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In the face of lower yields in the Caribbean, fuel cost savings and the new share repurchase program are the offsets. Street remains overwhelmingly bullish. 

CONF CALL 

  • 23% increase in 1Q capacity
  • Getaway/Breakaway in 1Q:  good pricing, onboard revenue improvements 
  • 1Q:  Driving price at the expense of occupancy
  • 2014:  Wave Season in normal pressure.  Brutal winter/polar vortex hurt consumer spending and reason for lower yield guidance 
    • Most agents we contact with said the cold winter helped bookings 
  • 1Q:  Incremental dry dock- Norweigan Spirit dry dock of 3 weeks
  • 1Q:  Additional $2MM in onboard cost upgrade, also increased security for Norweigan Jade due to incident
  • 1Q weighted cost of debt:  3.8%;  should improve at Escape and Bliss enter fleet as financing is cheap
  • Income tax benefit:  change in corporate structure
  • Rolling over strong net yield comps from 2013
  • In a promotional environment
  • 2Q:  38% in Caribbean, 23% Europe, 11% Bermuda, 10% Alaska
  • European market:  improved pricing/occupancy
  • Alaska:  Norweigan Sun unique itinerary doing well; stronger pricing/bookings
  • Epic:  decision to move to Barcelona in April 2015
    • Removing transatlantic voyage, further improving yields

Q & A

  • Timing of share buyback:  feel stock not reflective of company potential particularly as cash builds in 2H 2014
  • Pricing comparisons:  800/900 bps different from other players
  • 1Q:  give up a little bit on load 
  • Asia:  on their radar
  • Genting ownership:  no new news, cleared requirement with HKSE;  stock right where they want it to be
    • Comfortable sitting and waiting but not happy about stock price
  • Caribbean trends:  Wave season did not start out robust;  booking trends since mid-Feb improved (some due to promotions); feel a little better about landscape
  • Europe:  quite confident trend going right direction but off of very low comps; could see a couple more years of nice growth
  • Want to get past Q2
  • Q4 too early to tell
  • Net yield downward revision:  driven by price, not onboard
  • Getaway:  $5MM fuel improvement 
  • 2015 deployment:  Europe (21%), Caribbean (45%)
  • One competitor had been holding price but NCLH would not be 'reckless' in holding price for empty cabins
  • Escape decision to homeport in Miami:  Epic redeployed to Europe.  Caribbean 2015/2016 capacity roughly flat
  • Book load factors:  highly favorable (esp Europe:  Baltic/Canary/Med); on par with Hawaii;  heavily booked in Canada/New England;  Caribbean:  still has opportunity
  • Pricing by region:  Europe (up double digits);  Alaska (low single digit);  Hawaii( doing well); Canada/New England (priced well);  Caribbean (lower than where they want to be)
  • Net yield reduction:  Caribbean is the reason
  • Core fleet vs 2 new ships:  contraction in overall industry but Getaway/Breakaway still maintain double digit premiums
    • We saw this in our pricing survey where the core fleet pricing is dropping faster than that of Getaway/Breakaway.
  • Industrywide Caribbean capacity in 2015:  cautiously optimistic; will be better environment in 2015.
  • Any share repurchases not included in guidance
  • Fuel efficiency:  seeing in organic fleet ($2.5m),  Getaway $5-6m better
  • Q3:  solidly booked, environment looks good