Robust revenue growth drove record fourth quarter 2017 earnings for Norwegian Cruise Line Holdings (NCLH), which also posted an incredibly strong full year earnings per share (EPS) growth of 19 percent.
NCLH, the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises, also said it's entering 2018 with its "booked position" at an all-time high and at higher pricing.
Full Year 2017 Highlights
In 2017, NCLH generated net income of $759.9 million dollars, or EPS of $3.31, while adjusted net income was $907.7 million, or an adjusted EPS of $3.96.
The company also beat its full-year earnings expectations. Adjusted return on invested capital (ROIC) reached double-digit levels for the year.
Total revenue increased 10.7 percent to $5.4 billion. Gross yields were up 4.4 percent, adjust net yields up 5 percent, exceeding the company's earlier guidance.
Other annual highlights? NCLH said it was selected to join the S&P 500 Index and that its three brands are now sailing to Cuba. It also cited the successful launch of Norwegian Joy, the company's first entry into the Chinese cruise market.
In addition, the line already has more growth on the way with an order of next-generation ships for the Norwegian Cruise Line brand.
Looking Ahead for 2018
The "strong financial track record continues as company anticipates fifth consecutive year of double-digit EPS growth," the line said in its press release.
In addition, the "company's 2018 booked position at all-time high entering the year with load factor and pricing higher than prior year across all three brands driven by strong demand across all core markets," NCLH said.
Adjusted net yield growth guidance for the full year and first quarter 2018 are approximately 2 percent and one half percent, respectively.
Norwegian Bliss, custom-designed for the Alaska cruise market, will join the fleet in the second quarter 2018.
“The strong, record performance we delivered in 2017 was the perfect end to a historic year as we celebrate the five year anniversary of our initial public offering. Over the last five years we have continued our track record of consistent financial performance with a more than sixfold increase in EPS, a doubling of revenue and the expansion of adjusted ROIC to double-digit levels," said Frank Del Rio, NCLH's president and chief executive officer.
He continued: “It has been a remarkable journey for our company with more major milestones to come and an amazing trajectory of profit growth for 2018 and beyond. Our solid revenue and earnings performance will continue in 2018, having entered the year in the best booked position in our company’s history with pricing above prior year across all three of our brands."
In addition, “the continued strong global demand for our portfolio of brands will enable us to further grow revenue, resulting in our sixth consecutive year of net yield growth," said Wendy Beck, NCLH's executive vice president and chief financial officer. "This, coupled with the benefit of the launch of Norwegian Bliss and a continued focus on costs, will drive 2018 earnings to record highs."
Fourth Quarter 2017 Results
Fourth quarter 2017 net income was $98.8 million, generating EPS of $0.43 compared to $72.2 million or $0.32 in the prior year. The company posted adjusted net income of $156.8 million or $0.68 compared to $127.7 million or $0.56 in the prior year.
Revenue for the fourth quarter 2017 increased 11.1 percent to $1.2 billion compared with $1.1 billion in 2016. Adjusted net revenue increased 12.6 percent to $969.7 million compared to $861.6 million in 2016.
"These increases were primarily attributed to the addition of Norwegian Joy to the fleet, along with strong organic pricing growth across all core markets," the company said in its press release.
Gross yield increased 2.5 percent and adjusted net yield increased 3.4 percent on a constant currency basis and 3.9 percent on an as reported basis.
An increase in capacity days along with an increase in marketing, general and administrative expenses increased total cruise operating expense 8.4 percent in 2017 compared to 2016.
Full Year 2017 Results
Net income for the full year 2017 was $759.9 million or EPS of $3.31 compared to $633.1 million or $2.78 in the prior year. Adjusted net income was $907.7 million or adjusted EPS of $3.96 compared to $776.3 million or $3.41 in the prior year, despite what NCLH called "unprecedented weather-related headwinds experienced in 2017."
This strong growth follows a 49.5 percent increase in EPS and an 18.4% increase in adjusted EPS from 2015 to 2016, which NCLH said further demonstrated its "continued underlying earnings power."
Revenue increased 10.7 percent to $5.4 billion compared to $4.9 billion in 2016. Net revenue increased 11.2 percent to $4.2 billion compared to $3.8 billion in 2016.
These increases were primarily attributed to a 6.0 percent increase in capacity days due to the delivery of Norwegian Joy in April 2017, Regent’s Seven Seas Explorer in June 2016 and Oceania Cruises’ Sirena in April 2016 and strong organic pricing growth across all core markets.
Gross yield increased 4.4 percent and adjusted net yield increased 5 percent on a constant currency basis and 4.8 percent on an as reported basis.
An increase in capacity days along with an increase in marketing, general and administrative expenses increased total cruise operating expense 7.5 percent in 2017 compared to 2016.