Norwegian Cruise Line Q4 Earnings Call Highlights

Norwegian Cruise Line (NYSE:NCLH) opened its fourth quarter and full-year 2025 earnings call by introducing John Chidsey, who said he has spent his first two weeks as CEO conducting a “deep review” of the business and culture. Chidsey praised the company’s brands and guest loyalty while emphasizing that Norwegian “has clearly not been performing to its full potential,” pointing to execution issues, an “overly levered” balance sheet, and a cost structure that must be further streamlined.

New CEO outlines priorities and cultural reset

Chidsey said the company’s strategy is “sound,” but execution and coordination have not been. He described a need to create urgency and accountability, reduce bureaucracy, and build a “one-team mentality” across functions. He laid out three “jobs” for management:

• Fix execution and drive accountability, including optimizing the organization and eliminating bureaucracy.
• Improve efficiency and return on invested capital, with greater discipline in capital allocation.
• Unlock operational upside in revenue management, itinerary optimization, and monetization of private destinations.

Chidsey also said the company underinvested in technology, revenue management capabilities, and customer-facing systems even as it invested heavily in ships. Correcting that imbalance is “one of our top priorities,” he said, adding that progress will require “patience, discipline, and consistent execution.”

Fourth quarter and full-year 2025 results

Chief Financial Officer Mark Kempa said fourth quarter results were “ahead of or in line with our expectations.” Net yields grew 3.8% in the quarter, while adjusted net cruise cost excluding fuel was $158 and rose 0.2%, which Kempa attributed to strong cost controls. Adjusted EBITDA was $564 million, exceeding guidance.

Adjusted net income was $130 million and adjusted EPS was $0.28. Kempa noted the quarter’s adjusted results excluded an approximately $95 million, or $0.20 per share, write-off related to certain information technology assets included in depreciation and amortization.

For full-year 2025, Kempa said net yields rose 2.4% and adjusted net cruise cost excluding fuel per capacity day increased 0.7%, “slightly better than our guidance and well below inflation.” Adjusted EBITDA increased 11% to $2.73 billion, adjusted operational EBITDA margin improved 160 basis points to 37.1%, and adjusted EPS increased 19% to $2.11.

Operational updates: brands, ships, and Great Stirrup Cay

Kempa highlighted brand-level initiatives, including a refreshed Norwegian brand platform that reintroduced the 1990s tagline “It’s Different Out Here,” and the opening of bookings for Norwegian Aura, described as the largest Prima class ship, with first voyages scheduled in 2027.

In the luxury portfolio, management pointed to several indicators of demand:

• Oceania announced an adults-only policy fleet-wide, which Kempa said is “already yielding results.”
• Sales of Oceania Sonata had a “record-breaking opening day,” with bookings surpassing the launch of Oceania Allura by 45%.
• Regent Seven Seas Cruises’ January bookings were up 20% year-over-year.

The company also announced new ship orders across all three brands and said it now has 17 ships on order through 2037. Kempa said the timing of the new orders requires “only modest initial capital outlays” and is not expected to materially affect near-term leverage.

On Great Stirrup Cay, Norwegian’s private destination, management said early results after opening a pier, a new pool, and enhanced amenities have been encouraging, with strong guest feedback. Kempa said the company remains on track to open the Great Tides Waterpark later in the summer, which he said could strengthen demand into 2027.

Execution missteps tied to Caribbean shift and commercial alignment

A central theme of the call was that a major Caribbean capacity increase was implemented without adequate coordination across the enterprise. Kempa said the Caribbean strategy remains a “central pillar,” but the company increased capacity into the region ahead of the full build-out of Great Stirrup Cay’s infrastructure and before commercial initiatives were ready.

He said the company did not sufficiently align revenue management, sales, marketing, itinerary planning, and on-island monetization to support that deployment shift, which made first-quarter headwinds “more pronounced than we anticipated last quarter.” Kempa also said certain 2026 itineraries did not receive the coordinated commercial support required to maximize yields, leaving the company slightly behind its ideal booking curve in certain areas and creating near-term pricing pressure.

During Q&A, Chidsey said the Caribbean is “the place to be,” but acknowledged the company “got a little ahead of ourselves” and described the situation as “short-term misfires.” Management also pointed to issues in Europe tied to commercial misalignment. In response to a question about Europe, Kempa said the company reduced longer-duration itineraries versus last year, but pressure has emerged around “open jaw” itineraries, which he described as something the company cannot fully correct for 2026 and expects to address in 2027 and beyond. Kempa also cited heightened competitive activity in Alaska, where industry capacity has increased, pressuring yields.

2026 outlook: flat yields, sub-inflation cost growth, leverage focus

For 2026, Kempa said the company expects net yield growth in the first quarter to decline approximately 1.6% as higher occupancy is more than offset by pricing pressure. For the full year, management expects net yields to be “approximately flat,” with stabilization and modest improvement later in the year.

On costs, Kempa said discipline remains “firmly intact.” The company expects adjusted net cruise cost excluding fuel to decrease approximately 0.8% in the first quarter, with full-year unit cost growth of approximately 0.9%, which management said is well below inflation. First-quarter adjusted operational EBITDA margin is expected to improve to approximately 29.1% from 28.4% a year ago, with adjusted EBITDA of $515 million. For the full year, Kempa guided to adjusted EBITDA of approximately $2.95 billion, up about 8%, with margins “essentially flat” at approximately 37%. Adjusted EPS is expected to be about $0.16 in the first quarter and approximately $2.38 for the full year, up about 13%.

Deleveraging remains a top priority, but Kempa said 2026 net leverage is expected to remain approximately flat at 5.2x. He noted leverage will be temporarily higher due to the delivery of Norwegian Luna in March and Seven Seas Prestige in December, as EBITDA contribution from new ships phases in.

Management also said it is expanding its cost savings program from shipboard efficiencies to SG&A optimization, describing cost control as a “structural change in culture.” Kempa said rebuilding credibility begins with setting “clear, realistic expectations and delivering on them consistently.”

In closing remarks, Chidsey said the company is not operating in areas affected by the Middle East conflict and sees no itinerary impacts, while noting uncertainty around longer-term fuel impacts. He said the company is approximately 51% hedged for 2026 and 27% hedged for 2027.

About Norwegian Cruise Line (NYSE:NCLH)

Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is a global cruise operator offering a portfolio of premium brands that includes Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises. The company provides sea voyages and related onboard services such as dining, entertainment, shore excursions and destination experiences. Its fleet of modern vessels sails to more than 400 destinations across all seven continents, serving leisure travelers with itineraries ranging from short Caribbean getaways to extended world voyages.

Founded in 1966 by Knut Kloster and Ted Arison, the company pioneered the concept of “Freestyle Cruising,” which allows passengers greater flexibility in dining schedules, entertainment choices and onboard activities.