 753,652 Current operating lease liabilities Accrued expenses and other liabilities ​ ​ 27,939 ​ ​ 23,226 Non-current operating lease liabilities Other long-term liabilities ​ ​ 652,489 ​ ​ 644,646 ​ ​ ​ ​ ​ 12 Table of Contents 6. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) for the nine months ended September 30, 2024 was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2024 ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ Accumulated ​ Change ​ Related to ​ ​ ​ Other ​ Related to ​ Shipboard ​ ​ ​ Comprehensive ​ Cash Flow ​ Retirement ​ ​ Income (Loss) Hedges ​ Plan ​ Accumulated other comprehensive income (loss) at beginning of period ​ $ ( 508,438 ) ​ $ ( 508,524 ) ​ $ 86 Current period other comprehensive loss before reclassifications ​ ( 7,668 ) ​ ( 7,668 ) — Amounts reclassified into earnings ​ ( 3,570 ) ​ ( 3,853 ) (1) 283 (2) Accumulated other comprehensive income (loss) at end of period ​ $ ( 519,676 ) ​ $ ( 520,045 ) (3) $ 369 ​ Accumulated other comprehensive income (loss) for the nine months ended September 30, 2023 was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ Change ​ ​ Accumulated ​ Change ​ Related to ​ ​ ​ Other ​ Related to ​ Shipboard ​ ​ ​ Comprehensive ​ Cash Flow ​ Retirement ​ ​ Income (Loss) Hedges ​ Plan ​ Accumulated other comprehensive income (loss) at beginning of period $ ( 477,079 ) ​ $ ( 480,578 ) ​ $ 3,499 Current period other comprehensive income before reclassifications 34,833 34,833 — Amounts reclassified into earnings ( 13,699 ) ( 13,890 ) (1) 191 (2) Accumulated other comprehensive income (loss) at end of period $ ( 455,945 ) $ ( 459,635 ) ​ $ 3,690 (1) We refer you to Note 9 – “Fair Value Measurements and Derivatives” for the affected line items in the consolidated statements of operations. (2) Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net. (3) Includes $ 43.9 million of losses expected to be reclassified into earnings in the next 12 months. ​ 7. Property and Equipment, Net Property and equipment, net increased $ 310.6 million for the nine months ended September 30, 2024 primarily due to ships under construction. 8. Long-Term Debt In February 2024, NCLC and the purchasers named therein (collectively, the “Commitment Parties”) entered into a third amended and restated commitment letter (the “third amended commitment letter”), which became effective in March 2024. The third amended commitment letter amended and restated the commitment letter dated February 22, 2023 and extended the commitments thereunder through March 2025. 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 (the “Commitment Notes”) at NCLC’s option. If issued, the Commitment Notes will be subject to an issue fee of 0.50 % and will bear interest at a rate per annum equal to (A) the greater of (i) the interest rate of the 7.75 % senior notes due 2029 (“2029 Unsecured Notes”) and (ii) the then-current secondary trading yield applicable to the 2029 Unsecured Notes plus (B) 200 basis points . The Commitment Notes are 13 Table of Contents subject to a one-time structuring fee of 0.50 % and a quarterly commitment fee of 0.75 % for so long as the commitments with respect to the Commitment Notes are outstanding. 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 (the “2028 Secured Notes”) at a negotiated premium plus accrued and unpaid interest thereon. In March 2024, in connection with the settlement of the repurchase, the aggregate principal amount outstanding under the 2028 Secured Notes was cancelled while also releasing the related collateral. The loss on extinguishment was $ 29.0 million, recognized in interest expense, net. In November 2023, we executed an agreement for a commitment of € 200 million in connection with financial support for our newbuilds, which became available in April 2024. The commitment if drawn will pay interest quarterly at a rate per annum based on an applicable margin plus Euribor 3-months. The commitment may be drawn at any time and is payable within 364 days , but no later than July 15, 2025. Any amount repaid prior to July 15, 2025 may be drawn again. In September 2024, NCLC issued $ 315.0 million aggregate principal amount of 6.250 % senior unsecured notes due March 1, 2030 (the “2030 Notes”). NCLC may, at its option, redeem the 2030 Notes, in whole or in part, (i) prior to March 1, 2027 (the “First Call Date”), at a redemption price equal to 100 % of the principal amount of the 2030 Notes to be redeemed plus an applicable “make-whole” amount, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, and (ii) on or after the First Call Date, at the redemption prices set forth in the 2030 Notes indenture, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date. In addition, at any time and from time to time prior to the First Call Date, NCLC may redeem up to 40 % of the aggregate principal amount of the 2030 Notes with the net proceeds of certain equity offerings at a redemption price equal to 106.250 % of the principal amount of the 2030 Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, so long as at least 60 % of the aggregate principal amount of the 2030 Notes issued remains outstanding following such redemption. The 2030 Notes pay interest at 6.250 % per annum, semiannually in arrears on March 1 and September 1 of each year, to holders of record at the close of business on the immediately preceding February 15 and August 15, respectively. The 2030 Notes indenture contains covenants that limit the ability of NCLC and its restricted subsidiaries to, among other things: (i) grant or assume certain liens; (ii) enter into sale leaseback transactions; and (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of their assets. The net proceeds for the 2030 Notes, after deducting the initial purchasers’ discount but before deducting estimated fees and expenses, together with cash on hand, were used to redeem $ 315.0 million aggregate principal amount of the 3.625 % senior notes due 2024, including to pay any accrued and unpaid interest thereon. Exchangeable Notes The following is a summary of NCLC’s exchangeable notes as of September 30, 2024 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unamortized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal ​ Deferred ​ Net Carrying ​ Fair Value ​ Amount Financing Fees Amount Amount Leveling 2025 Exchangeable Notes (1) ​ $ 449,990 ​ $ ( 2,137 ) ​ $ 447,853 ​ $ 551,310 ​ Level 2 2027 1.125% Exchangeable Notes ​ ​ 1,150,000 ​ ​ ( 13,730 ) ​ ​ 1,136,270 ​ ​ 1,114,166 ​ Level 2 2027 2.5% Exchangeable Notes ​ ​ 473,175 ​ ​ ( 6,043 ) ​ ​ 467,132 ​ ​ 469,877 ​ Level 2 ​ 14 Table of Contents The following is a summary of NCLC’s exchangeable notes as of December 31, 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unamortized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal ​ Deferred ​ Net Carrying ​ Fair Value ​ Amount Financing Fees Amount Amount Leveling 2024 Exchangeable Notes (2) ​ $ 146,601 ​ $ ( 557 ) ​ $ 146,044 ​ $ 217,790 ​ Level 2 2025 Exchangeable Notes ​ ​ 449,990 ​ ​ ( 3,963 ) ​ ​ 446,027 ​ ​ 572,567 ​ Level 2 2027 1.125% Exchangeable Notes ​ ​ 1,150,000 ​ ​ ( 17,921 ) ​ ​ 1,132,079 ​ ​ 1,068,431 ​ Level 2 2027 2.5% Exchangeable Notes ​ ​ 473,175 ​ ​ ( 7,836 ) ​ ​ 465,339 ​ ​ 453,784 ​ Level 2 (1) Classified within current portion of long-term debt as of September 30, 2024. We expect that the holders of the 2025 Exchangeable Notes will exchange their 2025 Exchangeable Notes for NCLH ordinary shares. (2) Classified within current portion of long-term debt as of December 31, 2023. During the nine months ended September 30, 2024, substantially all the holders of 2024 Exchangeable Notes elected to exchange their 2024 Exchangeable Notes for 10,658,607 NCLH ordinary shares and the remaining unexchanged notes were repaid in cash at maturity. The following provides a summary of the interest expense of NCLC’s exchangeable notes (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2024 2023 ​ 2024 2023 Coupon interest ​ $ 12,238 ​ $ 14,438 ​ $ 39,983 ​ $ 43,313 Amortization of deferred financing fees ​ ​ 2,727 ​ ​ 3,072 ​ ​ 8,339 ​ ​ 8,571 Total ​ $ 14,965 ​ $ 17,510 ​ $ 48,322 ​ $ 51,884 ​ As of September 30, 2024, the effective interest rate is 5.97 %, 1.64 % and 3.06 % for the 2025 Exchangeable Notes, 2027 1.125% Exchangeable Notes and 2027 2.5% Exchangeable Notes, respectively. ​ Debt Repayments The following are scheduled principal repayments on our long-term debt including exchangeable notes, which can be settled in NCLH ordinary shares, and finance lease obligations as of September 30, 2024 (in thousands): ​ ​ ​ ​ ​ Year Amount Remainder of 2024 ​ $ 580,337 2025 ​ 1,324,480 2026 ​ 2,243,781 2027 ​ 3,308,071 2028 ​ 1,719,541 2029 ​ ​ 1,934,831 Thereafter ​ 2,600,722 Total ​ $ 13,711,763 ​ Debt Covenants As of September 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 our covenants. However, no assurances can be made that such amendments or waivers would be approved by our lenders. Generally, if an event of default under any debt agreement occurs, then pursuant to cross default and/or cross acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated, which would have a material adverse impact on our operations and liquidity. 15 Table of Contents 9. Fair Value Measurements and Derivatives Fair value is defined as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability). Derivatives are generally recorded at fair value. Contracts that are designated as normal purchases and normal sales are not recorded at fair value. The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business. All of our allowance purchase agreements related to the European Union’s Emissions Trading System meet the criteria specified for this exception. Fair Value Hierarchy The following hierarchy for inputs used in measuring fair value should maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available: Level 1 Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement dates. Level 2 Significant other observable inputs that are used by market participants in pricing the asset or liability based on market data obtained from independent sources. Level 3 Significant unobservable inputs we believe market participants would use in pricing the asset or liability based on the best information available. Derivatives We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We attempt to minimize these risks through a combination of our normal operating and financing activities and through the use of derivatives. We assess whether derivatives used in hedging transactions are “highly effective” in offsetting changes in the cash flow of our hedged forecasted transactions. We use critical terms match or regression analysis for hedge relationships and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings. There are no amounts excluded from the assessment of hedge effectiveness, and there are no credit-risk-related contingent features in our derivative agreements. We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivatives, is not considered significant, as we primarily conduct business with large, well-established financial institutions with which we have established relationships, and which have credit risks acceptable to us, or the credit risk is spread out among many creditors. We do not anticipate non-performance by any of our significant counterparties. As of September 30, 2024, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 846 thousand metric tons of our projected fuel purchases, maturing through December 31, 2026 . As of September 30, 2024, we had fuel swaps pertaining to approximately 4 thousand metric tons of our projected fuel purchases which were not designated as cash flow hedges maturing through February 28, 2025 . ​ 16 Table of Contents The derivatives measured at fair value and the respective location in the consolidated balance sheets include the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets ​ Liabilities ​ ​ ​ ​ September 30, ​ December 31, ​ September 30, ​ December 31, ​ Balance Sheet Location 2024 2023 2024 2023 Derivative Contracts Designated as Hedging Instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fuel contracts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrued expenses and other liabilities ​ $ 299 ​ $ 4,309 ​ $ 25,394 ​ $ 11,247 ​ ​ Other long-term liabilities ​ 475 ​ 137 ​ 9,827 ​ 8,932 Total derivatives designated as hedging instruments ​ $ 774 ​ $ 4,446 ​ $ 35,221 ​ $ 20,179 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative Contracts Not Designated as Hedging Instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fuel contracts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrued expenses and other liabilities ​ $ — ​ $ 141 ​ $ 458 ​ $ 1,031 ​ ​ Other long-term liabilities ​ ​ — ​ — ​ — ​ 280 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total derivatives not designated as hedging instruments ​ $ — ​ $ 141 ​ $ 458 ​ $ 1,311 Total derivatives ​ ​ ​ $ 774 ​ $ 4,587 ​ $ 35,679 ​ $ 21,490 ​ The fair values of swap and forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Company determines the value of options and collars utilizing an option pricing model based on inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets. The option pricing model used by the Company is an industry standard model for valuing options and is used by the broker/dealer community. The inputs to this option pricing model are the option strike price, underlying price, risk-free rate of interest, time to expiration, and volatility. The fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. Our derivatives and financial instruments were categorized as Level 2 in the fair value hierarchy, and we had no derivatives or financial instruments categorized as Level 1 or Level 3. Our derivative contracts include rights of offset with our counterparties. We have elected to net certain assets and liabilities within counterparties when the rights of offset exist. We are not required to post cash collateral related to our derivative instruments. The following table discloses the gross and net amounts recognized within assets and liabilities (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ Gross ​ Amounts ​ Total Net ​ Amounts ​ ​ ​ September 30, 2024 Amounts Offset Amounts Not Offset Net Amounts Liabilities ​ $ 35,679 ​ $ ( 774 ) ​ $ 34,905 ​ $ — ​ $ 34,905 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ Gross ​ Amounts ​ Total Net ​ Amounts ​ ​ ​ December 31, 2023 Amounts Offset Amounts Not Offset Net Amounts Liabilities ​ $ 21,490 ​ $ ( 4,587 ) ​ $ 16,903 ​ $ — ​ $ 16,903 ​ ​ 17 Table of Contents The effects of cash flow hedge accounting on accumulated other comprehensive income (loss) were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location of Gain ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Loss) Reclassified ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ from Accumulated ​ Amount of Gain (Loss) Reclassified ​ ​ Amount of Gain (Loss) ​ Other Comprehensive ​ from Accumulated Other ​ ​ Recognized in Other ​ Income (Loss) into ​ Comprehensive Income Derivatives Comprehensive Loss Income (Expense) (Loss) into Income (Expense) ​ ​ Three Months ​ Three Months ​ ​ ​ Three Months ​ Three Months ​ ​ Ended ​ Ended ​ ​ ​ Ended ​ Ended ​ September 30, 2024 September 30, 2023 ​ September 30, 2024 September 30, 2023 Fuel contracts ​ $ ( 56,615 ) ​ $ 74,710 Fuel ​ $ 1,440 ​ $ 9,540 Fuel contracts ​ ​ — ​ ​ — ​ Other income (expense), net ​ ​ 49 ​ ​ 417 Foreign currency contracts ​ 537 ​ ( 16,825 ) Depreciation and amortization ​ ( 4,119 ) ​ ( 3,394 ) Total gain (loss) recognized in other comprehensive loss ​ $ ( 56,078 ) ​ $ 57,885 ​ $ ( 2,630 ) ​ $ 6,563 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location of Gain ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Loss) Reclassified ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ from Accumulated ​ Amount of Gain (Loss) Reclassified ​ ​ Amount of Gain (Loss) ​ Other Comprehensive ​ from Accumulated Other ​ ​ Recognized in Other ​ Income (Loss) into ​ Comprehensive Income Derivatives Comprehensive Loss Income (Expense) (Loss) into Income (Expense) ​ ​ Nine Months ​ Nine Months ​ ​ ​ Nine Months ​ Nine Months ​ ​ Ended ​ Ended ​ ​ ​ Ended ​ Ended ​ September 30, 2024 September 30, 2023 ​ ​ September 30, 2024 September 30, 2023 Fuel contracts $ ( 8,327 ) ​ $ 33,640 ​ Fuel $ 14,855 ​ $ 22,709 Fuel contracts ​ ​ — ​ ​ — ​ Other income (expense), net ​ ​ 1,356 ​ ​ 74 Foreign currency contracts 659 ​ 1,193 ​ Depreciation and amortization ( 12,358 ) ​ ( 8,893 ) Total gain (loss) recognized in other comprehensive loss $ ( 7,668 ) ​ $ 34,833 ​ $ 3,853 ​ $ 13,890 ​ ​ 18 Table of Contents The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2024 ​ Three Months Ended September 30, 2023 ​ ​ ​ ​ ​ Depreciation ​ ​ ​ ​ ​ ​ ​ Depreciation ​ ​ ​ ​ ​ ​ ​ ​ and ​ Other Income ​ ​ ​ ​ and ​ Other Income ​ Fuel Amortization ( Expense), net Fuel Amortization ( Expense), net Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded ​ $ 164,934 ​ $ 218,428 ​ $ ( 34,146 ) ​ $ 170,893 ​ $ 204,608 ​ $ 12,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) ​ ​ ​ ​ ​ ​ Fuel contracts ​ ​ 1,440 ​ ​ — ​ ​ — ​ ​ 9,540 ​ ​ — ​ ​ — Foreign currency contracts ​ ​ — ​ ​ ( 4,119 ) ​ ​ — ​ ​ — ​ ​ ( 3,394 ) ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) as a result that a forecasted transaction is no longer probable of occurring ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fuel contracts ​ ​ — ​ ​ — ​ ​ 49 ​ ​ — ​ ​ — ​ ​ 417 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2024 ​ Nine Months Ended September 30, 2023 ​ ​ ​ ​ ​ Depreciation ​ ​ ​ ​ ​ ​ ​ Depreciation ​ ​ ​ ​ ​ ​ ​ ​ and ​ Other Income ​ ​ ​ ​ and ​ Other Income ​ Fuel Amortization ( Expense), net Fuel Amortization ( Expense), net Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded ​ $ 537,632 ​ $ 663,762 ​ $ ( 14,113 ) ​ $ 530,003 ​ $ 596,513 ​ $ ( 4,938 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) ​ ​ ​ ​ ​ ​ ​ Fuel contracts ​ 14,855 ​ — ​ — ​ 22,709 ​ — ​ ​ — Foreign currency contracts ​ — ​ ​ ( 12,358 ) ​ — ​ — ​ ( 8,893 ) ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) as a result that a forecasted transaction is no longer probable of occurring ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fuel contracts ​ ​ — ​ ​ — ​ ​ 1,356 ​ ​ — ​ ​ — ​ ​ 74 ​ The effects of derivatives not designated as hedging instruments on the consolidated statements of operations include the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of Gain (Loss) Recognized in Income ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ Location of Gain (Loss) 2024 2023 2024 2023 Derivatives not designated as hedging instruments ​ ​ ​ ​ ​ Fuel contracts Other income (expense), net ​ $ ( 401 ) ​ $ 1,369 ​ $ 1,785 ​ $ 522 ​ Long-Term Debt As of September 30, 2024 and December 31, 2023, the fair value of our long-term debt, including the current portion, was $ 13.2 billion and $ 13.5 billion, respectively, which was $ 0.5 billion and $ 0.9 billion lower, respectively, than the 19 Table of Contents carrying values, excluding deferred financing costs. The difference between the fair value and carrying value of our long-term debt is due to our fixed and variable rate debt obligations carrying interest rates that are above or below market rates at the measurement dates. The fair value of our long-term revolving and term loan facilities was calculated based on estimated rates for the same or similar instruments with similar terms and remaining maturities. The fair value of our exchangeable notes considers observable risk-free rates; credit spreads of the same or similar instruments; and share prices, tenors, and historical and implied volatilities which are sourced from observable market data. The inputs are considered to be Level 2 in the fair value hierarchy. Market risk associated with our long-term variable rate debt is the potential increase in interest expense from an increase in interest rates or from an increase in share values. Other The carrying amounts reported in the consolidated balance sheets of all other financial assets and liabilities approximate fair value. ​ ​ 10. Employee Benefits and Compensation Plans In January 2013, NCLH adopted the 2013 Performance Incentive Plan, which as amended and restated through 2023 (the “Restated 2013 Plan”), provided for a maximum aggregate limit of 42,009,006 NCLH ordinary shares that could have been delivered pursuant to all awards granted under the plan. In June 2024, NCLH’s shareholders approved a further amendment and restatement of the Restated 2013 Plan to increase the number of NCLH ordinary shares that may be delivered by 3,000,000 , resulting in an increase in the maximum aggregate limit to 45,009,006 NCLH ordinary shares. Restricted Share Unit Awards In March 2024, NCLH granted 4.5 million time-based restricted share unit awards to our employees, which primarily vest in substantially equal installments over three years . Additionally, in March 2024, NCLH granted 0.9 million performance-based restricted share units to certain members of our management team, which vest upon the achievement of certain pre-established performance targets established through 2026 and the satisfaction of an additional time-based vesting requirement that generally requires continued employment through March 1, 2027. The following is a summary of restricted share unit activity for the nine months ended September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Weighted- ​ Number of ​ Weighted- ​ ​ Time-Based ​ Average Grant ​ Performance- ​ Average Grant ​ Awards Date Fair Value Based Awards Date Fair Value Non-vested as of January 1, 2024 9,083,120 ​ $ 17.39 2,140,134 ​ $ 19.41 Granted 4,673,132 ​ ​ 19.25 ​ 945,040 ​ ​ 19.29 Vested ( 4,308,167 ) ​ ​ 18.85 ​ ( 334,888 ) ​ ​ 31.78 Forfeited or expired ( 433,687 ) ​ ​ 17.27 ​ ( 147,636 ) ​ ​ 16.69 Non-vested as of September 30, 2024 9,014,398 ​ ​ 17.67 2,602,650 ​ ​ 17.93 ​ Share Option Awards The following table sets forth a summary of option activity under NCLH’s Restated 2013 Plan for the nine months ended September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ Number of Share Option Awards ​ Weighted-Average Exercise Price ​ Average ​ Aggregate ​ ​ Time- ​ Performance- ​ Time- ​ Performance- ​ Contractual ​ Intrinsic ​ ​ Based ​ Based ​ Based ​ Based ​ Term ​ Value ​ Awards Awards Awards Awards (years) (in thousands) Outstanding as of January 1, 2024 3,524,856 ​ 114,583 ​ $ 52.98 ​ $ 59.43 ​ 1.26 ​ $ — Forfeited and cancelled ( 1,057,038 ) ​ ( 114,583 ) ​ ​ 50.93 ​ ​ 59.43 ​ ​ ​ Outstanding as of September 30, 2024 2,467,818 ​ — ​ ​ 53.85 ​ ​ — ​ 0.79 ​ ​ — ​ 20 Table of Contents The compensation expense recognized for share-based compensation for the periods presented include the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 Payroll and related expense ​ $ 4,855 ​ $ 4,592 ​ $ 14,546 ​ $ 13,925 Marketing, general and administrative expense ​ 15,783 ​ 18,971 ​ 51,024 ​ 82,329 Total share-based compensation expense ​ $ 20,638 ​ $ 23,563 ​ $ 65,570 ​ $ 96,254 ​ ​ ​ ​ 11. Commitments and Contingencies Ship Construction Contracts For the Norwegian brand, we have four Prima Class Ships on order, each ranging from approximately 156,000 to 169,000 Gross Tons with 3,550 to 3,850 Berths, with currently scheduled delivery dates from 2025 through 2028. For the Norwegian brand, we also have an order for four additional ships, each at approximately 225,000 Gross Tons and 5,200 Berths, with currently scheduled delivery dates from 2030 through 2036. For the Oceania Cruises brand, we have an order for one additional Allura Class Ship to be delivered in 2025, which will be approximately 68,000 Gross Tons and 1,250 Berths. For the Oceania Cruises brand, we also have an order for four additional ships (which includes two ships on order, which are currently scheduled for delivery in 2030 and 2031, but are expected to be cancelled), each at approximately 86,000 Gross Tons and 1,450 Berths, with currently scheduled delivery dates from 2027 through 2031. For the Regent Seven Seas Cruises brand, we have an order for two Prestige Class Ships, each at approximately 77,000 Gross Tons and 850 Berths, with currently scheduled delivery dates in 2026 and 2029. The impacts of initiatives to improve environmental sustainability and modifications the Company plans to make to its newbuilds and/or other macroeconomic conditions and events have resulted in delays in expected ship deliveries. These and other impacts could result in additional delays in ship deliveries in the future, which may be prolonged. ​ The combined contract prices, including amendments and change orders, of the 13 ships on order for delivery as of September 30, 2024 (which excludes two ships on order for Oceania Cruises, which are currently scheduled for delivery in 2030 and 2031, but are expected to be cancelled) was approximately € 17.5 billion, or $ 19.5 billion based on the euro/U.S. dollar exchange rate as of September 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. For ships on order, excluding the two ships on order for Oceania Cruises that are expected to be cancelled and the four additional ships on order for Norwegian Cruise Line with currently scheduled delivery from 2030 to 2036, we have obtained export credit financing which is expected to fund approximately 80 % of the contract price of each ship as well as related financing premiums, subject to certain conditions. We do not anticipate any contractual breaches or cancellations to occur, except as noted above. 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. ​ 21 Table of Contents Our minimum annual payments for non-cancelable ship construction contracts, which exclude two contracts with options to cancel, are as follows (in thousands): ​ ​ ​ ​ ​ Year Amount Remainder of 2024 ​ $ 54,517 2025 ​ ​ 2,271,345 2026 ​ 2,278,009 2027 ​ 2,356,110 2028 ​ 2,179,454 2029 ​ 1,009,655 Thereafter ​ 8,513,710 Total minimum annual payments ​ $ 18,662,800 ​ The above presentation reflects the current delivery dates; however, certain delivery dates may be delayed at the option of the builder, which would result in additional fees. ​ Litigation Investigations ​ In March 2020, the Florida Attorney General announced an investigation related to the Company’s marketing during the COVID-19 pandemic. Following the announcement of the investigation by the Florida Attorney General, we received notifications from other attorneys general and governmental agencies that they are conducting similar investigations. The Company is cooperating with these ongoing investigations, the outcomes of which cannot be predicted at this time. ​ Helms-Burton Act On August 27, 2019, a lawsuit was filed against Norwegian Cruise Line Holdings Ltd. in the United States District Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also known as the Helms-Burton Act. The complaint, filed by Havana Docks Corporation (the “Havana Docks Matter”), alleges it holds an interest in the Havana Cruise Port Terminal, which was expropriated by the Cuban Government. The complaint further alleges that the Company “trafficked” in the property by embarking and disembarking passengers at the facility, as well as profiting from the Cuban Government’s possession of the property. The plaintiff seeks all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. After various motions challenging the sufficiency of plaintiff’s complaint were resolved and voluminous discovery was completed, both sides filed motions for summary judgment. On March 21, 2022, the court issued an order granting plaintiff’s motion for summary judgment on the issue of liability and denying the Company’s cross-motion for summary judgment. The court scheduled a trial on determination of damages only for November 2022. The plaintiff elected to seek what the court ruled to be its baseline statutory damage amount, which was the amount of the certified claim plus interest, trebled and with attorneys’ fees. Given this, there was no fact issue to be tried, and the matter was removed from the trial calendar. On December 30, 2022, the court entered a final judgment of approximately $ 112.9 million and, on January 23, 2023, the Company filed a notice of appeal from that judgment. On April 12, 2023, the Company posted a sufficient supersedeas bond with the court to prevent any efforts by the plaintiff to collect on the judgment pending the appeal. On June 30, 2023, the Company filed its opening appellate brief with the United States Court of Appeals for the Eleventh Circuit. On September 29, 2023, the plaintiff filed its answering brief responding to the Company’s opening brief in the Eleventh Circuit. On May 17, 2024, the Eleventh Circuit heard oral argument on the matter. On October 22, 2024, the Eleventh Circuit reversed the trial court. We believe that the likelihood of loss related to this matter is reasonably possible but not probable at this time; therefore, no liability has been recorded. Other In the normal course of our business, various other claims and lawsuits have been filed or are pending against us. Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability is typically limited to our deductible amount. Nonetheless, the ultimate outcome of these claims and lawsuits that are not covered by 22 Table of Contents insurance cannot be determined at this time. We have evaluated our overall exposure with respect to all of our threatened and pending litigation and, to the extent required, we have accrued amounts for all estimable probable losses associated with our deemed exposure. We are currently unable to estimate any other potential losses beyond those accrued, as discovery is not complete nor is adequate information available to estimate such range of loss or potential recovery. However, based on our current knowledge, we do not believe that the aggregate amount or range of reasonably possible losses with respect to these matters will be material to our consolidated results of operations, financial condition or cash flows. We intend to vigorously defend our legal position on all claims and, to the extent necessary, seek recovery. Other Contingencies ​ The Company also has agreements with its credit card processors that govern approximately $ 2.9 billion in advance ticket sales at September 30, 2024 that have 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. Although the agreements vary, these requirements may generally be satisfied either through a percentage of customer payments withheld or providing cash funds directly to the card processor. Any cash reserve or collateral requested could be increased or decreased. As of September 30, 2024, we had cash reserves of approximately $ 4.9 million with credit card processors recognized in accounts receivable, net. The $ 31.5 million previously recognized in other long-term assets was returned to the Company during the three months ended September 30 2024. 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. ​ ​ 12. Other Income (Expense), Net For the three and nine months ended September 30, 2024, other income (expense), net consisted of expense of $ 34.1 million and $ 14.1 million, respectively, and for the three and nine months ended September 30, 2023, other income (expense), net consisted of income of $ 12.1 million and expense of $ 4.9 million, respectively, primarily due to net gains and losses on foreign currency remeasurements. ​ 13. Supplemental Cash Flow Information For the nine months ended September 30, 2024 and 2023, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $ 6.6 million and $ 57.0 million, respectively. ​ ​ ​ ​ ​ ​ 23 Table of Contents