Norwegian Cruise Line Holdings Posts Higher Yields and Expenses for 3rd Quarter

Higher pricing for the Norwegian Cruise Line brand helped drive higher earnings, said NCLH's Wendy Beck. // Photo of Norwegian Breakaway by Susan J. Young  

Norwegian Cruise Line Holdings (NCLH), reported third quarter 2015 earnings. Adjusted earnings per share (EPS) improved 22 percent to $1.35 per share. Adjusted net income was $311.1 million and strong pricing drove a 4.7 percent increase in the company's adjusted net yield.

Adjusted net revenue in the period was $978.2 million compared to $694.4 million in 2014, an increase of near 41 percent, primarily as a result of the acquisition of Prestige Cruise Holdings in fourth quarter 2014.

The continued momentum from our revenue enhancement strategies resulted in net yield growth of approximately five percent driving strong earnings performance in the quarter,” said Frank Del Rio, NCLH's president and CEO. “What is most impressive is that this yield performance was driven purely by organic growth, demonstrating that robust top-line growth need not be predicated solely on the addition of new ships to our fleet.”

The company also said improved pricing in the quarter was driven by strength in the Caribbean, Bermuda and Alaska, partially offset by softeness in certain eastern Mediterranean markets. 

Financial analyst Robin Farley of UBS Investment Research also said the company posted higher expenses. Still, it was a relatively good report for NCLH, the world's third largest cruise company. Farley's firm has a "buy" order out on its stock. 

Full Year 2015 Outlook

As a result of strong net yield performance, NCLH has increased its full year 2015 adjusted net yield guidance to the financial community. Adjusted earnings per share guidance is in the range of $2.85 to $2.90.

“The alignment of revenue management strategies across our three brands has resulted in a lengthening of the booking curve, enabling us to drive higher pricing, particularly on the Norwegian brand,” said Wendy Beck, NCLH's executive vice president and CFO. “This stronger pricing is contributing to robust earnings growth of approximately 27 percent in 2015, and brings our three-year compound annual growth rate to over 40 percent since our initial public offering in 2013.

2016 Outlook

The delivery of Norwegian Escape in October marks the latest chapter in the company’s new build program, which provides ship deliveries each year through 2019. NCLH will take delivery of two additional ships in 2016. Sirena will join Oceania Cruises in March with its first sailing in late April following a 35-day, multi-million dollar upgrade and refurbishment. Seven Seas Explorer will join the Regent Seven Seas Cruises fleet in the third quarter.

“The momentum from the initiatives we have implemented is building and is reflected in the solid foundation of bookings which, coupled with the powerful earnings growth from our existing fleet and upcoming ship additions, have positioned 2016 to be a breakout year,” said Del Rio. “With a clear path to significant earnings growth, we are confident in our targets of $5.00 earnings per share in 2017 and growing our already industry leading return on invested capital to 14 percent by 2018.”


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