Norwegian Cruise Line Holdings Ltd. together with NCL Corporation Ltd., “Norwegian Cruise Line Holdings”, “Norwegian” or the “Company”, reported financial results for the quarter ended June 30, 2015 and provided guidance for the third quarter and full year 2015.
Second Quarter 2015 Highlights
- Improvement in Adjusted EPS of 29.3% to $0.75 on Adjusted Net Income of $171.6 million.
- Increase in Adjusted Net Yield on a Combined Company basis of 1.5%, or 3.2% on a Constant Currency basis, driven by pricing improvement in the quarter. Increase of 18.2% on an as reported basis.
- Continued synergy identification efforts from the integration of Norwegian and Prestige lead to synergies of $75 million in 2015 and $125 millionin 2016 prior to reinvestment.
Second Quarter 2015 Results
“The benefits of the combination of Norwegian and Prestige are beginning to hit their full stride, resulting in strong earnings growth in the quarter,” saidFrank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “Many of the strategies we have previously communicated are gaining more and more traction, from the weaving of Prestige’s go to market strategy into the Norwegian brand’s pricing and marketing practices, to the focus on adding value for our guests in lieu of discounting, in addition to leveraging our scale to maximize cost efficiencies,” continued Del Rio.
The Company generated Adjusted Net Income of $171.6 million, or $0.75 per share. Adjusted EPS increased 29.3% over prior year and was at the top end of the Company’s guidance benefiting from solid Net Yield performance along with favorable timing of certain expenses. On a GAAP basis, Net Income was $158.5 million, or $0.69 per share compared to prior year of $111.6 million or $0.54 per share.
Adjusted Net Yield improved 18.2% (20.2% on a Constant Currency basis) mainly due to the addition of the Oceania Cruises and Regent Seven Seas Cruises brands which occurred in the fourth quarter of 2014. On a Combined Company basis, which compares current results against the combined results of Norwegian and Prestige in the prior year, Adjusted Net Yield increased 1.5%, (3.2% on a Constant Currency basis), reflecting improved pricing in both ticket and onboard revenue in the quarter. Adjusted Net Revenue in the period was $832.4 million compared to $595.7 million in 2014, an increase of 39.7% primarily as a result of the addition of the Oceania Cruises and Regent brands.
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 21.1% (22.0% on a Constant Currency basis), primarily as a result of the Acquisition of Prestige, while on a Combined Company basis decreased 4.7% (4.0% on a Constant Currency basis), primarily due to the timing of certain expenses that will now occur in the second half of the year. The Company’s fuel price per metric ton, net of hedges, decreased 10.3% to $558from $622 in 2014.
Interest expense, net increased to $52.4 million from $31.9 million as a result of the incremental debt from the Acquisition of Prestige. Other income (expense) was $(3.7) million, reflecting a non-recurring charge related to certain of the Company’s fuel derivatives, partially offset by the fair value increase related to a foreign exchange collar for the Seven Seas Explorer newbuild. The charge related to fuel derivatives resulted from a shift in the original implementation timeline for the Company’s exhaust gas scrubber project. As a result of this shift, the Company changed the mix of its future fuel consumption, resulting in a dedesignation of the associated fuel hedges.