Capital Allocation Q: How are you balancing share repurchases, dividends, and acquisitions given your strong free cash flow? A: Management views the $50 million share repurchase program as the most appropriate near-term action, aligning with the $50 million cash inflow from warrants. They continue to prioritize paying down debt at current interest rates and are considering introducing a dividend. While they have evaluated acquisition opportunities, nothing compelling is currently on the table; they are interested in targets that enhance onboard offerings, particularly in the wellness and mindful space.

EBITDA Margin Expansion Q: What's the opportunity for further EBITDA margin expansion, and which line items offer the greatest potential? A: Management focuses on absolute dollar generation rather than EBITDA margin percentage. They prioritize driving total revenue and cash generation, even if it means engaging in promotional activities that contribute marginally. While scaling can leverage fixed corporate costs, the primary emphasis remains on increasing absolute dollars.

Revenue Growth and Ship Additions Q: What's the outlook for medium-term revenue growth and the number of ships we should model over the next few years? A: The company expects a high number of vessel additions in 2024 and eight new builds in 2025, supporting their expectation of high single-digit revenue growth over the medium term. They remain committed to this growth rate as new ships come into service.

Operational Outlook and Passenger Quality Q: How are you balancing operational aspects with potential changes in passenger quality due to lower ticket prices, and what's your approach to share repurchases? A: Management is not concerned about lower ticket prices impacting passenger quality, as they continue to target penetration of around 11% to 11.5% of guests. They believe passengers buying cheaper tickets are not necessarily the same ones who use the spa. Regarding share repurchases, they plan to be opportunistic, buying back shares on weakness, with no time limit on the $50 million authorization.

Resilience and Consumer Spending Q: What's driving the resilience in your business when consumers are seeking more value, and what's the trend in prebooking? A: The company is pleased with the resilience in onboard spend, aided by simplification of service offerings that encourage higher spending. They haven't seen pushback on service or retail pricing. Prebooking trends remain positive, especially with the rollout on Norwegian Cruise Lines, expected to positively impact results by the third quarter.

Technology and AI Investments Q: How will your investments in tech and AI impact the business in 2025 and beyond? A: The company is investing in back-office automation with AI capabilities to improve operational efficiencies. They are also using AI to enhance onboard marketing offerings, replicating best-in-class practices across ships. These investments are expected to improve performance and data-driven decision-making as they move forward.

Products Segment Growth Q: What's driving the faster growth of your products segment compared to services? A: Simplification of the service menu has led to higher retail attachment rates, especially in spa and body products. New services like cryotherapy and facial LED treatments are contributing to strong product sales, with a heightened focus on improving retail sell-through.

Norwegian New Ships Q: Are there implications for wellness facilities and staffing from Norwegian's new larger ships? A: Management is engaging with Norwegian Cruise Lines to request more space, particularly in the Medispa area, on the new larger vessels. They aim to increase their offering and footprint in wellness services to match the increased passenger counts and are optimistic about adapting spa facilities on these new ships.

Timing of Share Repurchase Q: Can you provide color on the timing of potential share repurchases? A: The company intends to be opportunistic with share repurchases, buying on weakness. There is no specific timing, and they will utilize the $50 million authorization as they deem appropriate.

New Cruise Line Aroya Q: What are your expectations for wellness spend from guests on the new Aroya cruise line, especially from the Gulf region? A: While it's early to predict, management is prepared to adapt and provide agreed services on this new cruise line in a new geography. They have prior land-based experience in the region and are optimistic about the cruise line's potential success.

Royal Caribbean Contract Renewal Q: Is the Royal Caribbean contract renewal within standard term lengths? A: Yes, it's a multiyear agreement extending beyond five years, providing a long runway with both Celebrity and Royal Caribbean.