What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-05 compared with 2024-11-07 · 111 added, 154 removed, 285 unchanged (48% of the section changed)

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Examples of these risks, uncertainties and other factors include, but are not limited to the impact of:

● adverse general economic factors, such as fluctuating or increasing levels of interest rates, inflation, unemployment, underemployment and the volatility of fuel prices, declines in the securities and real estate markets, and perceptions of these conditions that decrease the level of disposable income of consumers or consumer confidence;

● implementing precautions in coordination with regulators and global public health authorities to protect the health, safety and security of guests, crew and the communities we visit and to comply with related regulatory restrictions;

● adverse general economic factors, such as fluctuating or increasing levels of interest rates, inflation, unemployment, underemployment, tariff increases and trade wars, and the volatility of fuel prices, declines in the securities and real estate markets, and perceptions of these conditions that decrease the level of disposable income of consumers or consumer confidence;

● our indebtedness and restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and be in compliance with maintenance covenants and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements;

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● future increases in the price of, or major changes, disruptions or reduction in, commercial airline services;

● changes involving the tax and environmental regulatory regimes in which we operate, including new regulations aimed at reducing greenhouse gas emissions;

● changes involving the tax and environmental regulatory regimes in which we operate, including new and existing regulations aimed at reducing greenhouse gas emissions;

● the accuracy of any appraisals of our assets;

● our success in controlling operating expenses and capital expenditures;

● trends in, or changes to, future bookings and our ability to take future reservations and receive deposits related thereto;

● adverse events impacting the security of travel, or customer perceptions of the security of travel, such as terrorist acts, armed conflict, such as Russia’s invasion of Ukraine or the Israel-Hamas war, or threats thereof, acts of piracy, and other international events;

● adverse events impacting the security of travel, or customer perceptions of the security of travel, such as terrorist acts, armed conflict or threats thereof, acts of piracy, and other international events;

● public health crises and their effect on the ability or desire of people to travel (including on cruises);

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● our inability to obtain adequate insurance coverage;

● pending or threatened litigation, investigations and enforcement actions;

● volatility and disruptions in the global credit and financial markets, which may adversely affect our ability to borrow and could increase our counterparty credit risks, including those under our credit facilities, derivatives, contingent obligations, insurance contracts and new ship progress payment guarantees;

● any further impairment of our trademarks, trade names or goodwill;

● our reliance on third parties to provide hotel management services for certain ships and certain other services;

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● overcapacity in key markets or globally;

● other factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024 (“Annual Report on Form 10-K”).

● other factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 (our “Annual Report on Form 10-K”).

The above examples are not exhaustive and new risks emerge from time to time.

There may be additional risks that we currently consider immaterial or which are unknown.

Such forward-looking statements are based on our current beliefs,

assumptions, expectations, estimates and projections regarding our present and future business strategies and the environment in which we expect to operate in the future.

Such forward-looking statements are based on our current beliefs, assumptions, expectations, estimates and projections regarding our present and future business strategies and the environment in which we expect to operate in the future.

You are cautioned not to place undue reliance on the forward-looking statements included in this report, which speak only as of the date made.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations with regard thereto or any change of events, conditions or circumstances on which any such statement was based, except as required by law.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our

expectations with regard thereto or any change of events, conditions or circumstances on which any such statement was based, except as required by law.

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.

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● 2025 Exchangeable Notes .

On May 8, 2020, pursuant to an indenture among NCLC, as issuer, NCLH, as guarantor, and U.S.

Bank National Association, as trustee, NCLC issued $862.5 million aggregate principal amount of exchangeable senior notes due 2024.

● 2025 Exchangeable Notes .

On July 21, 2020, pursuant to an indenture among NCLC, as issuer, NCLH, as guarantor, and U.S.

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● Adjusted Net Income.

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

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

● Allura Class Ships .

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Earnings before interest, taxes, and depreciation and amortization.

Earnings per share.

Earnings (loss) per share.

Generally accepted accounting principles in the U.S.

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Adjusted Gross Margin per Capacity Day.

● Occupancy or Occupancy Percentage .

● Occupancy Percentage .

The ratio of Passenger Cruise Days to Capacity Days.

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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 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.

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In addition, management uses Adjusted EBITDA as a performance measure for our incentive compensation.

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, 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 and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income and EPS.

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 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 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.

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For a discussion of our critical accounting policies and estimates, see “Critical Accounting Policies” included in our Annual Report on Form 10-K under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have made no significant changes to our critical accounting policies and estimates from those described in our Annual Report on Form 10-K.

Financing Transactions and Newbuild Orders

In February 2024, NCLC and the Commitment Parties entered into the third amended commitment letter, which became effective in March 2024.

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.

See Note 8 – “Long-Term Debt” for more information.

In April 2024, we obtained export credit financing for 80% of the contract price of two new Regent Seven Seas Cruises ship orders and two new Oceania Cruises ship orders as well as related premiums.

Contemporaneously, the ship orders became effective.

The Norwegian brand also placed a four-ship order, for which the shipbuilding contracts and financing are still being finalized.

We refer you to “—Liquidity and Capital Resources— Future Capital Commitments” and “—Liquidity and Capital Resources— Material Cash Requirements” for details regarding our newbuild orders.

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

See Note 8 – “Long-Term Debt” for more information.

In September 2024, NCLC issued $315.0 million aggregate principal amount of 6.250% senior notes due 2030.

The net proceeds, 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.

Financing Transactions

In January 2025, the full amount of outstanding borrowings under the Breakaway one loan, Breakaway two loan, Marina newbuild loan and Riviera newbuild loan, plus any accrued and unpaid interest thereon, was repaid with funds drawn from the Revolving Loan Facility, and the related collateral was also released.

NCLC also issued $1.8 billion aggregate principal amount of 6.750% senior unsecured notes due 2032.

The net proceeds, together with cash on hand, were used to redeem $600.0 million aggregate principal amount of 8.375% senior secured notes due 2028 and $1.2 billion aggregate principal amount of 5.875% senior unsecured notes due 2026, together with any accrued and unpaid interest thereon, and to pay any related transaction premiums, fees and expenses.

Concurrently, the Revolving Loan Facility was increased from $1.2 billion to $1.7 billion with the maturity date extended to 2030, and the collateral of the Revolving Loan Facility and the 8.125% senior secured notes due 2029 were modified.

In April 2025, Holders exchanged $353.9 million of 2025 Exchangeable Notes for 0.875% 2030 Exchangeable Notes and an aggregate Cash Payment of $64.0 million, plus accrued and unpaid interest on the 2025 Exchangeable Notes that were exchanged to, but excluding, the closing date of the Exchange.

Additionally, in April 2025, the Company completed an Equity Offering of 3,358,098 ordinary shares to the Holders at a price of $19.06 per share.

The Company used the net proceeds from the Equity Offering, together with cash on hand, to make the Cash Payment.

See Note 7 – “Long-Term Debt” for more information.

Deferred Tax Asset Valuation Allowance

The Company maintains a full valuation allowance against the net deferred tax assets mainly in the U.S.

and Bermuda jurisdictions.

Given our current earnings, anticipated future earnings and outlook of the cruise industry as a whole, we believe there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a portion or all of our U.S.

valuation allowance would no longer be required.

A release of the valuation allowance would result in recognition of certain deferred tax assets and a decrease in income tax expense in the period the release is recorded.

However, the timing and amount of the valuation allowance release, if any, are unknown as this is subject to change on the basis of the level of profitability that we are able to actually achieve in future periods.

Update on Bookings

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

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

The Company has seen softening in its 12-month forward booked position but continues to remain within the optimal range, even amid ongoing macroeconomic volatility.

Margin Enhancement Initiative

During 2024, we continued to see progress from our ongoing margin enhancement initiative.

The Company continues to prioritize identifying and evaluating a variety of initiatives to improve its cost structure and margin profile, while preserving its brand equity and optimal guest satisfaction levels.

However, global macroeconomic events have created volatility and disruptions in the past that have adversely impacted our costs and they may do so again in the future.

Furthermore, we are exposed to fluctuations in the euro exchange rate for certain portions of ship construction contracts that have not been hedged.

Our cost savings initiatives continue to deliver tangible results, positioning us well to cushion macroeconomic pressures.

While there may be potential pressures on revenue, we believe these can be effectively offset by the continued execution of our cost savings initiatives.

Our focus remains on managing the business for the long-term, balancing disciplined pricing and cost control with guest experience and strategic investments for the future.

However, global macroeconomic events have created volatility and disruptions in the past that have adversely impacted our Company, and they may do so again in the future.

Furthermore, we are exposed to fluctuations in the euro exchange rate for certain portions of ship construction contracts and various exchange rates for customer deposits that have not been hedged.

See “Item 1A.

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We believe the increasing focus on climate change, including the Company’s 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 (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 set interim targets to guide us on our path to net zero greenhouse gas (“GHG”) emissions and provide more details about such targets 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 have and will include expenses related to GHG emissions reduction initiatives, including modifications to our ships, and have and will include the purchase of emissions allowances and alternative

fuels, among other things.

We have changed 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 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;

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 GHG emissions;

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

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Quarterly Overview

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

● Total revenue increased 10.7% to $2.8 billion compared to $2.5 billion.

● Net income and diluted EPS were $474.9 million and $0.95, respectively, compared to $345.9 million and $0.71, respectively.

Three months ended March 31, 2025 (“2025”) compared to three months ended March 31, 2024 (“2024”)

● Total revenue decreased 2.9% to $2.1 billion compared to $2.2 billion.

● Net income (loss) and diluted EPS were $(40.3) million and $(0.09), respectively, compared to $17.4 million and $0.04, respectively.

● Operating income was $200.9 million compared to $218.4 million.

● Gross margin increased 23.4% to $1.1 billion compared to $862.7 million.

Adjusted Gross Margin increased 12.7% to $2.0 billion compared to $1.8 billion.

● Adjusted Net Income and Adjusted EPS were $511.9 million and $0.99, respectively, in 2024, which included $22.0 million of adjustments primarily related to share-based compensation.

Adjusted Net Income and Adjusted EPS were $388.0 million and $0.76, respectively, in 2023, which included $24.6 million of adjustments primarily related to share-based compensation.

● Adjusted EBITDA improved 23.8% to $931.0 million compared to $752.1 million.

● Gross margin increased 2.5% to $610.9 million compared to $595.7 million.

Adjusted Gross Margin decreased slightly from 2024 to 2025.

● Adjusted Net Income and Adjusted EPS were $30.5 million and $0.07, respectively, in 2025, which included $70.8 million of adjustments primarily related to losses on extinguishment and modification of debt.

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 EBITDA decreased 2.4% to $453.1 million compared to $464.0 million.

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

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Three Months Ended

Nine Months Ended

September 30,

Passengers carried

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Three Months Ended

Nine Months Ended

September 30,

Total revenue

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Three Months Ended

Nine Months Ended

September 30,

Total cruise operating expense

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Three Months Ended

Nine Months Ended

September 30,

Effect of dilutive securities - exchangeable notes

Net income and assumed conversion of exchangeable notes

Net income (loss)

Non-GAAP Adjustments:

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Adjusted Net Income

Diluted weighted-average shares outstanding - Net income and 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

Nine Months Ended

September 30,

Net income (loss)

Interest expense, net

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

Total revenue increased to $2.8 billion in 2024 compared to $2.5 billion in 2023 primarily due to an increase in Capacity Days and an increase in passenger ticket pricing and onboard spending.

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

Total cruise operating expense increased 3.8% and Gross Cruise Cost increased 4.9% in 2024 compared to 2023 primarily related to the delivery of two new ships in the second half of 2023 partially offset by a reduction in air costs largely due to changes in itinerary mix.

Total other operating expense increased 8.8% in 2024 compared to 2023 primarily related to an increase in depreciation expense from the delivery of two new ships in the second half of 2023 and variable compensation due to strong performance of the business.

Three months ended March 31, 2025 (“2025”) compared to three months ended March 31, 2024 (“2024”)

Total revenue decreased to $2.1 billion in 2025 compared to $2.2 billion in 2024 primarily due to a decrease in Capacity Days.

The decrease in Capacity Days was primarily related to increased Berths, due to larger ships, in Dry-dock in 2025.

Total cruise operating expense decreased 6.0% and Gross Cruise Cost decreased 3.1% in 2025 compared to 2024 primarily related to a reduction in air costs largely due to changes in itinerary mix and fuel costs.

Total other operating expense increased 6.4% in 2025 compared to 2024 primarily related to an increase in marketing, general and administrative expense from higher advertising and promotions.

Interest expense, net was $217.9 million in 2025 compared to $218.2 million in 2024.

The change in interest expense reflects higher losses in 2025 from extinguishment of debt and debt modification costs, which were $49.5 million in 2025 compared to $29.0 million in 2024.

Excluding these losses, interest expense decreased primarily as a result of lower average debt balances and lower rates.

Other income (expense), net was expense of $24.5 million in 2025 compared to income of $18.1 million in 2024.

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

Nine months ended September 30, 2024 (“2024”) compared to nine months ended September 30, 2023 (“2023”)

Total revenue increased to $7.4 billion in 2024 compared to $6.6 billion in 2023 primarily due to an increase in Capacity Days and 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 5.7% and Gross Cruise Cost increased 5.7% 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 7.9% in 2024 compared to 2023 primarily related to an increase in depreciation expense from the delivery of three new ships in 2023, variable compensation due to strong performance of the business and general and administrative costs related to consulting projects.

Interest expense, net was $571.9 million in 2024 compared to $530.2 million in 2023.

The increase in interest expense reflects higher losses in 2024 from extinguishment of debt and debt modification costs, which were $29.2 million in 2024 compared to $3.2 million in 2023.

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

Other income (expense), net was expense of $14.1 million in 2024 compared to $4.9 million in 2023.

The expenses primarily related to net losses on foreign currency remeasurements.

Liquidity and Capital Resources

As of September 30, 2024, our liquidity was approximately $2.4 billion, including cash and cash equivalents of $332.5 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.

As of March 31, 2025, our liquidity was approximately $1.4 billion, including cash and cash equivalents of $184.4 million, $1.0 billion available under our Revolving Loan Facility and €200 million commitment that can be used for future newbuild payments through July 2025.

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

In February 2024, NCLC and the Commitment Parties entered into the third amended commitment letter, which became effective in March 2024.

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

In September 2024, NCLC issued $315.0 million aggregate principal amount of 6.250% senior notes due 2030.

NCLC also issued $1.8 billion aggregate principal amount of 6.750% senior unsecured notes due 2032.

Additionally, in April 2025, the Company completed an Equity Offering of 3,358,098 ordinary shares to the Holders at a price of $19.06 per share.

The Company used the net proceeds from the Equity Offering, together with cash on hand, to make the Cash Payment.

See Note 7 – “Long-Term Debt” for further details about the above financing transactions.

Based on our liquidity estimates and our current resources, we have concluded we have sufficient liquidity to satisfy our obligations for at least the next 12 months.

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.

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

The remaining $250.0 million of the $565.0 million 3.625% senior unsecured notes due in December 2024 will be paid at maturity.

We expect the holders of the 2025 Exchangeable Notes maturing in August 2025 will exchange their 2025 Exchangeable Notes for NCLH ordinary shares.

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

The remaining $225.0 million of the 5.875% senior unsecured notes due in March 2026 will be paid at maturity unless refinanced.

We expect the holders of the remaining 2025 Exchangeable Notes maturing in August 2025 will exchange their 2025 Exchangeable Notes for NCLH ordinary shares.

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

Beyond the next 12 months, we will pursue refinancings and other balance sheet optimization transactions in order to reduce interest expense and/or extend debt maturities.

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

Beyond the next 12 months, we will pursue refinancings and other balance sheet optimization transactions in order to reduce interest expense and/or extend

debt maturities.

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.

As of March 31, 2025, 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.

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 to our operations and liquidity.

Our Moody’s long-term issuer rating is B2, our senior secured rating is B1 and our senior unsecured rating is Caa1.

Our S&P Global issuer credit rating is B+, our issue-level rating on our $1.2 billion Revolving Loan Facility, $600 million 8.375% senior secured notes due 2028 and $790 million 8.125% senior secured notes due 2029 is BB, our issue-level rating on our other senior secured notes is BB- and our senior unsecured rating is B.

Our Moody’s long-term issuer rating is B1, our senior secured rating is Ba3 and our senior unsecured rating is B3.

Our S&P Global issuer credit rating is B+, our issue-level rating on our $790 million 8.125% senior secured notes due 2029 is BB, our issue-level rating on our other senior secured notes is BB- and our senior unsecured rating is B+.

If our credit ratings were to be downgraded as has occurred in the past, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt or equity financing will be negatively impacted.

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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 September 30, 2024, we had advance ticket sales of $3.3 billion, including the long-term portion, which included approximately $63.2 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 September 30, 2024, governed approximately $2.9 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.

As of March 31, 2025, we had advance ticket sales of $3.9 billion, including the long-term portion.

We also have agreements with our credit card processors that, as of March 31, 2025, governed approximately $3.5 billion in advance ticket sales that had been received by the Company relating to future voyages.

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 collateral 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.

Sources and Uses of Cash

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

Net cash provided by operating activities was $1.7 billion in 2024 and 2023.

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

In this section, references to “2025” refer to the three months ended March 31, 2025 and references to “2024” refer to the three months ended March 31, 2024.

Net cash provided by operating activities was $679.2 million in 2025 and $807.2 million 2024.

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 $665.9 million in 2025 and by $592.2 million in 2024.

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 $985.7 million in 2024 and $2.2 billion in 2023.

Net cash used in investing activities was $1.5 billion in 2025 and $255.2 million in 2024.

The net cash used in investing activities was primarily related to the delivery of Norwegian Aqua in 2025.

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 $734.8 million in 2024 primarily due to repayments of newbuild loans, our 2028 Secured Notes, and a portion of the 3.625% senior notes due 2024 partially offset by the proceeds from newbuild loan facilities and the 2030 Notes.

Net cash provided by financing activities was $194.5 million in 2023 primarily due to newbuild loans and $850 million from our various note offerings, partially offset by debt repayments and a net decrease in our Revolving Loan Facility balance.

Net cash provided by financing activities was $846.6 million in 2025 primarily due to newbuild loans related to the delivery of Norwegian Aqua.

Net cash used in financing activities was $394.5 million in 2024 primarily due to repayments of newbuild loans and our 9.75% senior secured notes due 2028.

Future Capital Commitments

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

Anticipated expenditures related to ship construction contracts were $0.1 billion for the remainder of 2024 and $2.5 billion and $2.5 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 $43.6 million for the remainder of 2024 and $1.7 billion and $1.6 billion for the years ending December 31, 2025 and 2026, respectively.

Anticipated non-newbuild capital expenditures for the remainder of 2024 are approximately $0.1 billion.

Anticipated expenditures related to ship construction contracts and growth, which includes private island developments and enhancements and other strategic growth initiatives, were $1.3 billion for the remainder of 2025 and $2.5 billion and $2.5 billion for the years ending December 31, 2026 and 2027, respectively.

The Company has export credit financing in place for the anticipated expenditures related to ship construction contracts of $0.7 billion for the remainder of 2025 and

$1.5 billion and $1.9 billion for the years ending December 31, 2026 and 2027, respectively.

Anticipated other non-newbuild capital expenditures for the remainder of 2025 are approximately $0.4 billion.

Future expected capital expenditures will significantly increase our depreciation and amortization expense.

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Gross Tons (1)

Norwegian Cruise Line

Next Generation Prima Class

Norwegian Aqua

Contract effective / financed (4)

Oceania Cruises

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Norwegian Cruise Line

Next Generation Prima Class

Norwegian Luna

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Norwegian Cruise Line

Memorandum of agreement effective.

Financing is being negotiated.

Contract effective / financing is being negotiated.

Oceania Cruises

Contract effective, but not financed.

Order expected to be cancelled.

Option to cancel.

Oceania Cruises

Contract effective, but not financed.

Order expected to be cancelled.

Option to cancel.

Norwegian Cruise Line

Memorandum of agreement effective.

Financing is being negotiated.

Contract effective / financing is being negotiated.

Norwegian Cruise Line

Memorandum of agreement effective.

Financing is being negotiated.

Contract effective / financing is being negotiated.

Norwegian Cruise Line

Memorandum of agreement effective.

Financing is being negotiated.

Contract effective / 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 have the option to cancel the effective two-ship order for Oceania Cruises.

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

(6) Delivery dates may be delayed at the option of the builder, which would result in additional fees.

The combined contract prices, including amendments and change orders, of the 13 ships on order for delivery (which excludes the 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.

The combined contract prices, including amendments and change orders, of the 12 ships on order for delivery (which excludes the two ships on order for Oceania Cruises, which are currently scheduled for delivery in 2030 and 2031, that we have the option to cancel) was approximately €17.2 billion, or $18.6 billion based on the euro/U.S.

dollar exchange rate as of March 31, 2025.

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.

We do not anticipate any contractual breaches or cancellations to occur, except as noted above.

We do not anticipate any contractual breaches or cancellations to occur, except as noted above if we exercise our option to cancel.

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 September 30, 2024 and 2023 was $17.2 million and $13.4 million, respectively, and for the nine months ended September 30, 2024 and 2023 was $40.5 million and $44.7 million, respectively, primarily associated with the construction of our newbuild ships.

Capitalized interest for the three months ended March 31, 2025 and 2024 was $22.5 million and $10.1 million, respectively, primarily associated with the construction of our newbuild ships.

Material Cash Requirements

As of September 30, 2024, our material cash requirements for debt and ship construction (which excludes the two ships on order for Oceania Cruises that are expected to be cancelled) were as follows (in thousands):

Our material cash requirements for debt and ship construction (which excludes the two ships on order for Oceania Cruises that we have the option to cancel) 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 September 30, 2024.

(1) Includes principal as well as estimated interest payments with Term SOFR held constant as of March 31, 2025.

Includes exchangeable notes which can be settled in NCLH ordinary shares.

Excludes the impact of any future possible refinancings and undrawn export-credit backed facilities.

Subsequent to March 31, 2025, we completed an Exchange of $353.9 million 2025 Exchangeable Notes for an equal principal of 2030 Exchangeable Notes.

The related principal repayment has been reclassified from 2025 to 2030 in the table above and the interest payments include the 2030 Exchangeable Notes.

See Note 7 – “Long-Term Debt” for further information.

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

dollar exchange rate as of September 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 and the four additional ships on order for Norwegian Cruise Line with currently scheduled delivery from 2030 to 2036.

dollar exchange rate as of March 31, 2025.

We have committed undrawn export-credit backed facilities of approximately $7.8 billion which funds approximately 80% of our ship construction contracts, with the exception of the two ships on order for Oceania Cruises that we have the option to cancel and the four additional ships on order for Norwegian Cruise Line with currently scheduled delivery from 2030 to 2036.

The above presentation reflects the current delivery dates;

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Certain of our debt agreements contain covenants that, among other things, require us to maintain a minimum level of liquidity, as well as limit our net funded debt-to-capital ratio and maintain certain other ratios.

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 September 30, 2024.

The net book value of our ships pledged as collateral for certain of our debt is approximately $15 billion.

We believe we were in compliance with our covenants as of March 31, 2025.

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 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.

We believe our cash on hand, borrowings available under the Revolving Loan Facility, 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 and 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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The amount of collateral may change based on certain terms and conditions.

As a routine part of our business, depending on market conditions, exchange rates, pricing and our strategy for growth, we regularly consider opportunities to enter into contracts for the building of additional ships.

We may also consider the sale of ships, potential acquisitions and strategic alliances.

We refer you to “—Liquidity and Capital Resources—General” for information regarding collateral that may be provided to our credit card processors.

If any of these transactions were to occur, they may be financed through the incurrence of additional permitted indebtedness, through cash flows from operations, or through the issuance of debt, equity or equity-related securities.

We refer you to “—Liquidity and Capital Resources—General” for information regarding collateral provided to our credit card processors.

Additionally, we similarly consider opportunities for the sale of ships and long-term charters with purchase options.

For example, the Company recently executed long-term charter agreements, each inclusive of purchase options, for Norwegian Sky and Seven Seas Navigator beginning in 2026 and Norwegian Sun and Insignia beginning in 2027.

We are currently contemplating additional long-term charters with a purchase option for a nominal value at the end of the lease period.

These types of agreements are being pursued as part of our ship disposal strategy for certain older vessels in our fleet.

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