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. "