Norwegian Cruise Line reported results for the quarter ended September 30, 2012. Operating income increased 8.8% to $174.1 million in the third quarter of 2012 compared to $160.0 million in 2011 with an improvement in operating margin to 25.8% from 24.0%. Adjusted EBITDA grew 7.2% to $223.6 million from $208.6 million with an increase in Adjusted EBITDA margin to 33.2% from 31.3%. Net Revenue increased 1.8% to $498.4 million primarily due to an increase in Net Yield. With increases in both ticket and onboard and other revenue, Net Yield improved 1.0%, or 2.6% on a Constant Currency basis.
Net Cruise Cost per Capacity Day decreased 3.3% in the period, or 2.1% on a Constant Currency basis. This decrease reflects lower ship operating expenses, timing of repair and maintenance expense, and efficiencies from business improvement initiatives partially offset by a 13.5% increase in the per metric ton cost of fuel to $679. Excluding fuel expense, Net Cruise Cost per Capacity Day decreased 7.7%, or 6.2% on a Constant Currency basis.
"Posting these great results, despite the challenging economic environment in Europe where we had a record deployment, is a testament to the discipline and rigor instilled at Norwegian to continuously improve quarter after quarter," said Kevin Sheehan, the Company’s President and Chief Executive Officer. "Our results reflect strategic pricing programs, benefits from process improvements and other enhancement initiatives which resulted in a nine percent improvement in operating income," continued Sheehan.
Interest expense, net for the quarter decreased $2.7 million while other income increased $3.9 million. Net income for the quarter increased 19.2% to $128.2 million on revenue of $674.4 million from net income of $107.5 million on revenue of $666.6 million.
During the quarter, the Company announced upcoming enhancements to Pride of America, Norwegian’s US-flagged ship which sails exclusive seven-day itineraries in Hawai’i. Twenty-four new suites and four new studio staterooms will be added, bringing the ship’s capacity to approximately 2,200 Berths. The new suites will include two 566 square foot Owners Suites with the remainder designated as Family Suites ranging in size from 363 to 416 square feet. All suites include dedicated butler and concierge services and access to private dining for breakfast and lunch. During her 14-day dry-dock, Pride of America will also be outfitted with Norwegian’s signature Brazilian steakhouse, Moderno Churrascaria. Other enhancements include shipwide Wi-Fi, flat screen televisions in all staterooms and upgrades to the fitness center, gift shop, and photo and art galleries.
The Company also added two interactive experiences to Great Stirrup Cay, its private island in the Caribbean. These include the Stingray Encounter which allows guests to swim with the island’s friendly stingrays and the Fate of the Fancy Snorkel Adventure which takes guests on an underwater journey to discover the abandoned wreckage of The Fancy. For guests preferring to relax on the sandy beach there is the new Light House Beach Bar presented by Patron.
Progress on the Company’s groundbreaking Breakaway class vessels continues as scheduled. During the quarter, Norwegian Breakaway continued to strengthen ties with her homeport of New York City. In September, the ship’s hull art, designed by legendary Peter Max, was revealed showcasing two icons of New York, the city’s skyline as well as the Statue of Liberty. The theme of New York icons continued with the announcement of Norwegian Breakaway’s godmothers, the Rockettes® from New York’s famed Radio City Music Hall. The godmother relationship goes well past the ship’s inaugural and christening with a marketing partnership which names Norwegian as the official cruise line of the Rockettes and Radio City Music Hall. The partnership also includes two Rockettes sailing on select voyages and offering special fitness classes, photo opportunities and more. Guests will also enjoy a Rockettes retrospective in the ship’s library, as well as featured beverages and more. Guests on Norwegian Breakaway will also be able to take advantage of the ship’s groundbreaking, two-level spa and fitness facility. Highlights include the first-ever salt room at sea, a thermal suite and 22 treatment rooms offering more than 50 services. "By naming the Rockettes as Norwegian Breakaway’s godmothers, we continue to strengthen her ties to New York City," said Sheehan. "These ties also include partnerships with Peter Max and Chef Geoffrey Zakarian; along with an entertainment lineup that includes three Broadway shows: Rock of Ages, Burn the Floor and Cirque Dreams and Dinner: Jungle Fantasy. In addition, our state of the art spa will offer a tranquil respite from the hustle and bustle of the city."
The Company recently announced that the second ship of the Breakaway class, Norwegian Getaway, will be delivered in January 2014, ahead of schedule. Also announced was the ship’s inaugural season itinerary, sailing Eastern Caribbean voyages year-round from Miami. Norwegian Getaway will be the largest ship to sail year-round out of Miami, and like her sister ship’s ties with New York, she will have strong ties with her homeport in the Magic City.
On October 18th, the Company announced it placed an order with Meyer Werft, builder of the Company’s current Breakaway class ships as well as all four ships in the fleet’s Jewel-class, for one Breakaway Plus class ship, together with an option for a second sister ship. The 4,200 Berth Breakaway Plus class ship will incorporate many of the Breakaway class vessels’ unique design elements and innovations. Delivery of the first Breakaway Plus ship is scheduled for October 2015 with export credit financing in place.