Norwegian Cruise Line Holdings Ltd. (Nasdaq:NCLH) (together with NCL Corporation Ltd., “Norwegian Cruise Line Holdings”, “Norwegian” or the “Company”) today reported financial results for the third quarter ended September 30, 2017, and provided guidance for the fourth quarter and full year 2017.
Highlights
- The Company generated GAAP net income of $400.7 million or EPS of $1.74 compared to $342.4 millionor $1.50 in the prior year. Adjusted Net Income was $427.0 million or Adjusted EPS of $1.86 compared to $369.3 million or $1.62 in the prior year.
- Total revenue increased 11.2% to $1.7 billion. Gross Yield increased 2.0%. Adjusted Net Yield increased 3.0% on a Constant Currency basis.
- 2017 full year Adjusted EPS is now expected to be approximately $3.90. Excluding the impact from weather disruptions along with a current technical issue on Norwegian Gem, Adjusted EPS guidance would have increased to approximately $4.05, exceeding the high-end of our prior guidance range.
- 2017 full year Adjusted Net Yield growth guidance on a Constant Currency basis increased 50 basis points from prior guidance to approximately 4.75%.
“Strong operational performance across our core markets, bolstered by strength in European itineraries, where pricing has now exceeded the previous high watermark of 2015, drove third quarter revenue and yield growth well ahead of expectations, despite the disruptions caused by weather-related events during the quarter,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd.“Over the last several weeks we have seen consumer demand continue to accelerate for Caribbean sailings and booking volumes have now reached pre-hurricane levels. Our ships, crew and shoreside personnel have been actively engaged in assisting impacted destinations by evacuating stranded families and delivering much-needed supplies. In addition, our company has committed to providing long-term financial aid to rebuild critical infrastructure through our Hope Starts Here hurricane relief program.”
Third Quarter 2017 Results
GAAP net income was $400.7 million or EPS of $1.74 compared to $342.4 million or $1.50 in the prior year. The Company generated Adjusted Net Income of $427.0 million or Adjusted EPS of $1.86 compared to $369.3 million or $1.62 in the prior year.
Revenue increased 11.2% to $1.7 billion compared to $1.5 billion in 2016. This increase was primarily attributed to a 9.1% increase in Capacity Days primarily due to the delivery of Norwegian Joy, which entered service in late June, along with an increase in Net Yield due to strength in ticket pricing and higher onboard and other revenue. Gross Yield increased 2.0%, while Adjusted Net Yield improved 3.0% on a Constant Currency basis and 3.1% on an as reported basis.
Gross Cruise Cost increased 8.4% compared to 2016 due to an increase in total cruise operating expense and marketing, general and administrative expenses, which was primarily attributable to the aforementioned increase in Capacity Days. Gross Cruise Costs per Capacity Day decreased 0.6%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 0.5% on a Constant Currency basis and 0.6% on an as reported basis primarily due to an increase in marketing, general and administrative expenses primarily offset by a decrease in cruise operating expenses.
Fuel price per metric ton, net of hedges decreased 4.8% to $476 from $500 in the prior year. The Company reported fuel expense of $91.2 million in the period.
Interest expense, net increased to $66.3 million in 2017 from $60.7 million in 2016. Interest expense for 2017 reflects an increase in average debt balances outstanding primarily associated with the delivery of new ships and newbuild installments, as well as higher interest rates due to an increase in LIBOR.
Other income (expense), net was an expense of $3.3 million in 2017 compared to an expense of $5.3 millionin 2016. In 2017, the expense was primarily related to losses on foreign currency exchange. In 2016, the expense was primarily related to unrealized and realized losses on fuel swap derivative hedge contracts and foreign exchange derivative contracts and losses on foreign currency exchange.