NCL Reports Q3 2019 Earnings

Norwegian Cruise Line Holdings Ltd. reported financial results for the third quarter ended September 30, 2019, as well as provided guidance for the fourth quarter and full year 2019.

Norwegian Sky departing Miami ©CruiseInd
Norwegian Sky departing Miami 11/4/2016

Highlights

  • The Company generated GAAP net income of $450.6 million or EPS of $2.09 compared to $470.4 million or $2.11 in the prior year.  Adjusted Net Income was $481.5 million or Adjusted EPS of $2.23 compared to $506.4 million or $2.27 in the prior year.  These results include a $0.06 per share impact from voyage cancellations, itinerary modifications and relief efforts related to Hurricane Dorian. 
  • Total revenue increased 3.0% to $1.9 billion on a decrease in Capacity Days of 1.8%. Gross Yield increased 4.8%.  Net Yield increased 3.9% on a Constant Currency basis, outperforming August guidance by 215 basis points.
  • Full year Adjusted EPS is in line with the midpoint of August guidance and is expected to be approximately $5.05, inclusive of a $0.15 per share adverse impact from Hurricane Dorian.  Without this headwind, the Company’s full year outlook would have exceeded the high-end of its August guidance range, primarily as a result of revenue outperformance in the third quarter, coupled with a stronger revenue outlook for the fourth quarter driven primarily by outperformance in the core Caribbean.
  • Strong demand in the Company’s core markets more than offset the approximately 25 basis point impact on full year Net Yield growth from Hurricane Dorian, leading the Company to raise its outlook for Net Yield growth to approximately 3.0% on a Constant Currency basis. 
  • Company is on solid trajectory to achieve its Full Speed Ahead 2020 targets provided at its 2018 Investor Day.
  • The Company’s environmental stewardship efforts to reduce the use of single-use plastics took another step forward when Norwegian Cruise Line announced it will become the first major cruise line to eliminate all single-use plastic water bottles which is expected to eliminate over six million plastic bottles each year.
Norwegian Pearl departing Miami ©CruiseInd
Norwegian Pearl departing Miami 11/4/2016

“The underlying fundamentals of our business remain as strong as ever, allowing us to post another solid quarter of financial results despite the impacts from Hurricane Dorian.  The top line exceeded expectations and we recorded the highest quarterly revenue in our history,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd.  “We are on track to deliver yet another record-breaking year in 2019, and the positive momentum for our global brands is carrying over into 2020, as demand, occupancy and pricing continue to outpace 2019 record levels, buoyed by the addition of Norwegian Encore and Seven Seas Splendor.” 

Third Quarter 2019 Results

GAAP net income was $450.6 million or EPS of $2.09 compared to $470.4 million or $2.11 in the prior year.  The Company generated Adjusted Net Income of $481.5 million or Adjusted EPS of $2.23 compared to $506.4 million or $2.27 in the prior year. These results include a $0.06 per share adverse impact from voyage cancellations, itinerary modifications and relief efforts related to Hurricane Dorian.

Revenue increased 3.0% to $1.9 billion on a decrease in Capacity Days of 1.8% compared to slightly less than $1.9 billion in 2018.  This increase was primarily due to an increase in Net Yield driven by the repositioning of Norwegian Joy to North America, robust onboard spending along with strong growth in organic pricing across all core markets. Gross Yield increased 4.8%. Net Yield increased 3.9% on a Constant Currency basis and 3.3% on an as reported basis.

Total cruise operating expense increased 6.7% in 2019 compared to 2018, primarily due to continuing effects from the redeployment of Norwegian Joy during the second quarter of 2019 and incremental direct costs related to air promotions.  Gross Cruise Costs per Capacity Day increased 8.9%.  Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 11.0% on a Constant Currency basis and 10.2% on an as reported basis.

Fuel price per metric ton, net of hedges decreased to $504 from $510 in 2018.  The Company reported fuel expense of $98.9 million in the period. 

Interest expense, net decreased to $60.2 million in 2019 from $69.5 million in 2018. The decrease reflects lower outstanding debt balances and lower margins associated with recent refinancings, partially offset by newbuild financings.

Other income, net was income of $10.3 million in 2019 compared to income of $0.1 million in 2018. In 2019 the income primarily related to gains on foreign currency exchange.

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