Strength in Europe Bolsters NCLH Earnings, Despite Weather Disruptions

Norwegian Breakaway
Norwegian Cruise Line is one of three brands of Norwegian Cruise Line Holdings

Norwegian Cruise Line Holdings Ltd. (NCLH) reported financial results for the third quarter ended September 30, 2017. The company, which operates the Regent Seven Seas Cruises, Oceania Cruises and Norwegian Cruise Line brands, generated third quarter net income of $400.7 million or earnings per share (EPS) of $1.74. 

That compares with $342.4 million and $1.50, respectively in the third quarter of last year. Adjusted net income was $427.0 million or adjusted EPS of $1.86 compared to $369.3 million or $1.62 during the same quarter the prior year.

“Strong operational performance across our core markets, bolstered by strength in European itineraries, where pricing has now exceeded the previous high watermark of 2015, drove third quarter revenue and yield growth well ahead of expectations, despite the disruptions caused by weather-related events during the quarter,” said Frank Del Rio, NCLH's president and CEO.

Del Rio also said that “over the last several weeks we have seen consumer demand continue to accelerate for Caribbean sailings and booking volumes have now reached pre-hurricane levels.”

Total revenue in the third quarter increased 11.2 percent to $1.7 billion. This increase was primarily attributed to a 9.1 percent increase in capacity days primarily due to the delivery of Norwegian Joy, which entered service in late June, along with an increase in net yield due to strength in ticket pricing and higher onboard and other revenue. 

Gross yield increased 2.0 percent, while adjusted net gross yield increased 2 percent, while adjusted net yield increased 3 percent. 

The company’s full years 2017 adjusted earnings per share is expected to be approximately $3.90; that’s less than the $4.05 anticipated due to two factors -- the impact of weather disruptions and a current technical issue on Norwegian Gem. 

The 2017 full year adjusted net yield growth guidance provided to financial analysts now has increased 50 basis points from prior guidance to approximately 4.75 percent. 

Hurricane Assistance

Del Rio said that NCLH’s ships, crew and shoreside personnel have been actively engaged in assisting impacted destinations by evacuating stranded families and delivering much-needed supplies.

“In addition, our company has committed to providing long-term financial aid to rebuild critical infrastructure through our 'Hope Starts Here' hurricane relief program,” Del Rio noted. 

2018 Outlook

“Our booked position for full year 2018 remains well ahead in both load and price compared to prior year across all three of our brands, despite booking headwinds caused by weather-related disruptions in the Caribbean,” said Wendy Beck, NCLH’s executive vice president and chief financial officer. 

“We continue to focus on further strengthening our balance sheet as evidenced by the success of our recent refinancing transaction," she said. 

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