Jennifer Oettel / Kristina Heinrichs / Veronika Bahnmann
Phone: +49 611 36 07121
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 first quarter ended 31 March 2017, and provided guidance for the second quarter and full year 2017.
“2017 is off to a solid start with strong first quarter results which include record revenue of $1.2 billion for the quarter," said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. "The operating environment has remained favourable with strong close-in demand for Caribbean sailings and strength in onboard revenue driving topline growth above expectations," continued Del Rio.
First Quarter 2017 Results
GAAP net income was $61.9 million or EPS of $0.27 compared to $73.2 million or $0.32 in the prior year. The Company generated Adjusted Net Income of $91.2 million or Adjusted EPS of $0.40 compared to $86.7 million or $0.38 in the prior year.
Revenue increased 6.8% to $1.2 billion compared to $1.1 billion in 2016. This increase was primarily attributed to the addition of Oceania Cruises' Sirena and Regent's Seven Seas Explorer to the fleet, partially offset by five Dry-docks during the period along with an increase in Net Yield due to strength in ticket pricing and higher onboard and other revenue. Gross Yield increased 5.7% while Adjusted Net Yield improved 5.5% on a Constant Currency basis and 4.9% on an as reported basis.
Gross Cruise Cost increased 7.9% compared to 2016 due to an increase in total cruise operating expense and marketing, general and administrative expenses. Gross Cruise Costs per Capacity Day increased 6.8%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 5.8% on both a Constant Currency and as reported basis primarily due to an increase in maintenance and repairs including Dry-dock and crew payroll and related costs.
Fuel price per metric ton, net of hedges increased 3.4% to $453 from $438 in 2016. The Company reported fuel expense of $88.9 million in the period. In addition, a loss of $0.4 million was recorded in other expense in 2017 related to the ineffective portion of the Company's fuel hedge portfolio due to market volatility.
Interest expense, net decreased to $53.0million in 2017 from $59.8million in 2016 reflecting a decrease in average debt outstanding partially offset by an increase in LIBOR rates.
Other income (expense), net was an expense of $2.8million in 2017 compared to income of $2.8million in 2016. In 2017, the expense was primarily related to losses on foreign currency exchange and unrealized and realized losses on derivatives. In 2016, the income was primarily related to unrealized gains on derivatives partially offset by realized losses on derivatives and losses on foreign currency exchange.
"A strong end to the most successful Wave season in recent history resulted in a meaningful improvement in our full year booked position, with both occupancy and pricing now well ahead of prior year," said Wendy Beck, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. "I am pleased to report that the strong performance witnessed in our core markets and reflected in first quarter results also extended to our booked business in future quarters, allowing us to increase our full year Adjusted EPS and Adjusted Net Yield growth guidance. This positive momentum has been partially offset by recent uncertainties in Norwegian Joy's Chinese source market caused by the South Korea travel restriction. Taking all factors into account, we are on track to deliver another year of solid financial performance and double-digit Adjusted EPS growth."
2017 Guidance and Sensitivities
In addition to announcing the results for the first quarter, the Company also provided guidance for the second quarter and full year 2017, 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 2017 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 2017
Full Year 2017
Adjusted Net Yield
Adjusted Net Cruise Cost
$3.79 to $3.89
Adjusted Depreciation and Amortization (1)
$114 to $118 million
Approx. $475 million
AdjustedInterest Expense, net
Approx. $65 million
Approx. $247 million
Effect on Adjusted EPS of a
Effect on Adjusted EPS of a 1% change in Adjusted Net Cruise Cost Excluding Fuel per Capacity Day (2)
(1) Excludes $7.6million and $30.3 million of amortization of intangible assets related to the Acquisition of Prestige in the second quarter and full year 2017, respectively.
(2) Based on midpoint of guidance.
(3) For the remaining quarters of 2017.
The following reflects the Company’s expectations regarding fuel consumption and pricing, along with accompanying sensitivities.
Second Quarter 2017
Full Year 2017
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 2017.
As of 31 March 2017, the Company had hedged approximately 78%, 66%, 49% and 18% of its total projected metric tons of fuel consumption for the remainder of 2017, 2018, 2019 and 2020, respectively. The following table provides amounts hedged and price per barrel of heavy fuel oil ("HFO") and marine gas oil ("MGO") which are hedged utilising U.S. Gulf Coast 3% ("USGC") and Brent, respectively.
Remainder of 2017
% of HFO Consumption Hedged
Average USGC Price / Barrel
% of MGO Consumption Hedged
Average Brent Price / Barrel
The following reflects the foreign currency exchange rates the Company used in its Second Quarter and Full Year 2017 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 refurbishment projects. As of 31 March 2017, excluding Project Leonardo, our anticipated capital expenditures were $1.1billion for the remainder of 2017, $1.3 billion for the year ending 31 December 2018 and $1.2billion for the year ending 31 December 2019, of which the Company has export credit financing in place for the expenditures related to ship construction contracts of $0.8 billion for the remainder of 2017, $0.7billion for 2018 and $0.6billion for 2019.
Project Leonardo will introduce an additional four ships with expected delivery dates through 2025 with an option to introduce two additional ships for delivery in 2026 and 2027, subject to certain conditions. These four ships are each approximately 140,000 Gross Tons with approximately 3,300 Berths. The contract price for each of the additional four ships is approximately €800.0 million or $852.2 million based on the exchange rate as of 31 March 2017. For ships expected to be delivered after 2023, the contract price is subject to adjustment under certain circumstances. The additional anticipated capital expenditures for these ships were $70.8 million for the remainder of 2017, $5.2 million for the year ending 31 December 2018 and $6.4 million for the year ending 31 December 2019, of which we have export credit financing in place for the expenditures related to ship construction contracts of $54.5 million for 2018.
Company Updates and Other Business Highlights
Company Receives Approval to Sail to Cuba in 2018
The Company made history this spring as the first major U.S. cruise operator to have its full portfolio of brands sail their maiden voyage to Cuba. In addition to existing itineraries to Cuba in 2017, the Company announced approval from the government of the Republic of Cuba to operate cruises to Cuba in 2018 with 56 voyages across all three brands.
Share Repurchase Program Extended Through April 2020
The Company's Board of Directors extended its three-year, $500 million share repurchase program, which was originally scheduled to expire on 29 April 2017, through 29 April 2020. The Company's primary focus will continue to be the strengthening of its balance sheet by deleveraging, and the extension of its share repurchase program will provide continued flexibility to strategically repurchase shares at attractive levels should the opportunity materialise. The Company may repurchase its ordinary shares from time to time, in amounts, at prices and at such times as it deems appropriate, subject to market conditions and other considerations. The Company may make repurchases in the open market, in privately negotiated transactions, in accelerated repurchase programs or in structured share repurchase programs, and any repurchases may be made pursuant to Rule 10b5-1 plans. The program will be conducted in compliance with applicable legal requirements and will be subject to market conditions and other factors. As of 10 May 2017, there was $263.5 million remaining available for repurchases under the share repurchase program.
Company Releases 2016 Environmental Report
The Company released its 2016 Environmental Report and unveiled its global environmental program, ‘Sail & Sustain’. This encompassing program highlights the Company’s progress on its global environmental initiatives as well as the Company’s environmental objectives, which include increasing sustainable sourcing, minimising landfill waste, investing in emerging technologies, and reducing CO2 emissions.
Update on The Norwegian Edge™
In March, Norwegian Jade sailed into her seasonal homeport of Tampa as an essentially new vessel, following a three-week Dry-dock. She received enhancements to every part of the onboard experience, from two brand new restaurants and two new bars and lounges, updated design and décor in many public spaces, and a refurbishment of all staterooms. Additionally, in February, Norwegian Pearl sailed into her seasonal homeport of Miami following a two week Dry-dock where every stateroom and many of the ship's public areas were revitalised to provide a fresh, modern look. These extensive renovations are a part of The Norwegian Edge™, an investment program that sets a high standard of excellence for the Norwegian Cruise Line brand, encompassing the entire guest experience.
Delivery of Norwegian Joy
On 27 April the Company took delivery of Norwegian Joy, the Company's custom-designed ship for the Chinese cruise market, from MEYER WERFT during an onboard ceremony in Bremerhaven, Germany. At 167,775 Gross Tons and accommodating 3,883 guests, Norwegian Joy is the second ship in the line's Breakaway Plus Class and features an innovative design with amenities tailored to provide a "First Class at Sea" experience for Chinese guests with the elements of freedom and flexibility that Norwegian Cruise Line has become known for across the globe. After delivery, Norwegian Joy set sail for China, where she will be showcased through a grand inaugural port tour, which will be followed by the ship's christening ceremony on 27 June led by her Godfather, 'King of Chinese Pop', Wang Leehom. The spectacular inaugural celebration in Shanghai will include an exclusive concert and overnight cruise for honoured guests.
Launched Partnership with Alibaba Group
The Company recently announced the launch of a new partnership with Alibaba Group which will leverage Norwegian's expertise in providing exceptional holiday experiences and its innovative and award-winning cruise offerings along with Alibaba's unparalleled insights into the wants and needs of the Chinese consumer to deliver the cruise industry's most-customised product for the local Chinese market. Utilising Alibaba's expansive ecosystem for engaging consumers, the two companies will look to further increase the awareness in China of the unique offerings of a cruise holiday. The companies plan to make cruising the preferred holiday choice among Chinese travellers in what is forecasted to become the cruise industry's second-largest source market. The companies will also collaborate to provide Alibaba customers with new and unique online-to-offline (O2O) experiences at sea across Norwegian's China-based and global fleet.
About Norwegian Cruise Line Holdings Ltd.
Norwegian Cruise Line Holdings Ltd. (Nasdaq: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 25 ships with approximately 50,400 berths, these brands offer itineraries to more than 510 destinations worldwide. The Company will introduce seven additional ships through 2025, and has an option to introduce two additional ships for delivery in 2026 and 2027.
Norwegian Cruise Line is the innovator in cruise travel with a 50-year history of breaking the boundaries of traditional cruising. Most notably, Norwegian revolutionized the cruise industry by offering guests the freedom and flexibility to design their ideal cruise vacation on their schedule. Today, Norwegian invites guests to enjoy a relaxed, resort style cruise vacation on some of the newest and most contemporary ships at sea with a wide variety of accommodation options, including The Haven by Norwegian®, a luxury enclave with suites, private pools and dining, concierge service and personal butlers. Oceania Cruises offers an unrivaled vacation experience renowned for the finest cuisine at sea and destination-rich itineraries that span the globe. Expertly crafted voyages aboard designer-inspired, intimate ships call on ports across Europe, Asia, Africa, Australia, New Zealand, the South Pacific and the Americas. Celebrating its 25th anniversary in 2017, Regent Seven Seas Cruises offers the industry's most inclusive luxury experience aboard its all-suite fleet. A voyage with Regent Seven Seas Cruises includes round-trip air, highly personalized service, exquisite cuisine, fine wines and spirits, unlimited internet access, sightseeing excursions in every port, gratuities, ground transfers, a pre-cruise hotel package for guests staying in concierge-level suites and higher and beginning in summer 2017, business class air will be provided for all roundtrip air originating from the U.S. and Canada.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this release constitute forward-looking statements within the meaning of the U.S. federal securities laws intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this release, including, without limitation, those regarding our business strategy, financial position, results of operations, plans, prospects and objectives of management for future operations (including expected fleet additions, development plans, objectives relating to our activities and expected performance in new markets), are forward-looking statements. Many, but not all, of these statements can be found by looking for words like "expect," "anticipate," "goal," "project," "plan," "believe," "seek," "will," "may," "forecast," "estimate," "intend," "future," and similar words. Forward-looking statements do not guarantee future performance and may involve risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to the impact of: adverse general economic and related factors, such as fluctuating or increasing levels of unemployment, underemployment and the volatility of fuel prices, declines in the securities and real estate markets, and perceptions of these conditions that decrease the level of disposable income of consumers or consumer confidence; adverse events impacting the security of travel, such as terrorist acts, armed conflict and threats thereof, acts of piracy, and other international events; the risks and increased costs associated with operating internationally; our expansion into and investments in new markets; breaches in data security or other disturbances to our information technology and other networks; the spread of epidemics and viral outbreaks; adverse incidents involving cruise ships; changes in fuel prices and/or other cruise operating costs; an impairment of our tradenames or goodwill which could adversely affect our financial condition and operating results; our hedging strategies; our inability to obtain adequate insurance coverage; our substantial indebtedness, including the ability to raise additional capital to fund our operations, and to generate the necessary amount of cash to service our existing debt; restrictions in the agreements governing our indebtedness that limit our flexibility in operating our business; the significant portion of our assets pledged as collateral under our existing debt agreements and the ability of our creditors to accelerate the repayment of our indebtedness; volatility and disruptions in the global credit and financial markets, which may adversely affect our ability to borrow and could increase our counterparty credit risks, including those under our credit facilities, derivatives, contingent obligations, insurance contracts and new ship progress payment guarantees; fluctuations in foreign currency exchange rates; overcapacity in key markets or globally; our inability to recruit or retain qualified personnel or the loss of key personnel; future changes relating to how external distribution channels sell and market our cruises; our reliance on third parties to provide hotel management services to certain ships and certain other services; delays in our shipbuilding program and ship repairs, maintenance and refurbishments; future increases in the price of, or major changes or reduction in, commercial airline services; seasonal variations in passenger fare rates and occupancy levels at different times of the year; our ability to keep pace with developments in technology; amendments to our collective bargaining agreements for crew members and other employee relation issues; the continued availability of attractive port destinations; pending or threatened litigation, investigations and enforcement actions; changes involving the tax and environmental regulatory regimes in which we operate; and other factors set forth under "Risk Factors" in our most recently filed Annual Report on Form 10-K and subsequent filings by the Company with the Securities and Exchange Commission. The above examples are not exhaustive and new risks emerge from time to time. Such forward-looking statements are based on our current beliefs, assumptions, expectations, estimates and projections regarding our present and future business strategies and the environment in which we expect to operate in the future. These forward-looking statements speak only as of the date made. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change of events, conditions or circumstances on which any such statement was based, except as required by law.
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Further information and bookings in travel agencies or at:
NCL (Bahamas) Ltd., Wiesbaden Office
Continental Europe Branch
Kreuzberger Ring 68, 65205 Wiesbaden, Germany
From Denmark: Tel: +45 78 77 28 22
From Finland: Tel: +358 9 3157 9407
From France: Tel: +49 1805 62 55 27 (€ 0,14/min from landline network)
From Norway: Tel: +47 21 95 62 10
From Sweden: Tel: +46 8 403 087 02
From other European countries (toll-free from landline): Tel.: 00800 03 10 21 21; Fax: 00800 03 10 21 22
PR & Communications Executive EMEA
Tel.: +49 611 36 07 190
Fax: +49 611 36 07 095
Jennifer Oettel / Kristina Heinrichs / Veronika Bahnmann
Phone: +49 611 36 07121
Corporate Mailing Address
Wiesbaden, Continental Europe Office
NCL (Bahamas) Ltd.
Continental Europe Branch
Kreuzberger Ring 68
65205 Wiesbaden, Germany