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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the transition period from to

Commission File Number: 001-35784

NORWEGIAN CRUISE LINE HOLDINGS LTD.

(Exact name of registrant as specified in its charter)

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Bermuda		98-0691007
(State or other jurisdiction of incorporation or organization)	​	(I.R.S. Employer Identification No.)
​	​	​
7665 Corporate Center Drive**,** Miami**,** Florida 33126	​	33126
(Address of principal executive offices)	​	(zip code)

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(305) 436-4000

(Registrant’s telephone number, including area code)

N/A

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(Former name, former address and former fiscal year, if changed since last report)

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Securities registered pursuant to Section 12(b) of the Act:

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Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary shares, par value $0.001 per share		NCLH		The New York Stock Exchange

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer ⌧	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐	​

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

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There were 429,040,624 ordinary shares outstanding as of April 30, 2024.

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TABLE OF CONTENTS

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​		​		Page
PART I. FINANCIAL INFORMATION			​	​
​	​	​	​	​
Item 1.	​	Financial Statements	​	3
​	​	​	​	​
Item 2.	​	Management’s Discussion and Analysis of Financial Condition and Results of Operations	​	20
​	​	​	​	​
Item 3.	​	Quantitative and Qualitative Disclosures About Market Risk	​	34
​	​	​	​	​
Item 4.	​	Controls and Procedures	​	35
​	​	​	​	​
PART II. OTHER INFORMATION			​	​
​	​	​	​	​
Item 1.	​	Legal Proceedings	​	35
​	​	​	​	​
Item 1A.	​	Risk Factors	​	35
​	​	​	​	​
Item 5.	​	Other Information	​	36
​	​	​	​	​
Item 6.	​	Exhibits	​	36
​	​	​	​	​
SIGNATURES			​	38

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PART I. FINANCIAL INFORMATION

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​		2024			2023
Revenue		​			​
Passenger ticket	​	$	1,459,814	​	$	1,208,841
Onboard and other	​		731,401	​		613,098
Total revenue	​		2,191,215	​		1,821,939
Cruise operating expense	​			​
Commissions, transportation and other	​		436,210	​		409,684
Onboard and other	​		132,036	​		119,697
Payroll and related	​		344,281	​		304,155
Fuel	​		197,734	​		194,868
Food	​		84,708	​		95,966
Other	​		192,454	​		156,048
Total cruise operating expense	​		1,387,423	​		1,280,418
Other operating expense	​			​
Marketing, general and administrative	​		362,469	​		336,013
Depreciation and amortization	​		222,929	​		194,790
Total other operating expense	​		585,398	​		530,803
Operating income	​		218,394	​		10,718
Non-operating income (expense)	​		​	​		​
Interest expense, net	​		(218,177)	​		(171,257)
Other income (expense), net	​		18,137	​		(8,955)
Total non-operating income (expense)	​		(200,040)	​		(180,212)
Net income (loss) before income taxes	​		18,354	​		(169,494)
Income tax benefit (expense)	​		(1,001)	​		10,173
Net income (loss)	​	$	17,353	​	$	(159,321)
Weighted-average shares outstanding	​			​
Basic	​		426,803,519	​		422,655,215
Diluted	​		431,019,206	​		422,655,215
Earnings (loss) per share	​			​
Basic	​	$	0.04	​	$	(0.38)
Diluted	​	$	0.04	​	$	(0.38)

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The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​		2024			2023
Net income (loss)	​	$	17,353	​	$	(159,321)
Other comprehensive income (loss):	​			​
Shipboard Retirement Plan	​		95	​		64
Cash flow hedges:	​		​	​		​
Net unrealized gain (loss)	​		47,253	​		(18,475)
Amount realized and reclassified into earnings	​		(3,333)	​		(9,874)
Total other comprehensive income (loss)	​		44,015	​		(28,285)
Total comprehensive income (loss)	​	$	61,368	​	$	(187,606)

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The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)

​	​	​	​	​	​	​
​	​	March 31,		​	December 31,
​		2024			2023
Assets		​			​
Current assets:		​			​
Cash and cash equivalents	​	$	559,814	​	$	402,415
Accounts receivable, net	​		282,313	​		280,271
Inventories	​		157,879	​		157,646
Prepaid expenses and other assets	​		590,148	​		472,816
Total current assets	​		1,590,154	​		1,313,148
Property and equipment, net	​		16,463,522	​		16,433,292
Goodwill	​		98,134	​		98,134
Trade names	​		500,525	​		500,525
Other long-term assets	​		1,172,853	​		1,147,891
Total assets	​	$	19,825,188	​	$	19,492,990
Liabilities and shareholders’ equity	​			​
Current liabilities:	​			​
Current portion of long-term debt	​	$	1,744,221	​	$	1,744,778
Accounts payable	​		204,971	​		174,338
Accrued expenses and other liabilities	​		1,019,620	​		1,058,919
Advance ticket sales	​		3,629,707	​		3,060,666
Total current liabilities	​		6,598,519	​		6,038,701
Long-term debt	​		12,005,296	​		12,314,147
Other long-term liabilities	​		859,282	​		839,335
Total liabilities	​		19,463,097	​		19,192,183
Commitments and contingencies (Note 9)	​			​
Shareholders’ equity:	​			​
Ordinary shares, $0.001 par value; 980,000,000 shares authorized; 429,025,827 shares issued and outstanding at March 31, 2024 and 425,546,570 shares issued and outstanding at December 31, 2023	​		429	​		425
Additional paid-in capital	​		7,708,869	​		7,708,957
Accumulated other comprehensive income (loss)	​		(464,423)	​		(508,438)
Accumulated deficit	​		(6,882,784)	​		(6,900,137)
Total shareholders’ equity	​		362,091	​		300,807
Total liabilities and shareholders’ equity	​	$	19,825,188	​	$	19,492,990

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The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​		2024			2023
Cash flows from operating activities		​			​
Net income (loss)	​	$	17,353	​	$	(159,321)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	​			​
Depreciation and amortization expense	​	​	245,092	​		210,676
(Gain) loss on derivatives	​	​	(1,125)	​	​	4,404
Loss on extinguishment of debt	​		29,000	​		2,434
Provision for bad debts and inventory obsolescence	​		1,532	​		1,199
Gain on involuntary conversion of assets	​	​	(2,846)	​	​	—
Share-based compensation expense	​		21,948	​		28,155
Net foreign currency adjustments on euro-denominated debt	​		(6,603)	​		1,021
Changes in operating assets and liabilities:	​		​	​		​
Accounts receivable, net	​		(4,052)	​		65,391
Inventories	​		(517)	​		2,812
Prepaid expenses and other assets	​		(83,414)	​		(127,192)
Accounts payable	​		29,987	​		(25,926)
Accrued expenses and other liabilities	​		(31,422)	​		(168,581)
Advance ticket sales	​		592,238	​		668,261
Net cash provided by operating activities	​		807,171	​		503,333
Cash flows from investing activities	​			​
Additions to property and equipment, net	​		(258,851)	​		(237,676)
Other	​	​	3,608	​	​	1,320
Net cash used in investing activities	​		(255,243)	​		(236,356)
Cash flows from financing activities	​			​
Repayments of long-term debt	​		(425,339)	​		(1,821,412)
Proceeds from long-term debt	​		92,406	​		1,330,622
Proceeds from employee related plans	​		—	​		2,618
Net share settlement of restricted share units	​		(22,032)	​		(11,306)
Early redemption premium	​		(19,163)	​		—
Deferred financing fees	​		(20,401)	​		(13,886)

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Cautionary Statement Concerning Forward-Looking Statements

Some of the statements, estimates or projections contained in this report are “forward-looking statements” within the meaning of the U.S. federal securities laws intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained, or incorporated by reference, in this report, including, without limitation, our expectations regarding our future financial position, including our liquidity requirements and future capital expenditures, plans, prospects, actions taken or strategies being considered with respect to our liquidity position, including with respect to refinancing, amending the terms of, or extending the maturity of our indebtedness, our ability to comply with covenants under our debt agreements, expectations regarding our exchangeable notes, valuation and appraisals of our assets, expected fleet additions and cancellations, including expected timing thereof, our expectations regarding the impact of macroeconomic conditions and recent global events, and expectations relating to our sustainability program and decarbonization efforts may be forward-looking statements. Many, but not all, of these statements can be found by looking for words like “expect,” “anticipate,” “goal,” “project,” “plan,” “believe,” “seek,” “will,” “may,” “forecast,” “estimate,” “intend,” “future” and similar words. Forward-looking statements do not guarantee future performance and may involve risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. 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;

	●	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;

	●	our ability to work with lenders and others or otherwise pursue options to defer, renegotiate, refinance or restructure our existing debt profile, near-term debt amortization, newbuild related payments and other obligations and to work with credit card processors to satisfy current or potential future demands for collateral on cash advanced from customers relating to future cruises;

	●	our need for additional financing or financing to optimize our balance sheet, which may not be available on favorable terms, or at all, and our outstanding exchangeable notes and any future financing which may be dilutive to existing shareholders;

	●	the unavailability of ports of call;

	●	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;

	●	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;

	●	public health crises, including the COVID-19 pandemic, and their effect on the ability or desire of people to travel (including on cruises);

	●	adverse incidents involving cruise ships;

	●	our ability to maintain and strengthen our brand;

	●	breaches in data security or other disturbances to our information technology systems and other networks or our actual or perceived failure to comply with requirements regarding data privacy and protection;

	●	changes in fuel prices and the type of fuel we are permitted to use and/or other cruise operating costs;

	●	mechanical malfunctions and repairs, delays in our shipbuilding program, maintenance and refurbishments and the consolidation of qualified shipyard facilities;

	●	the risks and increased costs associated with operating internationally;

	●	our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues;

	●	impacts related to climate change and our ability to achieve our climate-related or other sustainability goals;

	●	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;

	●	fluctuations in foreign currency exchange rates;

	●	our expansion into new markets and investments in new markets and land-based destination projects;

	●	overcapacity in key markets or globally; and

	●	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”).

The above examples are not exhaustive and new risks emerge from time to time. There may be additional risks that we 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. These forward-looking statements 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.

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.

Terminology

This report includes certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Yield, Net Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS. Definitions of these non-GAAP financial measures are included below. For further information about our non-GAAP financial measures including detailed adjustments made in calculating our non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measure, we refer you to “Results of Operations” below.

Unless otherwise indicated in this report, the following terms have the meanings set forth below:

	●	2024 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. Bank National Association, as trustee, NCLC issued $450.0 million aggregate principal amount of exchangeable senior notes due 2025.

	●	2027 1.125% Exchangeable Notes. On November 19, 2021, pursuant to an indenture among NCLC, as issuer, NCLH, as guarantor, and U.S. Bank National Association, as trustee, NCLC issued $1,150.0 million aggregate principal amount of exchangeable senior notes due 2027.

	●	2027 2.5% Exchangeable Notes. On February 15, 2022, pursuant to an indenture among NCLC, as issuer, NCLH, as guarantor, and U.S. Bank National Association, as trustee, NCLC issued $473.2 million aggregate principal amount of exchangeable senior notes due 2027.

	●	Adjusted EBITDA. EBITDA adjusted for other income (expense), net and other supplemental adjustments.

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

	●	Adjusted Gross Margin. Gross margin adjusted for payroll and related, fuel, food, other and ship depreciation. Gross margin is calculated pursuant to GAAP as total revenue less total cruise operating expense and ship depreciation.

	●	Adjusted Net Cruise Cost Excluding Fuel. Net Cruise Cost Excluding Fuel adjusted for supplemental adjustments.

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

	●	Allura Class Ships. Oceania Cruises’ Vista and Oceania Cruises’ Allura.

	●	Berths. Double occupancy capacity per cabin (single occupancy per studio cabin) even though many cabins can accommodate three or more passengers.

	●	Capacity Days. Berths available for sale multiplied by the number of cruise days for the period for ships in service.

	●	Dry-dock. A process whereby a ship is positioned in a large basin where all of the fresh/sea water is pumped out in order to carry out cleaning and repairs of those parts of a ship which are below the water line.

	●	EBITDA. Earnings before interest, taxes, and depreciation and amortization.

	●	EPS. Earnings (loss) per share.

	●	GAAP. Generally accepted accounting principles in the U.S.

	●	Gross Cruise Cost. The sum of total cruise operating expense and marketing, general and administrative expense.

	●	Gross Tons. A unit of enclosed passenger space on a cruise ship, such that one gross ton equals 100 cubic feet or 2.831 cubic meters.

	●	Net Cruise Cost. Gross Cruise Cost less commissions, transportation and other expense and onboard and other expense.

	●	Net Cruise Cost Excluding Fuel. Net Cruise Cost less fuel expense.

	●	Net Yield. Adjusted Gross Margin per Capacity Day.

	●	Occupancy or Occupancy Percentage. The ratio of Passenger Cruise Days to Capacity Days. A percentage greater than 100% indicates that three or more passengers occupied some cabins.

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

	●	Prima Class Ships. Norwegian Prima, Norwegian Viva, Norwegian Aqua and three additional ships on order.

	●	Revolving Loan Facility. $1.2 billion senior secured revolving credit facility.

	●	SEC. U.S. Securities and Exchange Commission.

	●	Shipboard Retirement Plan. An unfunded defined benefit pension plan for certain crew members which computes benefits based on years of service, subject to certain requirements.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Yield, Net Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS, to enable us to analyze our performance. See “Terminology” for the definitions of these and other non-GAAP financial measures. We utilize Adjusted Gross Margin and Net Yield to manage our business on a day-to-day basis because they reflect revenue earned net of certain direct variable costs. We also utilize Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel

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

We believe that Adjusted EBITDA is appropriate as a supplemental financial measure as it is used by management to assess operating performance. We also believe that Adjusted EBITDA is a useful measure in determining our performance as it reflects certain operating drivers of our business, such as sales growth, operating costs, marketing, general and administrative expense and other operating income and expense. 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 (loss), as it does not take into account certain requirements such as capital expenditures and related depreciation, principal and interest payments and tax payments and it includes other supplemental adjustments.

In addition, Adjusted Net Income (Loss) and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income (loss) and EPS. We use Adjusted Net Income (Loss) and Adjusted EPS as key performance measures of our earnings performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparison to our historical performance. In addition, management uses Adjusted EPS as a performance measure for our incentive compensation. The amounts excluded in the presentation of these non-GAAP financial measures may vary from period to period; accordingly, our presentation of Adjusted Net Income (Loss) and Adjusted EPS may not be indicative of future adjustments or results.

You are encouraged to evaluate each adjustment used in calculating our non-GAAP financial measures and the reasons we consider our non-GAAP financial measures appropriate for supplemental analysis. In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur expenses similar to the adjustments in our presentation. Our non-GAAP financial measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of our non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our non-GAAP financial measures may not be comparable to other companies. Please see a historical reconciliation of these measures to the most comparable GAAP measure presented in our consolidated financial statements below in the “Results of Operations” section.

Financial Presentation

We categorize revenue from our cruise and cruise-related activities as either “passenger ticket” revenue or “onboard and other” revenue. Passenger ticket revenue and onboard and other revenue vary according to product offering, the size of the ship in operation, the length of cruises operated and the markets in which the ship operates. Our revenue is seasonal based on demand for cruises, which has historically been strongest during the Northern Hemisphere’s summer months. Passenger ticket revenue primarily consists of revenue for accommodations, meals in certain restaurants on the ship, certain onboard entertainment, government taxes, fees and port expenses and includes revenue for service charges and air and land transportation to and from the ship to the extent guests purchase these items from us. Onboard and other revenue primarily consists of revenue from casino, beverage sales, shore excursions, specialty dining, retail sales, spa services and Wi-Fi services. Our onboard revenue is derived from onboard activities we perform directly or that are performed by independent concessionaires, from which we receive a share of their revenue.

Our cruise operating expense is classified as follows:

	●	Commissions, transportation and other primarily consists of direct costs associated with passenger ticket revenue. These costs include travel advisor commissions, air and land transportation expenses, related credit card fees, certain government taxes, fees and port expenses and the costs associated with shore excursions and hotel accommodations included as part of the overall cruise purchase price.

	●	Onboard and other primarily consists of direct costs incurred in connection with onboard and other revenue, including casino, beverage sales and shore excursions.

	●	Payroll and related consists of the cost of wages, benefits and logistics for shipboard employees and costs of certain inventory items, including food, for a third party that provides crew and other hotel services for certain ships.

	●	Fuel includes fuel costs, the impact of certain fuel hedges and fuel delivery costs.

	●	Food consists of food costs for passengers and crew on certain ships.

	●	Other consists of repairs and maintenance (including Dry-dock costs), ship insurance and other ship expenses.

Critical Accounting Policies

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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.

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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 6 – “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 expects a four-ship order to replace a separate, effective, two-ship order for Oceania Cruises initially placed to secure availability with the shipyard. The four-ship order for Norwegian is still being finalized and is subject to financing. 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 6 – “Long-Term Debt” for more information.

Update on Bookings

​

The Company continues to experience healthy consumer demand across all revenue streams and had record bookings during the three months ended March 31, 2024 leading to a continued record booked position for the next twelve months. This strong demand is expected to almost fully offset the impact from the redeployed voyages related to the Middle East and Red Sea in 2024.

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Macroeconomic Trends and Uncertainties

As a result of conditions associated with global macroeconomic events, the global economy, including the financial and credit markets, has experienced volatility and disruptions, including impacts to inflation rates, fuel prices, foreign currencies and interest rates. Our costs have been and may be adversely impacted by these factors. We have used, and may continue to use, derivative instruments to attempt to mitigate the risk of volatility in fuel prices and interest rates. In

an attempt to mitigate risks related to inflation, our supply chain department has negotiated contracts with varying terms, with a goal of providing us with the ability to take advantage of cost declines when they occur, and diversified our sourcing options. These strategies may not fully offset the impact of current macroeconomic conditions; however, 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. Furthermore, we are exposed to fluctuations in the euro exchange rate for certain portions of ship construction contracts that have not been hedged. See “Item 1A. Risk Factors” in our Annual Report on Form 10-K for additional information.

Climate Change

We believe the increasing focus on climate change, including the Company’s recently established targets for greenhouse gas reductions, and evolving regulatory requirements will materially impact our future capital expenditures and results of operations. We have set interim targets to guide us on our path to net zero and provide more details about them in our annual Sail & Sustain Report. We expect to incur significant expenses related to these regulatory requirements and commitments, which may include expenses related to greenhouse gas emissions reduction initiatives, including modifications to our ships, and the purchase of emissions allowances, among other things. We have and may continue to be required to change certain operating procedures, for example slowing the speed of our ships, to meet regulatory requirements, which could adversely impact our operations. We are evaluating the effects of global climate change related requirements, which are still evolving, including our ability to mitigate certain future expenses through initiatives to reduce greenhouse gas emissions; consequently, the full impact to the Company is not yet known. Additionally, our ships, port facilities, corporate offices and island destinations have in the past and may again be adversely affected by an increase in the frequency and intensity of adverse weather conditions caused by climate change. For example, certain ports have become temporarily unavailable to us due to hurricane damage and other destinations have either considered or implemented restrictions on cruise operations due to environmental concerns. Refer to “Impacts related to climate change may adversely affect our business, financial condition and results of operations” in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for further information.

Quarterly Overview

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

	●	Total revenue increased 20.3% to $2.2 billion compared to $1.8 billion.

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

	●	Operating income was $218.4 million compared to $10.7 million.

	●	Gross margin increased 65.5% to $595.7 million compared to $360.0 million. Adjusted Gross Margin increased 25.6% to $1.6 billion compared to $1.3 billion.

	●	Adjusted Net Income and Adjusted EPS were $69.5 million and $0.16, respectively, in 2024, which included $52.2 million of adjustments primarily related to losses on extinguishment and modification of debt and share-based compensation. Adjusted Net Loss and Adjusted EPS were $(127.7) million and $(0.30), respectively, in 2023, which included $31.6 million of adjustments primarily related to share-based compensation.

	●	Adjusted EBITDA improved 98.1% to $464.0 million compared to $234.2 million.

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

Results of Operations

The following table sets forth selected statistical information:

​	​	​	​	​
​	Three Months Ended			​
​	March 31,			​
​	2024		2023	​
Passengers carried	736,559		633,910	​
Passenger Cruise Days	6,112,370		5,497,106	​
Capacity Days	5,841,015		5,415,547	​
Occupancy Percentage	104.6	%	101.5	%

​

Adjusted Gross Margin and Net Yield were calculated as follows (in thousands, except Capacity Days and Yield data):

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​	​	2024		2023
Total revenue	​	$	2,191,215	​	$	1,821,939
Less:	​	​	​	​	​	​
Total cruise operating expense	​		1,387,423	​		1,280,418
Ship depreciation	​		208,094	​		181,569
Gross margin	​	​	595,698	​	​	359,952
Ship depreciation	​	​	208,094	​	​	181,569
Payroll and related	​	​	344,281	​	​	304,155
Fuel	​	​	197,734	​	​	194,868
Food	​	​	84,708	​	​	95,966
Other	​	​	192,454	​	​	156,048
Adjusted Gross Margin	​	$	1,622,969	​	$	1,292,558
Capacity Days	​	​	5,841,015	​	​	5,415,547
Gross margin per Capacity Day	​	$	101.99	​	$	66.47
Net Yield	​	$	277.86	​	$	238.68

​

Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Cost Excluding Fuel were calculated as follows (in thousands, except Capacity Days and per Capacity Day data):

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​	2024			2023
Total cruise operating expense	​	$	1,387,423	​	$	1,280,418
Marketing, general and administrative expense	​		362,469	​		336,013
Gross Cruise Cost	​		1,749,892	​		1,616,431
Less:	​			​
Commissions, transportation and other expense	​		436,210	​		409,684
Onboard and other expense	​		132,036	​		119,697
Net Cruise Cost	​		1,181,646	​		1,087,050
Less: Fuel expense	​		197,734	​		194,868
Net Cruise Cost Excluding Fuel	​		983,912	​		892,182
Less Other Non-GAAP Adjustments:	​			​
Non-cash deferred compensation (1)	​		719	​		578
Non-cash share-based compensation (2)	​		21,948	​		28,155
Adjusted Net Cruise Cost Excluding Fuel	​	$	961,245	​	$	863,449
Capacity Days	​		5,841,015	​		5,415,547
Gross Cruise Cost per Capacity Day	​	$	299.59	​	$	298.48
Net Cruise Cost per Capacity Day	​	$	202.30	​	$	200.73
Net Cruise Cost Excluding Fuel per Capacity Day	​	$	168.45	​	$	164.74
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day	​	$	164.57	​	$	159.44

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

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

​

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

​

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​		2024			2023
Net income (loss)	​	$	17,353	​	$	(159,321)
Non-GAAP Adjustments:	​			​
Non-cash deferred compensation (1)	​		1,233	​		1,010
Non-cash share-based compensation (2)	​		21,948	​		28,155
Extinguishment and modification of debt (3)	​		29,000	​		2,434
Adjusted Net Income (Loss)	​	$	69,534	​	$	(127,722)
Diluted weighted-average shares outstanding - Net income (loss) and Adjusted Net Income (Loss)	​		431,019,206	​		422,655,215
Diluted EPS	​	$	0.04	​	$	(0.38)
Adjusted EPS	​	$	0.16	​	$	(0.30)

(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.

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

(3)	Losses on extinguishment of debt and modification of debt are included in interest expense, net.

EBITDA and Adjusted EBITDA were calculated as follows (in thousands):

​

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​		2024			2023
Net income (loss)	​	$	17,353	​	$	(159,321)
Interest expense, net	​		218,177	​		171,257
Income tax (benefit) expense	​		1,001	​		(10,173)
Depreciation and amortization expense	​		222,929	​		194,790
EBITDA	​		459,460	​		196,553
Other (income) expense, net (1)	​		(18,137)	​		8,955
Other Non-GAAP Adjustments:	​			​
Non-cash deferred compensation (2)	​		719	​		578
Non-cash share-based compensation (3)	​		21,948	​		28,155
Adjusted EBITDA	​	$	463,990	​	$	234,241

(1)	Primarily consists of gains and losses, net for foreign currency remeasurements.

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

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

​

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

Revenue

Total revenue increased to $2.2 billion in 2024 compared to $1.8 billion in 2023 primarily due to an increase in Capacity Days and improved pricing. Gross margin per Capacity Day increased 53.4% and Adjusted Gross Margin increased 25.6% to $1.6 billion in 2024 compared to $1.3 billion in 2023 due to an increase in Capacity Days of 7.9% and reflects an increase in passenger ticket pricing and onboard spending. The increase in Capacity Days was primarily related to the delivery of three new ships in 2023.

Expense

Total cruise operating expense increased 8.4% and Gross Cruise Cost increased 8.3% in 2024 compared to 2023 primarily related to the delivery of three new ships in 2023. Total other operating expense increased 10.3% in 2024 compared to 2023 largely related to the delivery of three new ships and also reflects an increase in general and administrative costs related to a consulting project.

​

Interest expense, net was $218.2 million in 2024 compared to $171.3 million in 2023. The increase in interest expense reflects higher losses in 2024 from extinguishment of debt and debt modification costs, which were $29.0 million in 2024 compared to $2.4 million in 2023. Excluding these losses, interest expense increased primarily as a result of higher debt outstanding and higher rates.

Other income (expense), net was income of $18.1 million in 2024 compared to expense of $9.0 million in 2023. The income and expense primarily related to net gains and losses on foreign currency remeasurements.

​

Liquidity and Capital Resources

General

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

undrawn commitment less related fees. 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. 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.

​

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

See Note 6 – “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. We intend to refinance the $565.0 million 3.625% senior unsecured notes due in December 2024 prior to September 2024. Within the next twelve months, we may pursue other refinancings in order to reduce interest expense and/or extend debt maturities. 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 March 31, 2024, we were in compliance with all of our debt covenants. If we do not continue to remain in compliance with our covenants, we would have to seek additional amendments to or waivers of the covenants. 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. 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. We also have capacity to incur additional indebtedness under our debt agreements and may issue additional ordinary shares from time to time, subject to our authorized number of ordinary shares. However, there is no guarantee that debt or equity financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations.

​

As of March 31, 2024, we had advance ticket sales of $3.8 billion, including the long-term portion, which included approximately $66.0 million of future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19. We also have agreements with our credit card processors that, as of March 31, 2024, governed approximately $3.4 billion in advance ticket sales that had been received by the Company relating to future voyages. 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 March 31, 2024, we had cash

collateral reserves of approximately $51.3 million with credit card processors, which includes $19.8 million recognized in accounts receivable, net and $31.5 million recognized in other long-term assets. We may be required to pledge additional collateral and/or post additional cash reserves or take other actions in the future that may adversely affect our liquidity.

​

Sources and Uses of Cash

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

Net cash provided by operating activities was $807.2 million in 2024 as compared to $503.3 million in 2023. 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 $592.2 million in 2024 and by $668.3 million in 2023.

Net cash used in investing activities was $255.2 million in 2024 and $236.4 million in 2023. The net cash used in investing activities was primarily related to newbuild payments and ship improvements in 2024. The net cash used in investing activities was primarily related to newbuild payments in 2023.

Net cash used in financing activities was $394.5 million in 2024 primarily due to repayments of newbuild loans and our 2028 Secured Notes. Net cash used in financing activities was $513.4 billion in 2023 primarily due to debt repayments and a net decrease in our Revolving Loan Facility partially offset by the proceeds of $850 million from our various note offerings.

Future Capital Commitments

Future capital commitments consist of contracted commitments, including ship construction contracts. Anticipated expenditures related to ship construction contracts (which includes two ships on order for Oceania Cruises that are expected to be cancelled, and excludes orders for four Norwegian Cruise Line ships, which are not yet effective) were $0.5 billion for the remainder of 2024 and $2.2 billion and $2.4 billion for the years ending December 31, 2025 and 2026, respectively, reflecting delays in certain scheduled ship delivery dates. The Company has export credit financing in place for the anticipated expenditures related to ship construction contracts of $0.3 billion for the remainder of 2024 and $1.6 billion and $1.5 billion for the years ending December 31, 2025 and 2026, respectively. Anticipated non-newbuild capital expenditures for the remainder of 2024 are approximately $460 million. Future expected capital expenditures will significantly increase our depreciation and amortization expense.

​

Newbuilds

​

The following chart discloses details about our newbuild program. 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. Expected delivery dates for our most recently announced newbuilds are preliminary and subject to change. Orders announced after March 31, 2024 are in bold.

​

​	​	​	​	​	​	​
Year	Brand	Class	Ship Name	Gross Tons(1)	Berths(1)	Status
2025	Norwegian Cruise Line	Next Generation Prima Class	Norwegian Aqua	~156,000	~3,550	Contract effective / financed(4)
2025	Oceania Cruises	Allura Class	Allura	~68,000	~1,250	Contract effective / financed(4)
2026	Norwegian Cruise Line	Next Generation Prima Class	To come	~156,000	~3,550	Contract effective / financed(4)

2026	Regent Seven Seas	New Class	To come	~77,000	~850	Contract effective / financed(4)
2027	Norwegian Cruise Line	Next Gen ”Methanol-Ready(2)”Prima Class	To come	~169,000	~3,850	Contract effective / financed(4)
2027	Oceania Cruises	New Class	To come	~86,000	~1,450	Contract effective / financed(4)
2028	Norwegian Cruise Line	Next Gen ”Methanol-Ready(2)”Prima Class	To come	~169,000	~3,850	Contract effective / financed(4)
Expected 2029(3)	Oceania Cruises	New Class	To come	~86,000	~1,450	Contract effective / financed(4)
2029	Regent Seven Seas	New Class	To come	~77,000	~850	Contract effective / financed(4)
2030	Norwegian Cruise Line	New Class	To come	~200,000	~5,000	Contract not yet effective / subject to financing(5)
2030	Oceania Cruises	New Class	—	~86,000	~1,450	Contract effective, but not financed. Order expected to be cancelled and replaced by listed Norwegian Cruise Line orders from 2030 – 2036(5)
2031	Oceania Cruises	New Class	—	~86,000	~1,450	Contract effective, but not financed. Order expected to be cancelled and replaced by listed Norwegian Cruise Line orders from 2030 - 2036(5)
2032	Norwegian Cruise Line	New Class	To come	~200,000	~5,000	Contract not yet effective / subject to financing(5)
2034	Norwegian Cruise Line	New Class	To come	~200,000	~5,000	Contract not yet effective / subject to financing(5)
2036	Norwegian Cruise Line	New Class	To come	~200,000	~5,000	Contract not yet effective / subject to financing(5)

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

(2)	Designs for the final two Prima Class ships have been lengthened and reconfigured to accommodate the use of green methanol as a future fuel source. Additional modifications will be needed to fully enable the use of green methanol.

(3)	Delivery for the second Oceania Cruises ship is contractually scheduled for the fourth quarter of 2028, but may be delayed to 2029.

(4)	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.

(5)	We expect the four ship Norwegian Cruise Line order to replace the separate, effective, two ship order for Oceania Cruises. The four-ship order for Norwegian Cruise Line is still being finalized and is subject to financing.

​

As of March 31, 2024, the combined contract prices, including amendments and change orders, of the five ships on order for delivery was approximately €5.8 billion, or $6.3 billion based on the euro/U.S. dollar exchange rate as of March 31, 2024. The combined contract prices of the six new ships with contracts that became effective subsequent to March 31, 2024 (which includes the two ships on order for Oceania Cruises, which were scheduled for delivery in 2030 and 2031, respectively, but are expected to be cancelled, and excludes the orders for the four Norwegian Cruise Line ships, which are not yet effective) was approximately €5.3 billion, or $5.7 billion based on the euro/U.S. dollar exchange rate as of March 31, 2024. 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. However, if any such events were to occur, it could result in, among other things, the forfeiture of prior deposits or payments made by us and potential claims and impairment losses which may materially impact our business, financial condition and results of operations.

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

Material Cash Requirements

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

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Remainder of			​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​
​	​	2024			2025			2026			2027			2028			2029			Thereafter			Total
Long-term debt (1)	​	$	1,961,710	​	$	1,882,085	​	$	2,695,301	​	$	3,638,843	​	$	1,941,473	​	$	2,040,805	​	$	2,239,004	​	$	16,399,221
Ship construction contracts (2)	​		190,481	​	​	1,861,993	​	​	1,297,001	​	​	1,244,929	​	​	1,159,580	​	​	—	​	​	—	​		5,753,984
Total	​	$	2,152,191	​	$	3,744,078	​	$	3,992,302	​	$	4,883,772	​	$	3,101,053	​	$	2,040,805	​	$	2,239,004	​	$	22,153,205

(1)	Includes principal as well as estimated interest payments with Term SOFR held constant as of March 31, 2024. Includes exchangeable notes which can be settled in shares. Excludes the impact of any future possible refinancings and undrawn export-credit backed facilities.

(2)

Ship construction contracts are for our newbuild ships based on the euro/U.S. dollar exchange rate as of March 31, 2024. As of March 31, 2024, we have committed undrawn export-credit backed facilities of approximately $5.3 billion which funds approximately 80% of our ship construction contracts. Taking into account the six new ship orders with contracts that became effective subsequent to March 31, 2024 (which includes the two ships on order for Oceania Cruises that are expected to be cancelled, and excludes the orders for the four Norwegian Cruise Line ships, which are not yet effective), our material cash requirements for ship construction contracts are as follows (in thousands):

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Remainder of			​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​
​	​	2024			2025			2026			2027			2028			2029			Thereafter			Total
Ship construction contracts	​	$	390,355	​	$	2,040,804	​	$	2,181,145	​	$	2,205,897	​	$	2,119,588	​	$	831,316	​	$	1,630,747	​	$	11,399,852

​

The above presentation reflects the contractual delivery date in the fourth quarter of 2028 of the second Oceania Cruises ship announced subsequent to March 31, 2024. However, it is expected that this delivery date may be moved to early 2029.

​

Funding Sources

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 March 31, 2024.

In addition, our existing debt agreements restrict, and any of our future debt arrangements may restrict, among other things, the ability of our subsidiaries, including NCLC, to make distributions and/or pay dividends to NCLH and NCLH’s ability to pay cash dividends to its shareholders. NCLH is a holding company and depends upon its subsidiaries for their ability to pay distributions to it to finance any dividend or pay any other obligations of NCLH. However, we do not believe that these restrictions have had or are expected to have an impact on our ability to meet any cash obligations.

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

Other

Certain service providers may require collateral in the normal course of our business. 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. 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.

​

General

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. The financial impacts of these derivative instruments are primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the notional, term and conditions of the derivatives with the underlying risk being hedged. We do not hold or issue derivatives for trading or other speculative purposes. Derivative positions are monitored using techniques including market valuations and sensitivity analyses.

Interest Rate Risk

As of March 31, 2024 and December 31, 2023, 95% of our debt was fixed and 5% was variable. Based on our March 31, 2024 outstanding variable rate debt balance, a one percentage point increase in annual Term SOFR interest rates would increase our annual interest expense by approximately $6.5 million excluding the effects of capitalization of interest.

Foreign Currency Exchange Rate Risk

We use foreign currency derivatives to hedge the exposure to volatility in foreign currency exchange rates related to our ship construction contracts denominated in euros; however, as of March 31, 2024 and December 31, 2023, we had no foreign currency derivatives. As of March 31, 2024, the payments not hedged aggregated €5.3 billion, or $5.7 billion based on the euro/U.S. dollar exchange rate as of March 31, 2024. As of December 31, 2023, the payments not hedged aggregated €5.4 billion, or $6.0 billion, based on the euro/U.S. dollar exchange rate as of December 31, 2023. The change from December 31, 2023 to March 31, 2024 was due to a payment on a newbuild agreement. We estimate that a 10% change in the euro as of March 31, 2024 would result in a $0.6 billion change in the U.S. dollar value of the foreign currency denominated remaining payments.

Fuel Price Risk

Our exposure to market risk for changes in fuel prices relates to the forecasted purchases of fuel on our ships. Fuel expense, as a percentage of our total cruise operating expense, was 14.3% and 15.2% for the three months ended March 31, 2024 and 2023, respectively. We use fuel derivative agreements to mitigate the financial impact of fluctuations in fuel prices and as of March 31, 2024, we had hedged approximately 55% and 22% of our remaining 2024 and 2025 projected metric tons of fuel purchases, respectively. As of December 31, 2023, we had hedged approximately 53% and 21% of our 2024 and 2025 projected metric tons of fuel purchases, respectively. The percentage of fuel purchases hedged changed between December 31, 2023 and March 31, 2024 primarily due to an update to projected purchases.

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We estimate that a 10% increase in our weighted-average fuel price would increase our anticipated 2024 fuel expense by $48.6 million. This increase would be offset by an increase in the fair value of all our fuel swap agreements of $28.5 million. Fair value of our derivative contracts is derived using valuation models that utilize the income valuation

approach. These valuation models take into account the contract terms such as maturity, as well as other inputs such as fuel types, fuel curves, creditworthiness of the counterparty and the Company, as well as other data points.

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Evaluation of Disclosure Controls and Procedures

Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of March 31, 2024. There are inherent limitations in the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2024 to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Our threshold for disclosing material environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.

See the section titled “Litigation” in “Item 1—Financial Statements—Notes to Consolidated Financial Statements—Note 9 Commitments and Contingencies” in Part I of this quarterly report for information about legal proceedings.

We refer you to our Annual Report on Form 10-K for a discussion of the risk factors that affect our business and financial results. We caution you that the risk factors discussed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K, elsewhere in this report or other SEC filings, could cause future results to differ materially from those stated in any forward-looking statements. You should not interpret the disclosure of a risk to imply that the risk has not already materialized. The impact of macroeconomic conditions and global conflicts have also had the effect of heightening many of the other risks described in the “Risk Factors” included in our Annual Report on Form 10-K, such as those relating to our need to generate sufficient cash flows to service our indebtedness, and our ability to comply with the covenants contained in the agreements that govern our indebtedness.

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K.

10b5-1 Trading Arrangements

During the three months ended March 31, 2024, none of our directors or officers subject to Section 16 of the Securities Exchange Act of 1934 adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408(a) of Regulation S-K).

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10.1	​	​	Third Amended and Restated Commitment Letter, dated as of February 23, 2024 and effective as of March 11, 2024, among NCL Corporation Ltd. and the purchasers named therein (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on March 12, 2024 (File No. 001-35784))
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10.2	​	​	SACE Facility Agreement, dated April 4, 2024, among Oceania Next I, LLC, as borrower, NCL Corporation Ltd., as guarantor, the lenders party thereto, Banco Santander, S.A., BNP Paribas, Caixabank S.A., Cassa Depositi e Prestiti S.P.A., Crédit Agricole Corporate and Investment Bank, KFW Ipex-Bank GMBH, as joint mandated lead arrangers, and Crédit Agricole Corporate and Investment Bank, as facility agent, ECA agent and security agent (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on April 8, 2024 (File No. 001-35784))#
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10.3	​	​	SACE Facility Agreement, dated April 4, 2024, among Oceania Next II, LLC, as borrower, NCL Corporation Ltd., as guarantor, the lenders party thereto, Banco Santander, S.A., BNP Paribas, Caixabank S.A., Cassa Depositi e Prestiti S.P.A., Crédit Agricole Corporate and Investment Bank, HSBC Bank PLC, JPMorgan Chase Bank, N.A., London Branch, KFW Ipex-Bank GMBH, as joint mandated lead arrangers, and Crédit Agricole Corporate and Investment Bank, as facility agent, ECA agent and security agent (incorporated herein by reference to Exhibit 10.2 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on April 8, 2024 (File No. 001-35784))#
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10.4	​	​	SACE Facility Agreement, dated April 4, 2024, among DaVinci One, LLC, as borrower, NCL Corporation Ltd., as guarantor, the lenders party thereto, Banco Santander, S.A., BNP Paribas, Caixabank S.A., Cassa Depositi e Prestiti S.P.A., Citibank, N.A. London Branch, Crédit Agricole Corporate and Investment Bank, KFW Ipex-Bank GMBH, as joint mandated lead arrangers, and Crédit Agricole Corporate and Investment Bank, as facility agent, ECA agent and security agent (incorporated herein by reference to Exhibit 10.3 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on April 8, 2024 (File No. 001-35784))#
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10.5	​	​	SACE Facility Agreement, dated April 4, 2024, among DaVinci Two, LLC, as borrower, NCL Corporation Ltd., as guarantor, the lenders party thereto, Banco Santander, S.A., BNP Paribas, Caixabank S.A., Cassa Depositi e Prestiti S.P.A., Crédit Agricole Corporate and Investment Bank, HSBC Bank PLC, JPMorgan Chase Bank, N.A., London Branch, KFW Ipex-Bank GMBH, as joint mandated lead arrangers, and Crédit Agricole Corporate and Investment Bank, as facility agent, ECA agent and security agent (incorporated herein by reference to Exhibit 10.4 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on April 8, 2024 (File No. 001-35784))#
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10.6	​	​	Form of Norwegian Cruise Line Holdings Ltd. Time-based Restricted Share Unit Award Agreement (2024)†
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10.7	​	​	Form of Norwegian Cruise Line Holdings Ltd. Performance-based Restricted Share Unit Award Agreement (2024)†
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31.1*	​	​	Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 ​

31.2*	​	​	Certification of the Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 ​
32.1**	​	​	Certifications of the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code

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101*	​	The following unaudited consolidated financial statements from Norwegian Cruise Line Holdings Ltd.’s Quarterly Report on Form 10‑Q for the quarterly period ended March 31, 2024, formatted in Inline XBRL:
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​	​	(i) the Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023;
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​	​	(ii) the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2024 and 2023;
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​	​	(iii) the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023;
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​	​	(iv) the Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023;
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​	​	(v) the Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the three months ended March 31, 2024 and 2023; and
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​	​	(vi) the Notes to the Consolidated Financial Statements.
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104*	​	The cover page from Norwegian Cruise Line Holdings Ltd.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL and included in the interactive data files submitted as Exhibit 101.

• Filed herewith.

** Furnished herewith.

† Management contract or compensatory plan.

Certain portions of this document that constitute confidential information have been redacted in accordance with Regulation S-K Item 601(b)(10).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NORWEGIAN CRUISE LINE HOLDINGS LTD.
	(Registrant)
	By:	/s/ HARRY SOMMER
	Name:	Harry Sommer
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ MARK A. KEMPA
	Name:	Mark A. Kempa
	Title:	Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)
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Dated: May 7, 2024	​	​

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