Norwegian Cruise Line (Nasdaq:NCLH) (Norwegian Cruise Line Holdings Ltd., NCL Corporation Ltd., “Norwegian” or “the Company”), today reported results for the quarter ended March 31, 2014, and provided guidance for the second quarter and full year 2014. The Company also announced that its Board of Directors today has authorized a three-year, $500 million share repurchase program.
First Quarter Highlights
- Adjusted EPS improvement to $0.23 from $0.06 in 2013
- Net Yield increase of 3.8% (3.9% on a Constant Currency basis)
- Revenue increase of 25.9% to $664.0 million
- Adjusted EBITDA increase of 39.6% to $139.3 million; 200 basis point margin improvement
- Successful introduction of Norwegian Getaway to the fleet
First Quarter Results
“Our strong results in the quarter include an almost four-fold increase in earnings on an adjusted basis,” said Kevin Sheehan, President and Chief Executive Officer of Norwegian Cruise Line. “With both Breakaway class ships now in our fleet, it is easy to appreciate the impact of their impressive earnings power, which includes commanding double-digit premiums over other Norwegian ships in the same itinerary,” continued Sheehan.
For the first quarter of 2014, the Company reported an increase in Adjusted EPS to $0.23 on Adjusted Net Income of $49.6 million compared to $0.06 and $12.9 million, respectively for the same period in 2013. On a GAAP basis, diluted earnings per share and net income were $0.24 and $51.3 million, respectively.
Net Revenue in the period increased 27.8% to $499.3 million, driven by a 23.2% increase in Capacity Days and a 3.8% improvement in Net Yield. The increase in Capacity Days was primarily from the addition of Norwegian Breakaway and Norwegian Getaway to the fleet in May 2013 and January 2014, respectively. The Net Yield improvement of 3.8%, or 3.9% on a Constant Currency basis, was a result of higher passenger ticket and onboard and other revenue. Revenue for the period increased to $664.0 million from $527.6 million in 2013.
Adjusted Net Cruise Cost excluding Fuel per Capacity Day increased 3.7% (3.4% on a Constant Currency basis) mainly due to inaugural and launch-related costs for Norwegian Getaway along with incremental expenses for the planned dry-dock of Norwegian Spirit. The Company’s fuel price per metric ton, net of hedges, was $643 compared to $673 in 2013. Fuel consumption per Capacity Day in the quarter decreased 6.8% which excludes an additional benefit of 0.7% from dockside charters for vessels used as floating hotels.
Interest expense, net for the quarter was $31.2 million compared to $127.7 million in 2013. Interest expense, net in 2013 included $90.5 million in charges related to the prepayment of certain credit facilities and the redemption of certain of the Company’s senior notes with proceeds from both the Company’s initial public offering and other transactions. Excluding these charges, Adjusted Interest Expense, net was $37.2 million in 2013. The year-over-year reduction in interest expense is due to lower interest rates in the period resulting from the Company’s capital structure optimization initiatives carried out in 2013 which more than offset the impact from higher debt balances related to the financing for Norwegian Breakaway and Getaway.
The Company recorded an income tax benefit of $9.4 million compared to an expense of $2.2 million in the prior year. The income tax benefit in 2014 is primarily related to the election of an alternative, acceptable tax methodology in connection with the change in the Company’s corporate entity structure completed in 2013. This election resulted in a $6.7 million non-recurring benefit which has been excluded from Adjusted Net Income and Adjusted EPS.