Senior Manager PR & Communications Europe
Phone: +49 611 36 07121
Norwegian Cruise Line Holdings Reports Record First Quarter 2019 Financial Results
Strong Demand Environment Drives Increase in Full Year Net Yield Growth
and Adjusted EPS Expectations
Company Executed $200 Million in Share Repurchases in the Quarter
Norwegian Joy Debuts in Alaska
MIAMI, Florida – May 9, 2019– Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) (together with NCL Corporation Ltd., “Norwegian Cruise Line Holdings”, “Norwegian” or the “Company”) 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.
“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 $0.54compared 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.
“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.”
2019 Guidance and Sensitivities
In addition to announcing the results for the first quarter 2019, the Company also provided guidance for the second quarter and full year 2019, along with accompanying sensitivities. The Company does not provide guidance on a GAAP basis because the Company is unable to predict, with reasonable certainty, the future movement of foreign exchange rates or the future impact of certain gains and charges. These items are uncertain and will depend on several factors, including industry conditions, and could be material to the Company's results computed in accordance with GAAP. The Company has not provided reconciliations between the Company's 2019 guidance and the most directly comparable GAAP measures because it would be too difficult to prepare a reliable U.S. GAAP quantitative reconciliation without unreasonable effort.
Second Quarter 2019
Full Year 2019
3.0% to 4.0%
3.5% to 4.5%
Adjusted Net Cruise Cost
Adjusted EPS (1)
$5.40 to $5.50 (2)
Adjusted Depreciation and Amortization (1)
Approx. $145 million
Approx. $597 million (2)
Adjusted Interest Expense, net
Approx. $66 million
Approx. $262 million
Effect on EPS of a
Effect on Adjusted EPS of a 1% change in Adjusted Net Cruise Cost Excluding Fuel per Capacity Day
(2) Excludes one-time expenses of approximately $25.0 million from Adjusted EPS, primarily resulting from a non-cash write-off, for enhancements to Norwegian Joy, associated with her redeployment to North America, of which approximately $20.0 million is excluded from Adjusted Depreciation and Amortization, and the remainder is excluded from Adjusted Net Cruise Cost Excluding Fuel per Capacity Day.
(3) Based on midpoint of guidance.
(4) For the remaining quarters of 2019.
The following reflects the Company’s expectations regarding fuel consumption and pricing, along with accompanying sensitivities.
Second Quarter 2019
Full Year 2019
Fuel consumption in metric tons
Fuel price per metric ton, net of hedges
Effect on Adjusted EPS of a 10% change
(1) For the remaining quarters of 2019.
As of March 31, 2019, the Company had hedged approximately 70%, 54%, and 36% of its total projected metric tons of fuel consumption for the remainder of 2019, 2020, and 2021, respectively. The following table provides amounts hedged and price per barrel of heavy fuel oil ("HFO") which is hedged utilizing U.S. Gulf Coast 3% ("USGC") and marine gas oil ("MGO") which is hedged utilizing Gasoil.
Remainder of 2019
% of HFO Consumption Hedged
Average USGC Price / Barrel
% of MGO Consumption Hedged
Average Gasoil Price / Barrel
(1) Includes 14% hedged through a collar with a call strike of $87.25 and a put strike of $79.81.
(2) Represents a blended rate that includes a $3.5 million benefit from 2019 Brent hedges that were replaced with Gasoil hedges in the first quarter of 2019. Does not reflect impact of collar.
(3) Represents a blended rate that includes a $7.4 million benefit from 2020 Brent hedges that were replaced with Gasoil hedges in the third quarter of 2018.
The following reflects the foreign currency exchange rates the Company used in its second quarter and full year 2019 guidance.
Current Guidance - May
Prior Guidance – February
Future capital commitments consist of contracted commitments, including ship construction contracts, and future expected capital expenditures necessary for operations as well as our ship revitalization projects and other strategic investments. As of March 31, 2019, anticipated capital expenditures were $1.4 billion for the remainder of 2019, $1.2 billion and $0.7 billion for the years ending December 31, 2020 and 2021, respectively. We have export credit financing in place for the anticipated expenditures related to ship construction contracts of $0.6 billion for the remainder of 2019, $0.5 billion and $0.2 billion for the years ended December 31, 2020 and 2021, respectively.
Company Updates and Other Business Highlights
Company Announced Plans for New, State-of-the-art Staff Training Facility
In March, the Company announced plans for the development and construction of the Norwegian Cruise Line Center of Excellence, a new state-of-the-art shipboard team member training facility near Manila in the Philippines. The 200,000-square-foot Center of Excellence will serve both new and existing shipboard team members across the Company and will provide training for various onboard service areas. The world- class training campus will enable the Company to fully immerse trainees in their coursework, reduce onboard training time and further improve upon our already industry-leading service levels. Slated for completion in 2020, the center will provide annual training for up to 8,000 shipboard team members each year.
Company Releases 2018 Stewardship Report
In celebration of Earth Day, the Company published its third annual Stewardship Report. This report highlights the Company’s progress on its sustainability goals as well as impactful initiatives underway, including the elimination of plastic straws across its 26-ship fleet and two island destinations, its exciting partnership with Ocean Conservancy’s Trash Free Seas Alliance® as well as the Company’s Hope Starts Here campaign to reconstruct schools and critical infrastructure in Caribbean islands impacted by the 2017 hurricanes. The 2018 Stewardship Report is part of the Company’s global environmental program, Sail & Sustain, which reflects the Company’s mission to continually improve its sustainability culture through fresh innovation, progressive education and open collaboration.
Norwegian Sky Revitalization Complete
As part of the Norwegian Edge® program, reaffirming the Company’s commitment to elevating the standard of excellence across the fleet, Norwegian Sky recently emerged from her bow to stern revitalization following a three-week Dry-dock in Freeport, Bahamas.
She recently returned to her homeport of Miami showcasing new venues, updated spaces and completely redesigned staterooms and corridors, elevating the experience for guests looking for shorter vacation getaways. All food and beverage outlets were updated, and eight new venues were introduced including the pub-style eatery The Local Bar & Grill; La Cucina for classic Italian fare; Sugarcane Mojito Bar; Topsiders, the poolside bar; late night venues, Bliss Ultra Lounge and Spinnaker Lounge; a full-service Starbucks® licensed store; and new to the Norwegian fleet - Pinnacle Lounge and Sushi Bar, which provides guests with a relaxed yet elevated atmosphere to enjoy original and traditional sushi concepts while taking in the endless views of the ocean through floor-to-ceiling windows.
New Itineraries Unveiled for 2020 and 2021
Norwegian Cruise Line announced select 2020 and 2021 itineraries for 12 of its ships. The itineraries include Norwegian Encore's debut in Seattle where she will sail seven-day cruises to Alaska alongside her sister ship Norwegian Bliss, as well as Norwegian Joy's arrival in New York for the first time. Further, Norwegian Spirit, which will undergo an extensive multi-million-dollar revitalization in early 2020, will sail a variety of port-intensive itineraries from Tokyo, Japan and Hong Kong, China. Norwegian Jewel will sail French Polynesia, Hawaii and South Pacific cruises in spring 2020 and spring 2021.
Oceania Cruises unveiled its new 2020 and 2021 Tropics & Exotics Collection of itineraries with 85 offerings, 69 of them entirely new itineraries, including 13 new voyages to Asia & Africa, 8 new voyages to South America, 7 new sailings to the South Pacific & Australia, 7 new Transoceanic journeys, and an extraordinary 30 new voyages to the Caribbean, the Panama Canal and Mexico.
Cruise Norwegian App Expanded Fleet-wide
Norwegian Cruise Line announced the complete expansion of its Cruise Norwegian app across its 16-ship fleet. Developed in-house and designed to enhance the guest experience, the app features a "pre-cruise" mode offering guests a comprehensive planning experience from pre-booking onboard activities, dining reservations, shore excursions and entertainment to accessing their vacation itinerary and leveraging mobile check-in and e-documents for paperless boarding.
When used on board and connected to a ship’s Wi-Fi network, the app offers guests a best-in-class connected experience, allowing them to continue making reservations, book last-minute excursions, view ship activities, send messages and make unlimited onboard calls for a small one-time charge.
Initially launched in October 2017 on Norwegian Sky, the Cruise Norwegian app was developed to transcend the stages of the travel experience, offering guests a stress-free way to manage their cruise. The app is currently available in English with additional language roll-outs to follow. The Cruise Norwegian app is one component of Cruise Freedom, the Company's technology platform aimed at enhancing the guest experience from booking to disembarkation.
Regent Seven Seas Cruises® Announced Fleetwide Guest Experience Enhancements
In March, Regent Seven Seas Cruises® announced three guest experience enhancements; the nearly doubling of internet bandwidth across its fleet by January 2020, free unlimited valet laundry service for guests sailing in Master and Grand Suites, and a new Digital Guest Survey which will help Regent track guest experiences and feedback in real-time.
Over the past year Regent has completed a $125 million fleet refurbishment program, unveiled its 2020-2021 Voyage Collection with 167 itineraries and new ports, introduced new relaxed outdoor evening dining fleetwide at the Pool Grill, debuted immersive Cuban voyage itineraries, and revealed Go Local Tours and Regent Choice small group shore excursions – all while readying to launch its fifth ship, Seven Seas Splendor™, in February 2020.
Seven Seas Splendor™ will have the First Woman Captain to Launch a Brand-New Cruise Ship
In celebration of International Women’s Day, Regent Seven Seas Cruises® announced that Captain Serena Melani will helm the cruise line’s newest ship, Seven Seas Splendor™, making her the first woman in cruise industry history to captain a new ocean cruise ship at launch.
Captain Melani, 45, has progressed quickly in her nearly 30-year career to roles of cruise ship leadership. She began her nautical career at age 16 as a cadet while attending school working on cargo ships in her hometown of Livorno, Italy, along the Tirrenian Sea in the Tuscany region. After graduating from Nautical College in 1993, she was one of only a few females to hold roles of increasing responsibilities on oil tankers, cargo and container vessels. Captain Melani joined Regent in 2010 as a Bridge Officer, then served as Navigation Officer, Safety Officer and Staff Captain on Seven Seas Voyager. She became the Company's first female Master Captain in 2016 and has led Seven Seas Explorer, Seven Seas Mariner and Seven Seas Navigator during her tenure.
About Norwegian Cruise Line Holdings Ltd.
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. With a combined fleet of 26 ships with approximately 54,400 berths, these brands offer itineraries to more than 450 destinations worldwide. The Company will introduce eleven additional ships through 2027.
Senior Manager PR & Communications Europe
Phone: +49 611 36 07121
Corporate Mailing Address
Wiesbaden, Continental Europe Office
NCL (Bahamas) Ltd.
Continental Europe Branch
Kreuzberger Ring 68
65205 Wiesbaden, Germany