Norwegian Cruise Line Holdings Ltd. today reported financial results for the first quarter ended March 31, 2019, as well as provided guidance for the second quarter and full year 2019.
Highlights
- The Company generated GAAP net income of $118.2 million or EPS of $0.54 compared to $103.2 million or $0.45 in the prior year. Adjusted Net Income was $181.8 million or Adjusted EPS of $0.83 compared to $137.8 million or $0.60 in the prior year. GAAP EPS and Adjusted EPS grew 20% and 38% over prior year, respectively.
- Total revenue increased 8.5% to $1.4 billion. Gross Yield increased 2.8%. Net Yield increased 4.1% on a Constant Currency basis.
- The Company expects to generate record full year earnings in 2019 and has increased its Net Yield growth and Adjusted EPS outlook above the high-end of the previous guidance range. Adjusted EPS is now expected to be in the range of $5.40 to $5.50, despite an impact of approximately $0.10 from higher fuel prices and unfavorable foreign exchange rates.
- 2019 full year Net Yield growth guidance on a Constant Currency basis increased 50 basis points from the prior guidance to 3.5% to 4.5%.
“We were pleased to enter the year in a record booked position, which when combined with a solid WAVE season and record results for the first quarter, paved the way for an increase to our full year Adjusted EPS outlook that now exceeds the high-end of our previous guidance range, and would result in yet another year of double-digit Adjusted EPS growth,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “Our modest in-year capacity growth of less than 3%, coupled with continued robust global demand for our portfolio of brands allowed us to focus on driving pricing as evidenced by our first quarter topline beat, our record wave season pricing and higher net yield growth expectations for the remainder of the year.”
First Quarter 2019 Results
GAAP net income was $118.2 million or EPS of $0.54 compared to $103.2 million or $0.45 in the prior year. The Company generated Adjusted Net Income of $181.8 million or Adjusted EPS of $0.83 compared to $137.8 million or $0.60 in the prior year.
Revenue increased 8.5% to $1.4 billion compared to $1.3 billion in 2018. These increases were primarily attributed to the addition of Norwegian Bliss to the fleet, along with strong growth in organic pricing across all core markets and robust onboard spending. Gross Yield increased 2.8%. Net Yield increased 4.1% on a Constant Currency basis and 3.2% on an as reported basis.
Total cruise operating expense increased 7.6% in 2019 compared to 2018, primarily due to an increase in Capacity Days. Gross Cruise Costs per Capacity Day increased 2.4%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 3.6% on a Constant Currency basis and 3.0% on an as reported basis.
Fuel price per metric ton, net of hedges increased to $461 from $448 in 2018. The Company reported fuel expense of $98.3 million in the period.
Interest expense, net increased to $73.5 million in 2019 from $59.7 million in 2018. The increase in interest expense reflects additional debt in connection with the delivery of Norwegian Bliss in 2018, Project Leonardo financing, as well as higher interest rates due to an increase in LIBOR. Also included in 2019 were losses on extinguishment of debt and debt modification costs of $6.1 million in connection with refinancings of certain of our credit facilities.
Other income (expense), net was an expense of $0.4 million in 2019 compared to an expense of $1.7 million in 2018. In both periods, the expense was primarily related to losses on foreign currency exchange.
In the quarter we had an income tax benefit of $33.8 million compared to an income tax expense of $2.5 million in 2018. In 2018, we implemented certain tax restructuring strategies that created the ability to utilize the net operating loss carryforwards of Prestige, for which we had previously provided a full valuation allowance. As a result, we recorded a tax benefit of $35.7 million in connection with the reversal of substantially all of the valuation allowance.
2019 Outlook
“The strong demand environment we have been experiencing for some time is continuing throughout 2019 and into 2020,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “We remain confident in our outlook to achieve our Full Speed Ahead 2020 targets and have opportunistically executed $200 million in share repurchases in the quarter, bringing our total shareholder capital returns to $600 million over the last four quarters.”