Norwegian Cruise Line (Nasdaq:NCLH) Norwegian Cruise Line Holdings Ltd., NCL Corporation Ltd., “Norwegian” or “the Company”), today reported results for the quarter ended September 30, 2013, and provided guidance for the fourth quarter and full year 2013.
Quarter Highlights
- Adjusted Net Income growth of 42.1% to $182.2 million with Adjusted EPS of $0.86
- Adjusted EBITDA increase of 21.2% to $271.0 million
- Net Yield increase of 4.1% (3.9% on a Constant Currency basis)
Third Quarter 2013 Results
“While the environment this year has become more challenging than anticipated, we demonstrated once again our ability to execute and post solid earnings. Our results for the quarter are the product of a summer season which was bolstered by the premium pricing from Norwegian Breakaway in her first full quarter of operation,” said Kevin Sheehan, president and chief executive officer of Norwegian Cruise Line. “Improved ticket pricing and onboard spend, along with better than expected results from business improvement initiatives drove incremental EPS in the quarter.”
The Company reported Adjusted Net Income for the third quarter of 2013 of $182.2 million and Adjusted EPS of $0.86 compared to $128.2 million and$0.72 in 2012, respectively. On a GAAP basis, net income and diluted earnings per share were $170.9 million and $0.82, respectively for the third quarter of 2013.
A 14.9% increase in Capacity Days from the addition of Norwegian Breakaway to the fleet, coupled with a 4.1% increase in Net Yield, (or 3.9% on a Constant Currency basis) resulted in a 19.6% improvement in Net Revenue for the period. The improvement in Net Yield was a result of higher pricing and onboard revenue in the period.
Adjusted Net Cruise Cost excluding Fuel per Capacity Day increased 4.6% (or 4.3% on a Constant Currency basis) over prior year. Fuel price, net of hedges, increased 2.4% to $695 per metric ton compared to $679 in 2012. The increase was partially offset by fuel consumption efficiencies particularly from the addition of Norwegian Breakaway to the fleet.
Interest expense, net for the quarter decreased significantly to $26.6 million from $47.2 million in the prior year mainly due to lower rates, resulting from the benefits of the redemption of higher rate debt and refinancing transactions completed earlier in the year.
2013 Guidance and Sensitivities
In addition to the results for the third quarter 2013, the Company also issued the following guidance, which reflects its expectations for the fourth quarter and full year 2013, along with accompanying sensitivities.
| In thousands except per share data | Fourth Quarter 2013 | Full Year 2013 | ||
| Constant | Constant | |||
| As Reported | Currency | As Reported | Currency | |
| Net Yield | 4.0 to 5.0% | 4.0 to 5.0% | 4.0 to 4.5% | 4.0 to 4.5% |
| Adjusted Net Cruise Cost Excluding Fuel per Capacity Day (1) | 6.0 to 7.0% | 6.0 to 7.0% | 3.5 to 4.5% | 3.5 to 4.5% |
| Adjusted EPS | $0.13 to $0.18 | $1.35 to $1.40 | ||
| Depreciation and amortization | $55 to $60 million | $215 to $220 million | ||
| Adjusted Interest Expense, net | $24 to $29 million | $122 to $127 million | ||
| Effect on Adjusted EPS of a 1% change in Net Yield (2) | $0.02 | $0.02 | ||
| (1) Full year includes inaugural costs and three incremental Dry-docks |
| (2) Based on midpoint of guidance |
The following reflects the Company’s expectations regarding fuel consumption and pricing, along with accompanying sensitivities.
| Fourth Quarter 2013 | Full Year 2013 | |
| Fuel consumption in metric tons | 125,000 | 455,000 |
| Fuel price per metric ton | $655 | $680 |
| Effect on Adjusted EPS of a 10% change in fuel prices, net of hedges (in thousands) | $0.01 | $0.01 |
As of September 30, 2013, the Company had hedged approximately 93%, 64%, 51% and 15% of its remaining 2013, 2014, 2015 and 2016 projected fuel purchases, respectively.
Future capital commitments consist of contracted commitments, including future expected capital expenditures for business enhancements and ship construction contracts. As of September 30, 2013, anticipated capital expenditures together with amounts for export credit financing for ship construction were as follows (in thousands, based on the euro/U.S. dollar exchange rate as of September 30, 2013):
| Fourth | ||||
| Quarter | Full Year | |||
| 2013 | 2014 | 2015 | 2016 | |
| Ship construction | $37,143 | $787,591 | $940,321 | $114,041 |
| Ship financing | — | (696,213) | (749,290) | (45,345) |
| Ship construction net of financing | $37,143 | $91,378 | $191,031 | $68,696 |
| Business Enhancement Capital Expenditures (1) | $ 22,147 | $ 110,000 | $ 90,000 | $ 85,000 |
| (1) For the fourth quarter and full year 2013, Business Enhancement Capital Expenditures include approximately $7.0 million and $40.0 million for ROI Capital Expenditures, respectively. |