Viking Holdings Ltd(VIK) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported total revenue of almost $1.7 billion for Q3 2024, an increase of 11.4% year-over-year, primarily due to higher revenue per passenger cruise day (PCD) [17] - Adjusted gross margin rose 12% year-over-year to$ 1.1 billion, resulting in a net yield of $576, which is 11% higher than Q3 2023 [17] - Net income for Q3 2024 was$ 375 million, a significant recovery from a loss of $1.2 billion in the same period of 2023 [18] - Adjusted EBITDA for Q3 totaled$ 554 million, improving by more than $73 million compared to the previous year, with an adjusted EBITDA margin of 50.4% [17][18] Business Line Data and Key Metrics Changes - In the River segment, adjusted gross margin grew 12.1% year-to-date to$ 1.2 billion, with a net yield of $546, up more than 13% year-over-year [19] - For the Ocean segment, adjusted gross margin increased 11.7% year-over-year to$ 1.2 billion, with a net yield of $533, up 4% compared to the previous year [19] Market Data and Key Metrics Changes - The company achieved 95% of its 2024 capacity booked as of November 3, 2024, with advanced bookings totaling$ 4.6 billion, which is 14% higher than the same point in 2023 [22] - For 2025, 70% of capacity is already booked, with advanced bookings of $4.3 billion, representing a 26% increase compared to the same time in 2024 [23] Company Strategy and Development Direction - The company aims to capitalize on its well-defined product offerings, focusing on a demographic of older travelers seeking high-quality experiences [33] - The company is expanding its presence in Asia, particularly in China, with tailored experiences for English-speaking guests and culturally rich itineraries [14][19] - The company is committed to maintaining a strong cash reserve for stability and flexibility, while also considering future acquisitions that align with its brand ethos [63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the booking trends and demand, noting that the company is on track with its long-term plans despite some external challenges [30][56] - The management highlighted the importance of brand loyalty and customer satisfaction, which are driving repeat bookings and strong demand for new product launches [11][12] Other Important Information - The company completed a secondary offering of 34.5 million shares at a price of$ 31 per share, slightly changing the ownership composition and increasing institutional floats [15] - The company has a strong balance sheet with total cash and cash equivalents of $2.4 billion and an undrawn revolver facility of$ 375 million as of September 30, 2024 [20] Q&A Session Summary Question: Any notable changes in forward demand indicators with the consumer backdrop today? - Management indicated that there are no surprises and that the company is following its solid long-term plan [30][33] Question: How do you view your optimal booked position for 2025? - Management acknowledged that the current booking position is accelerated compared to pre-COVID levels, and normalization is expected moving forward [40][41] Question: What is the impact of Egypt on 2025 yields and occupancy? - Management noted that while Egypt is a small portion of total capacity, it garners strong demand and yields, contributing positively to the overall portfolio [50][52] Question: Can you elaborate on the potential cost pressure from airlines? - Management confirmed that a significant portion of guests book airfare through the company, and yields will reflect any cost changes [58] Question: What are the plans for capital allocation and potential return of capital to shareholders? - Management emphasized a balanced capital allocation framework, focusing on reinvestment in the business and potential future returns to shareholders [63][64]