Item 1. Financial Statements

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	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)

​

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

​

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)

​

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

​

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

​

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

​

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)
Net cash used in financing activities	​		(394,529)	​		(513,364)
Net increase (decrease) in cash and cash equivalents	​		157,399	​		(246,387)
Cash and cash equivalents at beginning of period	​		402,415	​		946,987
Cash and cash equivalents at end of period	​	$	559,814	​	$	700,600

​

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

​

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity (Deficit)

(Unaudited)

(in thousands)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended March 31, 2024
​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​
​	​	​	​	​	Additional		​	Other		​	​		​	Total
​	​	Ordinary		​	Paid-in		​	Comprehensive		​	Accumulated		​	Shareholders’
​		Shares			Capital			Income (Loss)			Deficit			Equity (Deficit)
Balance, December 31, 2023		$	425	​	$	7,708,957	​	$	(508,438)	​	$	(6,900,137)	​	$	300,807
Share-based compensation		​	—		​	21,948		​	—		​	—		​	21,948
Issuance of shares under employee related plans		​	4		​	(4)		​	—		​	—		​	—
Net share settlement of restricted share units		​	—		​	(22,032)		​	—		​	—		​	(22,032)
Other comprehensive income, net		​	—		​	—		​	44,015		​	—		​	44,015
Net income		​	—		​	—		​	—		​	17,353		​	17,353
Balance, March 31, 2024	​	$	429	​	$	7,708,869	​	$	(464,423)	​	$	(6,882,784)	​	$	362,091

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended March 31, 2023
​		​	​	​	​	​	​	Accumulated			​	​		​	​
​	​	​	​	​	Additional		​	Other		​	​		​	Total
​	​	Ordinary		​	Paid-in		​	Comprehensive		​	Accumulated		​	Shareholders’
​		Shares			Capital			Income (Loss)			Deficit			Equity (Deficit)
Balance, December 31, 2022		$	421	​	$	7,611,564	​	$	(477,079)	​	$	(7,066,315)	​	$	68,591
Share-based compensation		​	—		​	28,155		​	—		​	—		​	28,155
Issuance of shares under employee related plans		​	3		​	2,615		​	—		​	—		​	2,618
Net share settlement of restricted share units		​	—		​	(11,306)		​	—		​	—		​	(11,306)
Other comprehensive loss, net	​	​	—		​	—		​	(28,285)		​	—		​	(28,285)
Net loss		​	—	​	​	—	​	​	—	​	​	(159,321)	​	​	(159,321)
Balance, March 31, 2023	​	$	424	​	$	7,631,028	​	$	(505,364)	​	$	(7,225,636)	​	$	(99,548)

​

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

​

​

​

Norwegian Cruise Line Holdings Ltd.

Notes to Consolidated Financial Statements

(Unaudited)

Unless otherwise indicated or the context otherwise requires, references in this report to (i) the “Company,” “we,” “our” and “us” refer to NCLH (as defined below) and its subsidiaries, (ii) “NCLC” refers to NCL Corporation Ltd., (iii) “NCLH” refers to Norwegian Cruise Line Holdings Ltd., (iv) “Norwegian Cruise Line” or “Norwegian” refers to the Norwegian Cruise Line brand and its predecessors, (v) “Oceania Cruises” refers to the Oceania Cruises brand and (vi) “Regent” refers to the Regent Seven Seas Cruises brand.

References to the “U.S.” are to the United States of America, and “dollar(s)” or “$” are to U.S. dollars, the “U.K.” are to the United Kingdom and “euro(s)” or “€” are to the official currency of the Eurozone. We refer you to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Terminology” for the capitalized terms used and not otherwise defined throughout these notes to consolidated financial statements.

1. Description of Business and Organization

We are a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. As of March 31, 2024, we had 32 ships with approximately 66,400 Berths and had orders for five additional ships to be delivered through 2028.

As of March 31, 2024, we had four Prima Class Ships on order with currently scheduled delivery dates from 2025 through 2028, and we had one Allura Class Ship on order for delivery in 2025. Subsequent to March 31, 2024, we announced anticipated additional newbuilds for our fleet.

​

​

2. Summary of Significant Accounting Policies

Liquidity

As of March 31, 2024, we had liquidity of approximately $2.4 billion, including cash and cash equivalents of $559.8 million and borrowings available under our $1.2 billion undrawn Revolving Loan Facility and $650 million undrawn commitment of senior unsecured notes issuable by NCLC less related fees (see Note 6 – “Long-Term Debt”). Additionally, in April 2024, a €200 million commitment became available that can be used for future newbuild payments (see Note 6 – “Long-Term Debt”). We believe that we have sufficient liquidity to fund our obligations and expect to remain in compliance with our financial covenants for at least the next twelve months from the issuance of these financial statements.

We will continue to pursue various opportunities to refinance future debt maturities to reduce interest expense and/or to extend the maturity dates associated with our existing indebtedness and obtain relevant financial covenant amendments or waivers, if needed.

Basis of Presentation

The accompanying consolidated financial statements are unaudited and, in our opinion, contain all normal recurring adjustments necessary for a fair statement of the results for the periods presented.

Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire fiscal year. Historically, demand for cruises has been strongest during the Northern Hemisphere’s summer months. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023, which are included in our most recent Annual Report on Form 10-K filed with the SEC on February 28, 2024.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the basic weighted-average number of shares outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) and assumed conversion of exchangeable notes by diluted weighted-average shares outstanding.

A reconciliation between basic and diluted earnings (loss) per share was as follows (in thousands, except share and per share data):

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​		2024			2023
Net income (loss) - Basic EPS	​	$	17,353	​	$	(159,321)
Basic weighted-average shares outstanding	​		426,803,519	​		422,655,215
Dilutive effect of share awards	​		4,215,687	​		—
Diluted weighted-average shares outstanding	​		431,019,206	​		422,655,215
Basic EPS	​	$	0.04	​	$	(0.38)
Diluted EPS	​	$	0.04	​	$	(0.38)

​

Each exchangeable note (see Note 6 – “Long-Term Debt”) is individually evaluated for its dilutive or anti-dilutive impact on EPS as determined under the if-converted method. Only the interest expense and weighted average shares for exchangeable notes that are dilutive are included in the effect of dilutive securities above. During the three months ended March 31, 2024 and 2023, each of the exchangeable notes was anti-dilutive. Share awards are evaluated for a dilutive or anti-dilutive impact on EPS using the treasury stock method. For the three months ended March 31, 2024 and 2023, a total of 91.1 million and 89.4 million shares, respectively, have been excluded from diluted weighted-average shares outstanding because the effect of including them would have been anti-dilutive.

Foreign Currency

The majority of our transactions are settled in U.S. dollars. We remeasure assets and liabilities denominated in foreign currencies at exchange rates in effect at the balance sheet date. The resulting gains or losses are recognized in our consolidated statements of operations within other income (expense), net. We recognized a gain of $13.3 million and a loss of $8.7 million for the three months ended March 31, 2024 and 2023, respectively, related to remeasurement of assets and liabilities denominated in foreign currencies. Remeasurements of foreign currency related to operating activities are recognized within changes in operating assets and liabilities in the consolidated statement of cash flows.

Depreciation and Amortization Expense

The amortization of deferred financing fees is included in depreciation and amortization expense in the consolidated statements of cash flows; however, for purposes of the consolidated statements of operations they are included in interest expense, net.

Accounts Receivable, Net

Accounts receivable, net included $19.8 million and $20.1 million due from credit card processors as of March 31, 2024 and December 31, 2023, respectively.

​

Recently Issued Accounting Guidance

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 includes additional disclosures on an interim and annual basis and requires that the disclosures be applied to public entities that have a single reportable segment. These provisions are effective for fiscal years beginning after December 15, 2023 and interim periods after December 15, 2024. ASU 2023-07 shall be applied retrospectively unless it

is impracticable to do so. We are evaluating the impact of ASU 2023-07 on our notes to the consolidated financial statements.

​

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information as well as certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024 and should be applied on a prospective basis. We are evaluating the impact of ASU 2023-09 on our notes to the consolidated financial statements.

​

3. Revenue Recognition

Disaggregation of Revenue

Revenue and cash flows are affected by economic factors in various geographical regions. Revenues by destination were as follows (in thousands):

​

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​		2024			2023
North America	​	$	1,560,772	​	$	1,361,053
Europe	​		25,236	​		81,318
Asia-Pacific	​		397,002	​		205,662
Other	​	​	208,205	​	​	173,906
Total revenue	​	$	2,191,215	​	$	1,821,939

​

North America includes the U.S., the Caribbean, Canada and Mexico. Europe includes the Baltic region, Canary Islands and Mediterranean. Asia-Pacific includes Australia, New Zealand and Asia. Other includes all other international territories.

Segment Reporting

We have concluded that our business has a single reportable segment. Each brand, Norwegian, Oceania Cruises and Regent, constitutes a business for which discrete financial information is available and management regularly reviews the brand level operating results and, therefore, each brand is considered an operating segment. Our operating segments have similar economic and qualitative characteristics, including similar long-term margins, products and services; therefore, we aggregate all of the operating segments into one reportable segment.

Although we sell cruises on an international basis, our passenger ticket revenue is primarily attributed to U.S.-sourced guests who make reservations through the U.S. Revenue attributable to U.S.-sourced guests has approximated 84-87% of total revenue over the preceding three fiscal years. No other individual country’s revenues exceed 10% in any given period.

Contract Balances

Receivables from customers are included within accounts receivable, net. As of March 31, 2024 and December 31, 2023, our receivables from customers were $131.8 million and $126.4 million, respectively, primarily related to in-transit credit card receivables.

​

Future cruise credits that have been issued as face value reimbursement for cancelled bookings due to COVID-19 are approximately $66.0 million. The future cruise credits are not contracts, and therefore, guests who elected this option are excluded from our contract liability balance; however, the credit for the original amount paid is included in advance ticket sales.

​

Our contract liabilities are included within advance ticket sales. As of March 31, 2024 and December 31, 2023, our contract liabilities were $2.7 billion and $2.2 billion, respectively. Of the amounts included within contract liabilities as of March 31, 2024, approximately 45% were refundable in accordance with our cancellation policies. Of the deposits included within advance ticket sales, the majority are refundable in accordance with our cancellation policies and it is uncertain to what extent guests may request refunds. For the three months ended March 31, 2024, $1.7 billion of revenue recognized was included in the contract liability balance at the beginning of the period.

​

​

​

4. Leases

Operating lease balances were as follows (in thousands):

​

​	​	​	​	​	​	​	​	​
​		Balance Sheet location		March 31, 2024			December 31, 2023
Operating leases				​		​	​
Right-of-use assets		Other long-term assets	​	$	764,045	​	$	753,652
Current operating lease liabilities		Accrued expenses and other liabilities	​	​	29,043	​	​	23,226
Non-current operating lease liabilities		Other long-term liabilities	​	​	648,487	​	​	644,646

​

​

​

5. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) for the three months ended March 31, 2024 was as follows (in thousands):

​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended March 31, 2024								​
​		​	​		​	​	​	Change		​
​	​	Accumulated		​	Change		​	Related to		​
​	​	Other		​	Related to		​	Shipboard		​
​	​	Comprehensive		​	Cash Flow		​	Retirement		​
​		Income (Loss)			Hedges		​	Plan		​
Accumulated other comprehensive income (loss) at beginning of period	​	$	(508,438)	​	$	(508,524)	​	$	86
Current period other comprehensive income before reclassifications	​		47,253	​		47,253			—
Amounts reclassified into earnings	​		(3,238)	​		(3,333)	(1)		95	(2)
Accumulated other comprehensive income (loss) at end of period	​	$	(464,423)	​	$	(464,604)	(3)	$	181

​

Accumulated other comprehensive income (loss) for the three months ended March 31, 2023 was as follows (in thousands):

​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended March 31, 2023								​
​		​	​		​	​	​	Change
​	​	Accumulated		​	Change		​	Related to		​
​	​	Other		​	Related to		​	Shipboard		​
​	​	Comprehensive		​	Cash Flow		​	Retirement		​
​		Income (Loss)			Hedges		​	Plan		​
Accumulated other comprehensive income (loss) at beginning of period		$	(477,079)	​	$	(480,578)	​	$	3,499
Current period other comprehensive loss before reclassifications			(18,475)			(18,475)			—
Amounts reclassified into earnings			(9,810)			(9,874)	(1)		64	(2)
Accumulated other comprehensive income (loss) at end of period		$	(505,364)		$	(508,927)	​	$	3,563

(1)	We refer you to Note 7 – “Fair Value Measurements and Derivatives” for the affected line items in the consolidated statements of operations.

(2)	Amortization of prior-service cost and actuarial loss reclassified to other income (expense), net.

(3)	Includes $6.6 million of gains expected to be reclassified into earnings in the next 12 months.

​

6. Long-Term Debt

In February 2024, NCLC and the purchasers named therein (collectively, the “Commitment Parties”) entered into a third amended and restated commitment letter (the “third amended commitment letter”), which became effective in March 2024. The third amended commitment letter amended and restated the commitment letter dated February 22, 2023 and extended the commitments thereunder through March 2025. Pursuant to the third amended commitment letter, the Commitment Parties have agreed to purchase from NCLC an aggregate principal amount of $650 million of senior unsecured notes due five years after the issue date (the “Commitment Notes”) at NCLC’s option. If issued, the Commitment Notes will be subject to an issue fee of 0.50% and will bear interest at a rate per annum equal to (A) the greater of (i) the interest rate of the 7.75% senior notes due 2029 (“2029 Unsecured Notes”) and (ii) the then-current secondary trading yield applicable to the 2029 Unsecured Notes plus (B) 200 basis points. The Commitment Notes are subject to a one-time structuring fee of 0.50% and a quarterly commitment fee of 0.75% for so long as the commitments with respect to the Commitment Notes are outstanding.

In connection with the execution of the third amended commitment letter, NCLC agreed to repurchase all of the outstanding $250 million aggregate principal amount of 9.75% senior secured notes due 2028 (the “2028 Secured Notes”) at a negotiated premium plus accrued and unpaid interest thereon. In March 2024, in connection with the settlement of the repurchase, the aggregate principal amount outstanding under the 2028 Secured Notes was cancelled while also releasing the related collateral. The loss on extinguishment was $29.0 million, recognized in interest expense, net.

In November 2023, we executed an agreement for a commitment of €200 million in connection with financial support for our newbuilds, which became available in April 2024. The commitment if drawn will pay interest quarterly at a rate per annum based on an applicable margin plus Euribor 3-months. The commitment may be drawn at any time and is payable within 364 days, but no later than July 15, 2025. Any amount repaid prior to July 15, 2025 may be drawn again.

Exchangeable Notes

The following is a summary of NCLC’s exchangeable notes as of March 31, 2024 (in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Unamortized		​	​	​	​	​	​	​	​
​	​	Principal		​	Deferred		​	Net Carrying		​	Fair Value
​		Amount			Financing Fees			Amount			Amount			Leveling
2024 Exchangeable Notes (1)	​	$	146,601	​	$	(193)	​	$	146,408	​	$	224,238	​	Level 2
2025 Exchangeable Notes	​	​	449,990	​	​	(3,383)	​	​	446,607	​	​	581,270	​	Level 2
2027 1.125% Exchangeable Notes	​	​	1,150,000	​	​	(16,544)	​	​	1,133,456	​	​	1,098,273	​	Level 2
2027 2.5% Exchangeable Notes	​	​	473,175	​	​	(7,254)	​	​	465,921	​	​	464,540	​	Level 2

(1)	Classified within current portion of long-term debt as of March 31, 2024. We expect that the holders of the 2024 Exchangeable Notes will exchange their 2024 Exchangeable Notes for shares.

The following is a summary of NCLC’s exchangeable notes as of December 31, 2023 (in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Unamortized		​	​	​	​	​	​	​	​
​	​	Principal		​	Deferred		​	Net Carrying		​	Fair Value
​		Amount			Financing Fees			Amount			Amount			Leveling
2024 Exchangeable Notes (1)	​	$	146,601	​	$	(557)	​	$	146,044	​	$	217,790	​	Level 2
2025 Exchangeable Notes	​	​	449,990	​	​	(3,963)	​	​	446,027	​	​	572,567	​	Level 2
2027 1.125% Exchangeable Notes	​	​	1,150,000	​	​	(17,921)	​	​	1,132,079	​	​	1,068,431	​	Level 2
2027 2.5% Exchangeable Notes	​	​	473,175	​	​	(7,836)	​	​	465,339	​	​	453,784	​	Level 2

(1)	Classified within current portion of long-term debt as of December 31, 2023. We expect that the holders of the 2024 Exchangeable Notes will exchange their 2024 Exchangeable Notes for shares.

The following provides a summary of the interest expense of NCLC’s exchangeable notes (in thousands):

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​	2024			2023
Coupon interest	​	$	14,437	​	$	14,438
Amortization of deferred financing fees	​	​	2,903	​	​	2,643
Total	​	$	17,340	​	$	17,081

​

As of March 31, 2024, the effective interest rate is 7.04%, 5.97%, 1.64% and 3.06% for the 2024 Exchangeable Notes, 2025 Exchangeable Notes, 2027 1.125% Exchangeable Notes and 2027 2.5% Exchangeable Notes, respectively.

​

Debt Repayments

The following are scheduled principal repayments on our long-term debt including exchangeable notes, which can be settled in shares, and finance lease obligations as of March 31, 2024 (in thousands):

​

​	​	​	​
Year		Amount
Remainder of 2024	​	$	1,569,504
2025	​		1,321,130
2026	​		2,234,657
2027	​		3,291,131
2028	​		1,697,619
2029	​	​	1,911,513
Thereafter	​		2,064,110
Total	​	$	14,089,664

​

Debt Covenants

As of 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 our covenants. However, no assurances can be made that such amendments or waivers would be approved by our lenders. Generally, if an event of default under any debt agreement occurs, then pursuant to cross default and/or cross acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated, which would have a material adverse impact on our operations and liquidity.

7. Fair Value Measurements and Derivatives

Fair value is defined as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

Derivatives are generally recorded at fair value. Contracts that are designated as normal purchases and normal sales are not recorded at fair value. The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business. All of our allowance purchase agreements related to the European Union’s Emissions Trading System meet the criteria specified for this exception.

Fair Value Hierarchy

The following hierarchy for inputs used in measuring fair value should maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available:

Level 1 Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement dates.

Level 2 Significant other observable inputs that are used by market participants in pricing the asset or liability based on market data obtained from independent sources.

Level 3 Significant unobservable inputs we believe market participants would use in pricing the asset or liability based on the best information available.

Derivatives

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We attempt to minimize these risks through a combination of our normal operating and financing activities and through the use of derivatives. We assess whether derivatives used in hedging transactions are “highly effective” in offsetting changes in the cash flow of our hedged forecasted transactions. We use critical terms match or regression analysis for hedge relationships and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings. There are no amounts excluded from the assessment of hedge effectiveness, and there are no credit-risk-related contingent features in our derivative agreements. We monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Credit risk, including but not limited to counterparty non-performance under derivatives, is not considered significant, as we primarily conduct business with large, well-established financial institutions with which we have established relationships, and which have credit risks acceptable to us, or the credit risk is spread out among many creditors. We do not anticipate non-performance by any of our significant counterparties.

As of March 31, 2024, we had fuel swaps, which are used to mitigate the financial impact of volatility of fuel prices pertaining to approximately 630 thousand metric tons of our projected fuel purchases, maturing through December 31, 2025.

As of March 31, 2024, we had fuel swaps pertaining to approximately 4 thousand metric tons of our projected fuel purchases which were not designated as cash flow hedges maturing through December 31, 2024.

The derivatives measured at fair value and the respective location in the consolidated balance sheets include the following (in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Assets					​	Liabilities
​	​	​	​	March 31,		​	December 31,		​	March 31,		​	December 31,
​		Balance Sheet Location		2024			2023			2024			2023
Derivative Contracts Designated as Hedging Instruments			​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fuel contracts	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Prepaid expenses and other assets	​	$	22,725	​	$	—	​	$	109	​	$	—
​	​	Other long-term assets	​	​	2,839	​	​	—	​	​	410	​	​	—
​	​	Accrued expenses and other liabilities	​		—	​		4,309	​		—	​		11,247
​	​	Other long-term liabilities	​		—	​		137	​		—	​		8,932
Total derivatives designated as hedging instruments			​	$	25,564	​	$	4,446	​	$	519	​	$	20,179
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivative Contracts Not Designated as Hedging Instruments			​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fuel contracts	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Prepaid expenses and other assets	​	$	—	​	$	—	​	$	45	​	$	—
​	​	Accrued expenses and other liabilities	​	​	—	​		141	​	​	—	​	​	1,031
​	​	Other long-term liabilities	​	​	—	​		—	​		—	​		280
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total derivatives not designated as hedging instruments			​	$	—	​	$	141	​	$	45	​	$	1,311
Total derivatives	​	​	​	$	25,564	​	$	4,587	​	$	564	​	$	21,490

​

The fair values of swap and forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Company determines the value of options and collars utilizing an option pricing model based on inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets. The option pricing model used by the Company is an industry standard model for valuing options and is used by the broker/dealer community. The inputs to this option pricing model are the option strike price, underlying price, risk-free rate of interest, time to expiration, and volatility. The fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values.

Our derivatives and financial instruments were categorized as Level 2 in the fair value hierarchy, and we had no derivatives or financial instruments categorized as Level 1 or Level 3. Our derivative contracts include rights of offset with our counterparties. We have elected to net certain assets and liabilities within counterparties when the rights of offset exist. We are not required to post cash collateral related to our derivative instruments.

The following table discloses the gross and net amounts recognized within assets and liabilities (in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Gross		​	​	​	​	Gross		​	​	​
​	​	Gross		​	Amounts		​	Total Net		​	Amounts		​	​	​
March 31, 2024		Amounts			Offset			Amounts			Not Offset			Net Amounts
Assets	​	$	25,564	​	$	(564)	​	$	25,000	​	$	—	​	$	25,000

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Gross		​	​	​	​	Gross		​	​	​
​	​	Gross		​	Amounts		​	Total Net		​	Amounts		​	​	​
December 31, 2023		Amounts			Offset			Amounts			Not Offset			Net Amounts
Liabilities	​	$	21,490	​	$	(4,587)	​	$	16,903	​	$	—	​	$	16,903

​

The effects of cash flow hedge accounting on accumulated other comprehensive income (loss) were as follows (in thousands):

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	Location of Gain		​	​		​	​
​	​	​	​	​	​	​	​	(Loss) Reclassified	​	​	​	​	​	​
​	​	​	​	​	​	​	​	from Accumulated	​	Amount of Gain (Loss) Reclassified
​	​	Amount of Gain (Loss)					​	Other Comprehensive	​	from Accumulated Other
​	​	Recognized in Other					​	Income (Loss) into	​	Comprehensive Income
Derivatives		Comprehensive Loss						Income (Expense)		(Loss) into Income (Expense)
​	​	Three Months		​	Three Months		​	​	​	Three Months		​	Three Months
​	​	Ended		​	Ended		​	​	​	Ended		​	Ended
​		March 31, 2024			March 31, 2023		​	​		March 31, 2024			March 31, 2023
Fuel contracts		$	47,253	​	$	(29,015)	​	Fuel		$	6,577	​	$	12,597
Fuel contracts	​	​	—	​	​	—	​	Other income (expense), net	​	​	875	​	​	(37)
Foreign currency contracts			—	​		10,540	​	Depreciation and amortization			(4,119)	​		(2,686)
Total gain (loss) recognized in other comprehensive loss		$	47,253	​	$	(18,475)	​			$	3,333	​	$	9,874

​

​

The effects of cash flow hedge accounting on the consolidated statements of operations include the following (in thousands):

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended March 31, 2024								​	Three Months Ended March 31, 2023
​	​	​	​	​	Depreciation		​	​	​	​	​	​	​	Depreciation		​	​	​
​	​	​	​	​	and		​	Other Income		​	​	​	​	and		​	Other Income
​		Fuel			Amortization			(Expense), net			Fuel			Amortization			(Expense), net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	​	$	197,734	​	$	222,929	​	$	18,137	​	$	194,868	​	$	194,790	​	$	(8,955)
​	​	​		​	​		​	​	​	​	​		​	​		​	​	​
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense)		​			​			​	​		​			​		​
Fuel contracts		​	6,577		​	—		​	—		​	12,597		​	—	​	​	—
Foreign currency contracts		​	—	​	​	(4,119)		​	—		​	—		​	(2,686)	​	​	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) as a result that a forecasted transaction is no longer probable of occurring	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fuel contracts	​	​	—	​	​	—	​	​	875	​	​	—	​	​	—	​	​	(37)

​

The effects of derivatives not designated as hedging instruments on the consolidated statements of operations include the following (in thousands):

​

​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
​	​	​	Three Months Ended
​	​	​	March 31,
​	Location of Gain (Loss)		2024			2023
Derivatives not designated as hedging instruments	​	​			​
Fuel contracts	Other income (expense), net	​	$	2,199	​	$	(596)

​

Long-Term Debt

As of March 31, 2024 and December 31, 2023, the fair value of our long-term debt, including the current portion, was $13.3 billion and $13.5 billion, respectively, which was $0.8 billion and $0.9 billion lower, respectively, than the carrying values, excluding deferred financing costs. The difference between the fair value and carrying value of our long-term debt is due to our fixed and variable rate debt obligations carrying interest rates that are above or below market rates at the measurement dates. The fair value of our long-term revolving and term loan facilities was calculated based on estimated rates for the same or similar instruments with similar terms and remaining maturities. The fair value of our exchangeable notes considers observable risk-free rates; credit spreads of the same or similar instruments; and share prices, tenors, and historical and implied volatilities which are sourced from observable market data. The inputs are considered to be Level 2 in the fair value hierarchy. Market risk associated with our long-term variable rate debt is the potential increase in interest expense from an increase in interest rates or from an increase in share values.

Other

The carrying amounts reported in the consolidated balance sheets of all other financial assets and liabilities approximate fair value.

​

​

8. Employee Benefits and Compensation Plans

Restricted Share Unit Awards

In March 2024, NCLH granted 4.5 million time-based restricted share unit awards to our employees, which primarily vest in substantially equal installments over three years. Additionally, in March 2024, NCLH granted 0.9 million performance-based restricted share units to certain members of our management team, which vest upon the achievement of certain pre-established performance targets established through 2026 and the satisfaction of an additional time-based vesting requirement that generally requires continued employment through March 1, 2027.

The following is a summary of restricted share unit activity for the three months ended March 31, 2024:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	Number of	​	Weighted-		​	Number of	​	Weighted-
​	​	Time-Based	​	Average Grant		​	Performance-	​	Average Grant
​		Awards		Date Fair Value			Based Awards		Date Fair Value
Non-vested as of January 1, 2024		9,083,120	​	$	17.39		2,140,134	​	$	19.41
Granted		4,619,945	​	​	19.27	​	945,040	​	​	19.29
Vested		(4,288,932)	​	​	18.84	​	(334,888)	​	​	31.78
Forfeited or expired		(113,048)	​	​	17.44	​	—	​	​	—
Non-vested as of March 31, 2024		9,301,085	​	​	17.66		2,750,286	​	​	17.86

​

The compensation expense recognized for share-based compensation for the periods presented include the following (in thousands):

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​		2024			2023
Payroll and related expense	​	$	4,614	​	$	4,457
Marketing, general and administrative expense	​		17,334	​		23,698
Total share-based compensation expense	​	$	21,948	​	$	28,155

​

​

​

9. Commitments and Contingencies

Ship Construction Contracts

As of March 31, 2024, for the Norwegian brand, we had four Prima Class Ships on order, each ranging from approximately 156,000 to 169,000 Gross Tons with 3,550 to 3,850 Berths, with currently scheduled delivery dates from 2025 through 2028. As of March 31, 2024, for the Oceania Cruises brand, we had an order for one additional Allura Class Ship to be delivered in 2025, which will be approximately 68,000 Gross Tons and 1,250 Berths. Subsequent to March 31, 2024, we announced anticipated additional newbuilds for our fleet. The impacts of initiatives to improve environmental sustainability and modifications the Company plans to make to its newbuilds and/or other macroeconomic conditions and events have resulted in delays in expected ship deliveries. These and other impacts could result in additional delays in ship deliveries in the future, which may be prolonged.

​

The combined contract prices, including amendments and change orders, of the five ships on order for delivery as of March 31, 2024 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 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 orders for 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. For ships on order as of March 31, 2024 and for four of the six ships effective subsequent to March 31, 2024, we have obtained export credit financing which is expected to fund approximately 80% of the contract price of each ship as well as related financing premiums, subject to certain conditions. We do not anticipate any contractual breaches or cancellations to occur, except

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

​

Taking into account the six new ship orders with contracts that became effective subsequent to March 31, 2024 (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), our minimum annual payments for ship construction contracts, which include non-cancelable contracts or contracts that are cancelable when a replacement agreement is signed with the same party, are as follows (in thousands):

​

​	​	​	​
Year		Amount
Remainder of 2024	​	$	390,355
2025	​	​	2,040,804
2026	​		2,181,145
2027	​		2,205,897
2028	​		2,119,588
2029	​		831,316
Thereafter	​		1,630,747
Total minimum annual payments	​	$	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.

​

Litigation

Investigations

​

In March 2020, the Florida Attorney General announced an investigation related to the Company’s marketing during the COVID-19 pandemic. Following the announcement of the investigation by the Florida Attorney General, we received notifications from other attorneys general and governmental agencies that they are conducting similar investigations. The Company is cooperating with these ongoing investigations, the outcomes of which cannot be predicted at this time.

​

Helms-Burton Act

On August 27, 2019, a lawsuit was filed against Norwegian Cruise Line Holdings Ltd. in the United States District Court for the Southern District of Florida under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, also known as the Helms-Burton Act. The complaint, filed by Havana Docks Corporation (the “Havana Docks Matter”), alleges it holds an interest in the Havana Cruise Port Terminal, which was expropriated by the Cuban Government. The complaint further alleges that the Company “trafficked” in the property by embarking and disembarking passengers at the facility, as well as profiting from the Cuban Government’s possession of the property. The plaintiff seeks all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. After various motions challenging the sufficiency of plaintiff’s complaint were resolved and voluminous discovery was completed, both sides filed motions for summary judgment. On March 21, 2022, the court issued an order granting plaintiff’s motion for summary judgment on the issue of liability and denying the Company’s cross-motion for summary judgment. The court scheduled a trial on determination of damages only for November 2022. The plaintiff elected to seek what the court ruled to be its baseline statutory damage amount, which was the amount of the certified claim plus interest, trebled and with attorneys’ fees. Given this, there was no fact issue to be tried, and the matter was removed from the trial calendar. On December 30, 2022, the court entered a final judgment of approximately $112.9 million and, on January 23, 2023, the Company filed a notice of appeal from that judgment. On April 12, 2023, the Company posted a sufficient supersedeas bond with the court to prevent any efforts by the plaintiff to collect on the judgment pending the appeal. On June 30, 2023, the Company filed its opening appellate brief with the United States Court of Appeals for the Eleventh Circuit. On September 29, 2023, the plaintiff filed its answering brief responding to the Company’s opening brief in the Eleventh Circuit. The Court has scheduled oral argument on the matter for May 17,

2024. We believe that the likelihood of loss related to this matter is reasonably possible but not probable at this time; therefore, no liability has been recorded. The ability to make such estimates and judgments can be affected by various factors including, among other things: lack of legal precedent, stage of the proceedings, legal uncertainties inherent within the litigation process, the availability of appellate remedies, and involvement of numerous parties. We continue to believe we have meritorious defenses to the Havana Docks Matter. However, if the plaintiff prevails in the final outcome of this matter, there may be a material adverse impact on the Company’s financial condition, results of operations and/or cash flows.

Other

In the normal course of our business, various other claims and lawsuits have been filed or are pending against us. Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability is typically limited to our deductible amount. Nonetheless, the ultimate outcome of these claims and lawsuits that are not covered by insurance cannot be determined at this time. We have evaluated our overall exposure with respect to all of our threatened and pending litigation and, to the extent required, we have accrued amounts for all estimable probable losses associated with our deemed exposure. We are currently unable to estimate any other potential losses beyond those accrued, as discovery is not complete nor is adequate information available to estimate such range of loss or potential recovery. However, based on our current knowledge, we do not believe that the aggregate amount or range of reasonably possible losses with respect to these matters will be material to our consolidated results of operations, financial condition or cash flows. We intend to vigorously defend our legal position on all claims and, to the extent necessary, seek recovery.

Other Contingencies

​

The Company also has agreements with its credit card processors that govern approximately $3.4 billion in advance ticket sales at March 31, 2024 that have been received by the Company relating to future voyages. These agreements allow the credit card processors to require under certain circumstances, including the existence of a material adverse change, excessive chargebacks and other triggering events, that the Company maintain a reserve which would be satisfied by posting collateral. Although the agreements vary, these requirements may generally be satisfied either through a percentage of customer payments withheld or providing cash funds directly to the card processor. Any cash reserve or collateral requested could be increased or decreased. As of March 31, 2024, we had cash reserves of approximately $51.3 million with credit card processors, which includes approximately $19.8 million recognized in accounts receivable, net and approximately $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.

​

​

10. Other Income (Expense), Net

For the three months ended March 31, 2024 and 2023, other income (expense), net consisted of income of $18.1 million and expense of $9.0 million, respectively, primarily due to net gains and losses on foreign currency remeasurements.

​

11. Supplemental Cash Flow Information

For the three months ended March 31, 2024 and 2023, we had non-cash investing activities consisting of changes in accruals related to property and equipment of $11.3 million and $53.4 million, respectively.

​

​

​

​

​