Jennifer Oettel / Kristina Heinrichs / Veronika Bahnmann
Phone: +49 611 36 07121
Company Reports Record Second Quarter Revenue and Earnings
Strong Global Demand Environment and Revenue Initiatives Drive Increase in
Full Year Adjusted EPS Guidance Above High-end of Previous Guidance Range
Company’s Growth Profile Extended with Confirmation of Two Additional Leonardo Class Ships for Delivery in 2026 and 2027
Company Executed $200 Million in Share Repurchases in the Quarter
Under its $1 Billion Share Repurchase Program
MIAMI, Florida – August 9, 2018– 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 second quarter ended June 30, 2018, as well as provided guidance for the third quarter and full year 2018.
“The continuation of the robust booking environment from our core source markets, combined with the successful execution of demand creation strategies drove higher pricing across all three brands, resulting in second quarter revenue, yield and earnings growth well above expectations,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. "Global consumer cruise demand shows no signs of slowing as evidenced by solid organic growth and the hugely successful introduction of Norwegian Bliss, whose record-breaking performance surpassed our high expectations. The strong demand environment is expected to continue driving higher pricing in the back half of the year, leading to an increase of our full year 2018 Adjusted EPS outlook to a range of $4.70 to $4.80, well above the initial guidance range set at the beginning of the year."
Second Quarter 2018 Results
GAAP net income was $226.7 million or EPS of $1.01 compared to $198.5 million or $0.87 in the prior year. The Company generated Adjusted Net Income of $271.9 million or Adjusted EPS of $1.21 compared to $232.7 million or $1.02 in the prior year.
Revenue increased 13.2% to $1.5 billion compared to $1.3 billion in 2017. Net Revenue increased 13.7% to $1.2 billion compared to $1.0 billion in 2017. These increases were primarily attributed to strong organic pricing growth across all core markets along with an increase in Capacity Days due to the addition of Norwegian Joy to the fleet in the second quarter of 2017 and Norwegian Bliss to the fleet in the second quarter of 2018, partially offset by three scheduled Dry-docks during the period. Gross Yield increased 4.3% and Net Yield increased 4.0% on a Constant Currency basis and 4.7% on an as reported basis.
Total cruise operating expense increased 14.7% in 2018 compared to 2017 primarily due to the increase in Capacity Days. Gross Cruise Costs per Capacity Day increased 6.0% due to an increase in maintenance and repairs including Dry-dock expenses and an increase in marketing, general and administrative expenses. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 7.4% on a Constant Currency basis and 8.4% on an as reported basis.
Fuel price per metric ton, net of hedges increased to $481 from $469 in 2017. The Company reported fuel expense of $95.2 million in the period.
Interest expense, net was $73.0 million in 2018 compared to $64.2 million in 2017. The increase in interest expense reflects additional debt in connection with the delivery of Norwegian Bliss in April 2018, the delivery of Norwegian Joy in April 2017, Project Leonardo financing, as well as higher interest rates due to an increase in LIBOR, partially offset by the benefit from the full redemption in October 2017 of our 4.625% Senior Notes due 2020 and $135.0 million partial redemption in April 2018 of our 4.75% Senior Notes due 2021. Also included in 2018 is the $6.3 million of redemption premium and write-off of fees in connection with the partial redemption mentioned above.
Other income (expense), net was income of $12.9 million in 2018 compared to an expense of $5.6 million in 2017. In 2018, the income was primarily related to gains on foreign currency exchange. In 2017, the expense was primarily related to losses on foreign currency exchange and unrealized and realized losses on derivatives.
"2018 is well on track for yet another year of record financial performance. Furthermore, robust global demand has accelerated year-over-year gains in occupancy and pricing for full year 2019, which remains well ahead of this year's record levels across all three brands," continued Del Rio. “We have a high level of confidence and strong conviction in our outlook for 2019 and beyond as demonstrated by our recent global redeployment initiatives, the bolstering of our measured growth profile with the confirmation of two additional Leonardo Class ships for delivery in 2026 and 2027, as well as the opportunistic execution of $200 million in share repurchases in the quarter, bringing the year-to-date total for share repurchases to over $450 million.”
2018 Guidance and Sensitivities
In addition to announcing the results for the second quarter, the Company also provided guidance for the third quarter and full year 2018, 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 2018 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.
Third Quarter 2018
Full Year 2018
Adjusted Net Cruise Cost
$4.70 to $4.80
Adjusted Depreciation and Amortization (1)
Approx. $140 million
Approx. $547 million
AdjustedInterest Expense, net
Approx. $70 million
Approx. $270 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 $6.2 million and $24.9 million of amortization of intangible assets related to the Acquisition of Prestige in the third quarter and full year 2018, respectively.
(2) Based on midpoint of guidance.
(3) For the remaining quarters of 2018.
The following reflects the Company’s expectations regarding fuel consumption and pricing, along with accompanying sensitivities.
Third Quarter 2018
Full Year 2018
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 2018.
As of June 30, 2018, the Company had hedged approximately 64%, 49%, and 26% of its total projected metric tons of fuel consumption for the remainder of 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 utilizing U.S. Gulf Coast 3% (“USGC”) and Brent, respectively.
Remainder of 2018
% 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 third quarter and full year 2018 guidance.
Current Guidance – August
Prior Guidance – May
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 June 30, 2018, anticipated capital expenditures were $0.3 billion for the remainder of 2018, $1.3 billion and $0.9 billion for the years ending December 31, 2019 and 2020, respectively. We have export credit financing in place for the expenditures related to ship construction contracts of $0.05 billion for the remainder of 2018, $0.6 billion and $0.5 billion for the years ended December 31, 2019 and 2020, respectively.
Company Updates and Other Business Highlights
Norwegian Bliss Launch and Christening
Norwegian Cruise Line took delivery of its sixteenth ship, the 168,028 gross ton Norwegian Bliss, from Meyer Werft in April. Following a month and a half tour that began in Bremerhaven, Germany and continued around the United States and included previews in New York, Miami and Los Angeles, Norwegian Bliss was officially christened in her summer home of Seattle, Washington on May 31. The christening ceremony held aboard the vessel was broadcasted throughout the ship’s multiple venues to the over 2,500 guests in attendance. Following the official bottle-break led by Godfather Elvis Duran, a bevy of stars performed in six different venues including the Bliss Theater where three-time Grammy® award-winning rock band, Train, performed fan-favorite songs.
Norwegian Cruise Line Announced Enhancements to its 2019 and 2020 Itineraries
In July, Norwegian Cruise Line announced changes to its 2019 and 2020 deployments to capitalize on the strong global demand environment and leverage the strategic benefits of a growing fleet to quickly seize sizeable opportunities in over performing, unserved and underserved markets to drive higher returns for shareholders. In April 2019, Norwegian Joy will redeploy from Shanghai to Seattle to sail 7-day voyages to Alaska and in winter 2019/2020 will reposition to Los Angeles for a season of Mexican Riviera and Panama Canal voyages. Norwegian Cruise Line remains committed to serving the Chinese cruise market by redeploying Norwegian Spirit seasonally to the region beginning in summer 2020.
Additionally, Norwegian Pearl, Jewel and Jade will expand the brand’s presence in Europe, Australia and Asia in 2019. Norwegian Pearl will redeploy to Europe in summer 2019 offering varied itineraries throughout Northern Europe from Amsterdam, a new homeport for the line. In winter 2019/20, Norwegian Jewel will return to Australia for a third year of seasonal sailings from Sydney and new voyages departing from Auckland, New Zealand, and Norwegian Jade will offer a season of sailings throughout Southeast Asia departing from Singapore and Hong Kong.
Norwegian Cruise Line Confirms Options for Fifth and Sixth Ships in Next Generation of Newbuilds
The Company confirmed its previously announced options for the fifth and sixth Project Leonardo Class ships with Fincantieri S.p.A. for Norwegian Cruise Line for delivery in 2026 and 2027, contingent on the Company’s entry into committed financing arrangements. At 140,000 gross tons and accommodating approximately 3,300 guests, this next generation class of ships will build upon the highly successful offering of freedom and flexibility found across Norwegian Cruise Line's fleet, including the most recent Breakaway Plus Class ships, and feature a host of inventive designs that will further elevate its already award-winning guest experience. A priority of the prototype design is energy efficiency, with the aim of optimizing fuel consumption and reducing the impact on the environment. The smaller footprint will also broaden deployment opportunities around the world.
Appointment of Russell Galbut to Chairman of the Board and Mary Landry to Board of Directors
At the Company's 2018 annual general meeting, the Board of Directors (the "Board") appointed Mr. Russell W. Galbut, an independent director of the Board, as Chairman of the Board. Mr. Galbut succeeded Mr. Walter Revell, who stepped down from Norwegian's Board after serving as Chairman for the past three years and on the Board for over two decades. In addition, the shareholders of the Company elected retired U.S. Coast Guard Rear Admiral Mary E. Landry as a new independent director. With the election of Ms. Landry, Norwegian's Board consists of 10 members, seven of whom are independent. Ms. Landry also serves as a member of the Company's Nominating and Governance Committee.
Company Joins Ocean Conservancy’s Trash Free Seas Alliance®
In June, Norwegian announced its partnership with Ocean Conservancy to protect and ensure the long-term health of our oceans. The Company will join several of the world’s leading corporations and organizations in Ocean Conservancy’s Trash Free Seas Alliance®, actively working toward solutions that will mitigate plastic waste entering the ocean. The Company recently announced an important next step in its efforts to reduce its environmental impact by eliminating single-use plastic straws across its fleet of 26 ships and two island destinations, Great Stirrup Cay and Harvest Caye, and anticipates eliminating over 50 million plastic straws each year across its fleet with these changes. The membership in Ocean Conservancy’s Trash Free Seas Alliance® is part of the Company’s global environmental program, ‘Sail & Sustain’, which reflects the Company’s mission of providing truly exceptional cruise vacation experiences for all of its guests while minimizing its impact on the environment.
Norwegian Cruise Line Announced Cruise Freedom™
Norwegian Cruise Line recently announced their partnership with award-winning technology-solutions leader DeCurtis Corporation for a new technology platform project - Cruise Freedom™. This strategic decision is a major next step in leveraging technology that meaningfully enhances the guest experience from the moment of booking throughout their cruise. On the heels of introducing the launch of the new fully integrated Cruise Norwegian app in December, Norwegian Cruise Line's partnership with DeCurtis is the second stage in its ongoing objective to elevate the guest experience and push the limits of innovation via technology on its young and modern fleet. Phased implementation will begin later this year, with preliminary elements launching on Norwegian Bliss in late 2018, followed by Norwegian Encore in the fall of 2019.
Record Bookings for Regent Seven Seas Splendor
In June, Regent Seven Seas Cruises celebrated the keel laying ceremony for the ultra-luxurious ship, Seven Seas Splendor, at the Fincantieri shipyard in Ancona, Italy. During the ceremony, the first two of 210 blocks that will comprise the approximately 55,000 gross ton vessel were lifted into the Dry-dock, officially marking the start of the ship’s assembly in the Ancona shipyard. Additionally, two extraordinary full-size suite models provided a first look at the ultimate accommodations and attention to detail guests will enjoy when the luxury ship debuts in 2020. The highly anticipated Seven Seas Splendor had the best single booking day in the brand’s 26-year history upon opening reservations, accounting for a 32% increase over the previous all-time high. Seven Seas Splendor’s inaugural season will launch in February 2020 and feature a variety of destination-rich itineraries calling on iconic locations throughout the Caribbean, North America and Europe.
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 eight additional ships through 2027.
Norwegian Cruise Line is the innovator in cruise travel with a 51-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 with no set dining times, a variety of entertainment options and no formal dress codes. 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 accommodations options, including The Haven by Norwegian®, a luxury enclave with suites, private pool and dining, concierge service and personal butlers. Norwegian Cruise Line sails around the globe, offering guests the freedom and flexibility to explore the world on their own time and experience up to 27 dining options, award-winning entertainment, superior guest service and more across all of the brand's 16 ships.
Celebrating its 15th anniversary in 2018, Oceania Cruises is the world’s leading culinary- and destination-focused cruise line. The line’s six intimate and luxurious ships which carry only 684 or 1,250 guests offer an unrivaled vacation experience featuring the finest cuisine at sea and destination-rich itineraries that span the globe. Expertly crafted voyages aboard designer-inspired, intimate ships call on more than 450 ports across Europe, Alaska, Asia, Africa, Australia, New Zealand, New England-Canada, Bermuda, the Caribbean, Panama Canal, Tahiti and the South Pacific and epic Around The World Voyages that range from 180 to 200 days.
Regent Seven Seas Cruises offers the industry's most inclusive luxury experience aboard its all-suite fleet. Seven Seas Mariner's 2018 dry-dock refurbishment concluded the line's $125 million refurbishment program to elevate the elegance of the whole fleet to the standard set by Seven Seas Explorer. In early 2020, Regent will perfect luxury with the launch of Seven Seas Splendor. A voyage with Regent Seven Seas Cruises includes all-suite accommodations, round-trip air, highly personalized service, exquisite cuisine, fine wines and spirits, unlimited internet access, sightseeing excursions in every port, gratuities, ground transfers and a pre-cruise hotel package for guests staying in concierge-level suites and higher.
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