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Item 2 — Management's Discussion and Analysis
Norwegian Cruise Line Holdings Ltd. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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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 results of operations, 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, expectations regarding our deferred tax assets and valuation allowances, expected fleet additions and deliveries, including expected timing thereof, our expectations regarding the impact of macroeconomic conditions and recent global events, and expectations relating to our sustainability program, decarbonization efforts and alternative fuel sources and related regulation 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, tariff increases and trade wars, the volatility of fuel prices, declines in the securities and real estate markets, and perceptions of these conditions that decrease the level of disposable income of consumers or consumer confidence;
● our indebtedness and restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and be in compliance with maintenance covenants and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements;
● 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 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;
● our ability to maintain and strengthen our brand;
● shareholder activism and/or proxy contests;
● the unavailability of ports of call and the impacts of port and destination fees and expenses;
● future increases in the price of, or major changes, disruptions or reductions in, commercial airline services;
● changes involving the tax and environmental regulatory regimes in which we operate, including new and existing regulations aimed at reducing greenhouse gas emissions;
● the accuracy of any appraisals of our assets;
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● our success in controlling operating expenses and capital expenditures;
● adverse events impacting the security of travel, or customer perceptions of the security of travel, such as terrorist acts, geopolitical conflict, armed conflict or threats thereof, acts of piracy, and other international events;
● public health crises and their effect on the ability or desire of people to travel (including on cruises);
● adverse incidents involving cruise ships;
● 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;
● 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;
● 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;
● our reliance on third parties to provide hotel management services for certain ships, technology services and certain other critical services;
● fluctuations in foreign currency exchange rates;
● our expansion into new markets and investments in new markets, businesses and land-based destination projects;
● overcapacity in key markets or globally; and
● other factors set forth under “Risk Factors” in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 and our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 2, 2026 (our “Annual Report on Form 10-K”).
The above examples are not exhaustive and new risks emerge from time to time. There may be additional risks that we currently consider immaterial or which are unknown. Such forward-looking statements are based on our current beliefs,
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assumptions, expectations, estimates and projections regarding our present and future business strategies and the environment in which we expect to operate in the future. You are cautioned not to place undue reliance on the forward-looking statements included in this report, which speak only as of the date made. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations with regard thereto or any change of events, conditions or circumstances on which any such statement was based, except as required by law.
Furthermore, certain statements in this report, particularly pertaining to our sustainability performance, goals and initiatives, are subject to additional risks and uncertainties that could significantly affect our future financial condition and results of operations, as well as our ability to achieve our environmental goals. These risks and uncertainties may cause results to differ materially and adversely from those expressed in any of our forward-looking statements. Additionally, we may provide information herein that is not necessarily “material” under the federal securities laws for SEC reporting purposes but that is informed by various standards and frameworks (including standards for the measurement of underlying data) and the interest of various stakeholders. However, we cannot guarantee strict adherence to framework recommendations and much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change, and our disclosures based on these frameworks may change due to revisions in framework requirements, availability of information, changes in our business or applicable governmental policy, or other factors, some of which may be beyond our control.
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 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:
● 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 (exchanged or repaid at maturity in 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.
● 2030 0.875% Exchangeable Notes. On April 7, 2025, pursuant to an indenture among NCLC, as issuer, NCLH, as guarantor, and U.S. Bank Trust Company, National Association, as trustee, NCLC issued $353.9 million aggregate principal amount of exchangeable senior notes due 2030.
● 2030 0.750% Exchangeable Notes. On September 11, 2025, pursuant to an indenture among NCLC, as issuer, NCLH, as guarantor, and U.S. Bank Trust Company, National Association, as trustee, NCLC issued $1,407.0 million aggregate principal amount of exchangeable senior notes due 2030.
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● Adjusted EBITDA. EBITDA adjusted for other income (expense), net and other supplemental adjustments.
● Adjusted EPS. Adjusted Net Income 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. Net income (loss) adjusted for the effect of dilutive securities and other supplemental adjustments.
● 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 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.
● Prestige Class Ships. Regent’s Seven Seas Prestige and three additional ships on order.
● Prima Class Ships. Norwegian Prima, Norwegian Viva, Norwegian Aqua, Norwegian Luna, Norwegian Aura and one additional ship on order.
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● Revolving Loan Facility. Approximately $2.5 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.
● Sonata Class Ships. Oceania Sonata, Oceania Arietta and three additional ships on order.
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 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 and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income (loss) and EPS. We use Adjusted Net Income and Adjusted EPS as key performance measures of our earnings performance. 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 and Adjusted EPS may not be indicative of future adjustments or results. For example, for the six months ended June 30, 2026, we had an expense of $19.7 million related to restructuring costs. We included this as an adjustment in the reconciliation of Adjusted Net Income since the loss is not representative of our day-to-day operations, and this adjustment did not occur and is not included in the comparative period presented within this report.
Non-GAAP diluted weighted-average shares are calculated using the treasury stock method to calculate the effect of restricted share units and options and the if-converted method to calculate the effect of convertible instruments. This is the same methodology that is used when calculating GAAP diluted weighted-average shares. However, the determination of whether the shares are dilutive or anti-dilutive is made independently on a GAAP and non-GAAP net income or loss basis, and therefore, the number of diluted weighted-average shares outstanding for GAAP and non-GAAP may be different.
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-
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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
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.
Update on Bookings
The Company remains below its optimal booked position for the next 12 months, as it continues to experience pressure from softer demand at Norwegian Cruise Line related to Company-specific execution challenges, as well as the ongoing conflict in the Middle East. As we look ahead, the full amenities at the Company’s private island, Great Stirrup Cay, will be open to the public beginning September 4, including the pier and the new Great Tides Waterpark, the Great Life Lagoon and the nearby Splash Harbor, which we expect will improve demand to Caribbean itineraries over time.
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Fleet Optimization Strategy
In 2025, we initiated a fleet optimization strategy focused on addressing older vessels and enhancing the long‑term efficiency and competitiveness of our fleet. As part of this strategy, we entered into 10‑year bareboat charter agreements for Norwegian Sky and Norwegian Sun, commencing in late 2026 and late 2027, respectively. Each agreement includes a nominal purchase option.
In 2026, we further executed this strategy by entering into a nine‑year bareboat charter agreement for Seven Seas Navigator, scheduled to commence in late 2027 and also inclusive of a purchase option.
In July 2026, we entered into a memorandum of agreement for the sale of Oceania Sirena. The terms of the memorandum stipulate that the closing of the sale will take place during the three months ended September 30, 2026. In addition, a bareboat charter agreement is anticipated to be executed for Oceania Cruises to continue operating the vessel through the spring of 2028.
Oceania Regatta is scheduled to commence a two‑year time charter in late 2026. At the conclusion of the initial term, the charter may be extended for multiple years or, alternatively, the vessel may be sold to a third‑party cruise operator.
In parallel, we have elected to retain and materially reposition Oceania Nautica. Following a comprehensive refurbishment, the vessel is expected to be renamed Aurelia in late 2027. The refurbishment is intended to significantly enhance the ship’s guest experience and operational profile, enabling its redeployment on new itineraries and supporting its continued contribution to the fleet over the longer term.
We continue to evaluate strategic alternatives for other older vessels in the fleet, including potential sales or long‑term charter arrangements, as part of our ongoing fleet optimization strategy.
Strategic Cost Optimization and Macroeconomic Trends
Our strategic cost optimization efforts are driving a disciplined, company-wide focus on identifying efficiencies and optimizing costs across the organization to expand margins. These initiatives are designed to deliver sustainable long-term value creation without compromising the guest experience or the quality of our offerings. We previously announced that we are taking steps to streamline the organization and better align resources in a manner that is expected to simultaneously drive revenue growth and manage costs, including executing savings initiatives targeting $125 million in expected annualized savings within marketing, general and administrative expense. These are long-term structural actions that we believe will help offset near-term pressures and position the business for stronger performance over time. During the second quarter of 2026, we’ve advanced the Company’s global business sourcing strategy through the consolidation of technology vendors as well as other salary and benefit savings, generating approximately $100 million of additional expected annualized run-rate savings, primarily from capital expenditures and marketing, general and administrative expense. The benefits of these latest incremental savings are expected to be realized over time and will have a limited impact on 2026 financial results. Beyond the financial impact, these efforts represent an evolution in our culture, embedding cost awareness, accountability, and continuous improvement into the way we operate.
While macroeconomic and geopolitical headwinds and events, such as the ongoing conflict in the Middle East and misalignment between our commercial strategy and deployment, have and may put pressures on revenue and fuel costs, we believe these impacts may be at least partially offset through the continued execution of our cost optimization efforts as well as our hedging strategy. Fuel is approximately 52% hedged for the remainder of 2026, which we believe helps mitigate a portion of near-term fuel price volatility. Our focus remains on managing the business for the long term, balancing disciplined pricing and cost control with guest experience and strategic investments for the future. Furthermore, we are exposed to fluctuations in the euro exchange rate for certain portions of ship construction contracts, euro-denominated debt and various exchange rates for customer deposits that have not been hedged. See “Item 1A. Risk Factors” in our Annual Report on Form 10-K for additional information.
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Quarterly Overview
Three months ended June 30, 2026 (“2026”) compared to three months ended June 30, 2025 (“2025”)
● Total revenue increased 4.9% to $2.6 billion compared to $2.5 billion.
● Net income and diluted EPS were $222.6 million and $0.48, respectively, compared to $30.0 million and $0.07, respectively.
● Operating income was $363.3 million compared to $423.8 million.
● Gross margin decreased 3.8% to $804.1 million compared to $835.9 million. Adjusted Gross Margin increased 6.6% to $2.0 billion compared to $1.8 billion.
● Adjusted Net Income and Adjusted EPS were $222.0 million and $0.48, respectively, in 2026, which included $(1.2) million of adjustments. Adjusted Net Income and Adjusted EPS were $257.3 million and $0.51, respectively, in 2025, which included $227.3 million of adjustments primarily related to certain euro foreign currency remeasurements and losses on extinguishment and modification of debt.
● Adjusted EBITDA decreased 4.1% to $665.5 million compared to $694.0 million.
We refer you to our “Results of Operations” below for a calculation of Adjusted Gross Margin, Adjusted Net Income, Adjusted EPS and Adjusted EBITDA.
Results of Operations
The following table sets forth selected statistical information:
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Passengers carried 906,689 738,635 1,767,749 1,407,734
Passenger Cruise Days 6,745,954 6,288,800 13,380,480 12,076,043
Capacity Days 6,589,740 6,052,273 12,982,709 11,752,836
Occupancy Percentage 102.4 % 103.9 % 103.1 % 102.8 %
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Adjusted Gross Margin and Net Yield were calculated as follows (in thousands, except Capacity Days and Yield data):
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Total revenue $ 2,640,544 $ 2,517,497 $ 4,971,765 $ 4,645,050
Less:
Total cruise operating expense 1,586,808 1,456,847 2,964,689 2,760,785
Ship depreciation 249,609 224,728 490,837 437,491
Gross margin 804,127 835,922 1,516,239 1,446,774
Ship depreciation 249,609 224,728 490,837 437,491
Payroll and related 394,573 346,133 774,789 680,637
Fuel 219,384 157,377 388,310 332,391
Food 87,322 81,323 168,004 156,911
Other 209,415 196,495 407,999 381,126
Adjusted Gross Margin $ 1,964,430 $ 1,841,978 $ 3,746,178 $ 3,435,330
Capacity Days 6,589,740 6,052,273 12,982,709 11,752,836
Gross margin per Capacity Day $ 122.03 $ 138.12 $ 116.79 $ 123.10
Net Yield $ 298.10 $ 304.34 $ 288.55 $ 292.30
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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 Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Total cruise operating expense $ 1,586,808 $ 1,456,847 $ 2,964,689 $ 2,760,785
Marketing, general and administrative expense 419,204 393,054 878,885 784,430
Gross Cruise Cost 2,006,012 1,849,901 3,843,574 3,545,215
Less:
Commissions, transportation and other expense 484,668 487,835 882,273 883,178
Onboard and other expense 191,446 187,684 343,314 326,542
Net Cruise Cost 1,329,898 1,174,382 2,617,987 2,335,495
Less: Fuel expense 219,384 157,377 388,310 332,391
Net Cruise Cost Excluding Fuel 1,110,514 1,017,005 2,229,677 2,003,104
Less Other Non-GAAP Adjustments:
Non-cash deferred compensation (1) 614 552 1,228 1,105
Non-cash share-based compensation (2) 22,734 25,899 44,074 46,180
Professional advisory fees (3) 175 — 5,242 —
Restructuring costs (4) 7,460 — 19,677 —
Adjusted Net Cruise Cost Excluding Fuel $ 1,079,531 $ 990,554 $ 2,159,456 $ 1,955,819
Capacity Days 6,589,740 6,052,273 12,982,709 11,752,836
Gross Cruise Cost per Capacity Day $ 304.41 $ 305.65 $ 296.05 $ 301.65
Net Cruise Cost per Capacity Day $ 201.81 $ 194.04 $ 201.65 $ 198.72
Net Cruise Cost Excluding Fuel per Capacity Day $ 168.52 $ 168.04 $ 171.74 $ 170.44
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day $ 163.82 $ 163.67 $ 166.33 $ 166.41
(1) Non-cash deferred compensation expenses related to the Shipboard Retirement Plan, 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.
(3) Incremental expenses related to activist investor activities, which are not associated with ongoing operations and are included in marketing, general and administrative expense.
(4) Severance and other related fees associated with certain employee terminations, including non-cash share-based compensation expense related to accelerated vesting for a former executive, net of forfeitures, which are included in marketing, general and administrative expense.
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Adjusted Net Income and Adjusted EPS were calculated as follows (in thousands, except share and per share data):
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Net income (loss) $ 222,553 $ 29,992 $ 327,219 $ (10,303)
Effect of dilutive securities - exchangeable notes 624 — 1,576 —
Net income (loss) and assumed conversion of exchangeable notes 223,177 29,992 328,795 (10,303)
Non-GAAP Adjustments:
Non-cash deferred compensation (1) 1,104 987 2,207 1,976
Non-cash share-based compensation (2) 22,734 25,899 44,074 46,180
Professional advisory fees (3) 175 — 5,242 —
Restructuring costs (4) 7,460 — 19,677 —
Extinguishment and modification of debt (5) — 68,435 — 117,977
Net foreign currency adjustments on euro-denominated debt (6) (32,660) 121,909 (70,298) 137,922
Effect of dilutive securities - exchangeable notes (7) — 10,049 — 24,769
Adjusted Net Income $ 221,990 $ 257,271 $ 329,697 $ 318,521
Diluted weighted-average shares outstanding - Net income (loss) 463,932,441 448,033,138 465,388,927 443,882,011
Diluted weighted-average shares outstanding - Adjusted Net Income 463,932,441 502,251,714 465,388,927 510,196,923
Diluted EPS $ 0.48 $ 0.07 $ 0.71 $ (0.02)
Adjusted EPS $ 0.48 $ 0.51 $ 0.71 $ 0.62
(1) Non-cash deferred compensation expenses related to the Shipboard Retirement Plan, 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) Incremental expenses related to activist investor activities, which are not associated with ongoing operations and are included in marketing, general and administrative expense.
(4) Severance and other related fees associated with certain employee terminations, including non-cash share-based compensation expense related to accelerated vesting for a former executive, net of forfeitures, which are included in marketing, general and administrative expense.
(5) Losses on extinguishment of debt and modification of debt are included in interest expense, net.
(6) Net gains and losses for foreign currency remeasurements of our euro-denominated debt principal included in other income (expense), net.
(7) The impact of the above non-GAAP adjustments results in an anti-dilutive effect on Adjusted EPS related to our exchangeable notes for which we are increasing the impact on GAAP net income (loss) and dilutive weighted average shares.
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EBITDA and Adjusted EBITDA were calculated as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2026 2025 2026 2025
Net income (loss) $ 222,553 $ 29,992 $ 327,219 $ (10,303)
Interest expense, net 170,887 236,782 336,874 454,654
Income tax (benefit) expense 3,404 637 6,397 (503)
Depreciation and amortization expense 271,205 243,760 531,921 475,057
EBITDA 668,049 511,171 1,202,411 918,905
Other (income) expense, net (1) (33,517) 156,425 (74,220) 180,930
Other Non-GAAP Adjustments:
Non-cash deferred compensation (2) 614 552 1,228 1,105
Non-cash share-based compensation (3) 22,734 25,899 44,074 46,180
Professional advisory fees (4) 175 — 5,242 —
Restructuring costs (5) 7,460 — 19,677 —
Adjusted EBITDA $ 665,515 $ 694,047 $ 1,198,412 $ 1,147,120
(1) Primarily consists of gains and losses, net for foreign currency remeasurements of our euro-denominated debt.
(2) Non-cash deferred compensation expenses related to the Shipboard Retirement Plan, 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.
(4) Incremental expenses related to activist investor activities, which are not associated with ongoing operations and are included in marketing, general and administrative expense.
(5) Severance and other related fees associated with certain employee terminations, including non-cash share-based compensation expense related to accelerated vesting for a former executive, net of forfeitures, which are included in marketing, general and administrative expense.
Three months ended June 30, 2026 (“2026”) compared to three months ended June 30, 2025 (“2025”)
Revenue
Total revenue was $2.6 billion in 2026 and $2.5 billion in 2025 primarily due to an increase in Capacity Days related to the delivery of new ships.
Expense
Total cruise operating expense increased 8.9% primarily due to the delivery of new ships. Total other operating expense increased 8.4% in 2026 compared to 2025 primarily related to an increase in depreciation and amortization expense primarily related to the delivery of new ships. Additionally, we had an increase in marketing, general and administrative expense from higher severance payments associated with the restructuring.
Interest expense, net was $170.9 million in 2026 compared to $236.8 million in 2025. The change in interest expense primarily reflects losses in 2025 from extinguishment of debt and debt modification costs, which were $68.4 million.
Other income (expense), net was income of $33.5 million in 2026 compared to expense of $156.4 million in 2025. The income and expense primarily related to net gains and losses on foreign currency remeasurements of our euro-denominated debt.
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Six months ended June 30, 2026 (“2026”) compared to six months ended June 30, 2025 (“2025”)
Revenue
Total revenue was $5.0 billion in 2026 and $4.6 billion in 2025 primarily due to an increase in Capacity Days related to the delivery of new ships.
Expense
Total cruise operating expense increased 7.4% primarily related to the delivery of new ships. Total other operating expense increased 12.0% in 2026 compared to 2025 primarily related to an increase in marketing, general and administrative expense from higher advertising and promotions and severance payments associated with the restructuring. Additionally, we had an increase in depreciation and amortization expense primarily related to the delivery of new ships.
Interest expense, net was $336.9 million in 2026 compared to $454.7 million in 2025. The change in interest expense primarily reflects losses in 2025 from extinguishment of debt and debt modification costs, which were $118.0 million.
Other income (expense), net was income of $74.2 million in 2026 compared to expense of $180.9 million in 2025. The income and expense primarily related to net gains and losses on foreign currency remeasurements of our euro-denominated debt.
Liquidity and Capital Resources
General
As of June 30, 2026, our liquidity was approximately $1.5 billion, including cash and cash equivalents of $218.1 million and $1.3 billion available under our Revolving Loan Facility. Our primary ongoing liquidity requirements are to finance working capital, capital expenditures and debt service.
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, tariff increases and trade wars, rising fuel prices and higher interest rates. Within the next 12 months, we may optimize our liquidity or pursue other refinancings in order to reduce interest expense and/or extend debt maturities. We expect to repay each of the remaining 2027 1.125% Exchangeable Notes and 2027 2.5% Exchangeable Notes in cash or refinance prior to maturity. 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 this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for further details regarding risks and uncertainties that may cause our results to differ from our expectations.
As of June 30, 2026, 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 on our operations and liquidity.
Our Moody’s long-term issuer rating is B1 and our senior unsecured rating is B3. Our S&P Global issuer credit rating is B+, our issue-level rating on our Revolving Loan Facility 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
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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.
The Company also has agreements with its credit card processors that govern the vast majority of advance ticket sales that are received by the Company relating to future voyages. These agreements allow the credit card processors to require, under certain circumstances, 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. As of June 30, 2026, the Company was not required to maintain any reserve funds.
Sources and Uses of Cash
In this section, references to “2026” refer to the six months ended June 30, 2026 and references to “2025” refer to the six months ended June 30, 2025.
Net cash provided by operating activities was $1.4 billion in 2026 and 2025. The net cash provided by operating activities included net income or losses and timing differences in cash receipts and payments relating to operating assets and liabilities. Advance ticket sales increased by $482.0 million in 2026 and $708.1 million in 2025.
Net cash used in investing activities was $1.9 billion in 2026 and 2025. The net cash used in investing activities was primarily related to the delivery of Norwegian Luna in 2026. The net cash used in investing activities was primarily related to the delivery of Norwegian Aqua in 2025.
Net cash provided by financing activities was $492.8 million in 2026 primarily due to newbuild loans related to the delivery of Norwegian Luna, partially offset by scheduled repayments of newbuild loans. Net cash provided by financing activities was $467.2 million in 2025 primarily due to newbuild loans related to the delivery of Norwegian Aqua partially offset by payments on our Revolving Loan Facility and other newbuild loan facilities.
Future Capital Commitments
Future capital commitments consist of contracted commitments, including ship construction contracts. Anticipated expenditures related to ship construction contracts and growth, which includes private island developments and enhancements and other strategic growth initiatives, were $1.3 billion for the remainder of 2026 and $2.9 billion and $1.8 billion for the years ending December 31, 2027 and 2028, respectively. The Company has export credit financing in place for the anticipated expenditures related to ship construction contracts of $0.7 billion for the remainder of 2026 and $2.0 billion and $1.3 billion for the years ending December 31, 2027 and 2028, respectively. Anticipated other non-newbuild capital expenditures for the remainder of 2026 are approximately $0.2 billion. Future expected capital expenditures will significantly increase our depreciation and amortization expense.
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Newbuilds
The following chart discloses details about our newbuild program. The impacts of initiatives to improve environmental sustainability and modifications that NCLH plans to make to its newbuilds to improve their profitability and better space out the newbuilds, along with shipyard availability and/or other macroeconomic conditions and events, have resulted in us resetting delivery dates for certain 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.
Year Brand Class Ship Name Gross Tons(1) Berths(1) Status
2026 Regent Seven Seas Cruises Prestige Class 1 Seven Seas Prestige ~77,000 ~822 Contract effective / financed(3)
2027 Norwegian Cruise Line Next Gen "Methanol-Ready(2)" Prima Class 5 Norwegian Aura ~170,000 ~3,880 Contract effective / financed(3)
2027 Oceania Cruises Sonata Class 1 Oceania Sonata ~86,000 ~1,390 Contract effective / financed(3)
2028 Norwegian Cruise Line Next Gen "Methanol-Ready(2)" Prima Class 6 To come ~170,000 ~3,880 Contract effective / financed(3)
2029 Oceania Cruises Sonata Class 2 Oceania Arietta ~86,000 ~1,390 Contract effective / financed(3)
2030 Norwegian Cruise Line New Class 1 To come ~227,000 ~5,000 Contract effective / financed(3)
2030 Regent Seven Seas Cruises Prestige Class 2 To come ~77,000 ~822 Contract effective / financed(3)
2032 Oceania Cruises Sonata Class 3 To come ~86,000 ~1,390 Contract effective, but not yet financed
2032 Norwegian Cruise Line New Class 2 To come ~227,000 ~5,000 Contract effective / financed(3)
2033 Regent Seven Seas Cruises Prestige Class 3 To come ~77,000 ~822 Contract will be effective upon financing
2034 Norwegian Cruise Line New Class 3 To come ~227,000 ~5,000 Contract effective / financing is being negotiated
2035 Oceania Cruises Sonata Class 4 To come ~86,000 ~1,390 Contract effective, but not yet financed
2036 Norwegian Cruise Line New Class 4 To come ~227,000 ~5,000 Contract effective / financing is being negotiated
2036 Regent Seven Seas Cruises Prestige Class 4 To come ~77,000 ~822 Contract will be effective upon financing
2037 Oceania Cruises Sonata Class 5 To come ~86,000 ~1,390 Contract will be effective upon financing
2037 Norwegian Cruise Line New Class 5 To come ~227,000 ~5,000 Contract will be effective upon financing
(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) 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.
As of June 30, 2026, the combined contract prices, including amendments and change orders, of the 12 ships on order that are effective were approximately €17.1 billion, or $19.5 billion based on the euro/U.S. dollar exchange rate as of
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June 30, 2026. We do not anticipate any contractual breaches or cancellations to occur. 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 June 30, 2026 and 2025 was $24.0 million and $21.4 million, respectively, and for the six months ended June 30, 2026 and 2025 was $47.9 million and $43.9 million, respectively, primarily associated with the construction of our newbuild ships.
Material Cash Requirements
As of June 30, 2026, our material cash requirements for debt and ship construction were as follows (in thousands):
Remainder of
2026 2027 2028 2029 2030 2031 Thereafter Total
Long-term debt (1) $ 792,057 $ 1,702,053 $ 1,894,473 $ 1,855,675 $ 4,323,725 $ 2,159,171 $ 5,731,550 $ 18,458,704
Ship construction contracts (2) 1,004,238 2,473,240 1,467,973 1,276,800 3,238,843 203,123 8,984,137 18,648,354
Total $ 1,796,295 $ 4,175,293 $ 3,362,446 $ 3,132,475 $ 7,562,568 $ 2,362,294 $ 14,715,687 $ 37,107,058
(1) Includes principal as well as estimated interest payments with Term Secured Overnight Financing Rate (“SOFR”) held constant as of June 30, 2026. Excludes the impact of any future possible refinancings and undrawn export-credit backed facilities.
(2) Ship construction contracts are for our 12 non-cancelable newbuild ships based on the euro/U.S. dollar exchange rate as of June 30, 2026. As of June 30, 2026, we have committed undrawn export-credit backed facilities of approximately $10.9 billion, which funds approximately 80% of our ship construction contracts, with the exception of the two Sonata Class Ships on order for Oceania Cruises with currently scheduled delivery in 2032 and 2035 and the two additional ships on order for Norwegian Cruise Line with currently scheduled delivery in 2034 and 2036.
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. Approximately $15 billion of the net book value of our assets were pledged as collateral for certain of our debt as of June 30, 2026. We believe we were in compliance with our covenants as of June 30, 2026.
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, borrowings available under the Revolving Loan Facility, expected future operating cash inflows and our ability to issue debt securities or additional equity securities will be sufficient to fund operations, debt payment requirements and capital expenditures and maintain compliance with covenants under our debt agreements over the next 12-month period. Refer to “—Liquidity and Capital Resources—General” for further information regarding liquidity.
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. We refer you to “—Liquidity and Capital Resources—General” for information regarding collateral that may be provided to our credit card processors.
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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, 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.
Additionally, we similarly consider opportunities for the sale of ships and long-term charters with purchase options. For example, the Company executed long-term charter agreements, each inclusive of purchase options, for Norwegian Sky beginning in 2026 and Norwegian Sun and Seven Seas Navigator beginning in 2027. We continue to evaluate additional long-term charters and ship sales. These types of agreements are being pursued as part of our ship disposal strategy for certain older vessels in our fleet.