Norwegian Cruise Line (NCL Corporation Ltd., “Norwegian” or “the Company”) today reported results for the three and twelve months ended December 31, 2010.
2010 Company Highlights
– Record EBITDA of $400.4 million
– Net Yield increase of 7.7% and Net Revenue increase of 12.1% compared to prior year
– Successful introduction of Norwegian Epic, the Company’s largest-ever Freestyle Cruising ship
– Contract for two 4,000-berth Freestyle Cruising vessels for delivery in spring 2013 and spring 2014
Norwegian continued demonstrating improved financial performance in 2010 with strong increases in EBITDA, Net Yield and Net Revenue. EBITDA improved 23.6% to $400.4 million, setting a Company record. “I am extremely pleased with our results in 2010, especially after successfully navigating through the challenging economic environment of late 2008 and 2009,” said Kevin Sheehan, president and chief executive officer. “Improved ticket pricing and onboard spending, along with the benefits of our strategic initiatives, combined to drive Norwegian’s record results in 2010, setting up the year as the most successful in the Company’s history. Not only did we set an EBITDA record for a full year, it was also the fourth consecutive year of double-digit EBITDA growth.”
Company milestones for the year included the successful introduction of the Company’s largest and most innovative vessel to date, Norwegian Epic, to enthusiastic reviews from the travel media and the cruising public. Norwegian Epic has since settled into her seven-night alternating Eastern and Western Caribbean itineraries and will reposition to Europe for an extended summer season. The Company announced in the fourth quarter that it would expand its purpose-built Freestyle Cruising fleet by contracting for two 4,000-berth ships for delivery in spring 2013 and 2014. Said Sheehan, “Every team member at Norwegian has worked diligently over the last three years to generate consistently improving results and put the Company on firm financial footing. We now move ahead with the next chapter of Norwegian’s story of growth and innovation. These two new ships will take the best aspects of our current fleet along with new elements to create the innovative vacations that our guests have come to expect from Norwegian.”
Full Year Results
EBITDA for the twelve months ended December 31, 2010 increased 23.6% to $400.4 million from $324.1 million in 2009 (Adjusted EBITDA was $404.7 million in 2010 compared to $332.5 million in 2009). Net Revenue increased to $1.5 billion from $1.3 billion as a result of a 7.7% increase in Net Yield coupled with a 4.0% increase in Capacity Days. The improvement in Net Yield came as a result of both improved ticket pricing and onboard and other revenue per Capacity Day. The growth in Capacity Days was the result of the addition of Norwegian Epic to the fleet in June 2010 and was partially offset by the departure of Norwegian Majesty from the fleet in October 2009. Occupancy percentage in 2010, which included the planned phase-in period for Norwegian Epic, was 108.7% versus 109.4% in the prior year.
Net Cruise Cost per Capacity Day increased 4.2% primarily due to a 28.3% increase in the average cost of fuel to $490 per metric ton in 2010 from $382 per metric ton in 2009. Excluding fuel expense, Net Cruise Cost per Capacity Day was essentially flat versus prior year.
Interest expense, net of capitalized interest, increased to $173.8 million for the year compared to $115.4 million in 2009 due to an increase in borrowings related to the addition of Norwegian Epic and higher average interest rates. Other income (expense) was $(34.0) million in 2010 versus income of $10.4 million in 2009 primarily due to a non-recurring charge of $33.1 million related to foreign exchange contracts associated with the financing of Norwegian Epic in 2010 compared to gains from fuel derivatives in 2009.
Net income for the year, including the impact of the aforementioned loss on foreign exchange contracts was $22.6 million on revenue of $2.0 billion versus net income of $67.2 million on revenue of $1.9 billion in 2009.
Fourth Quarter Results
EBITDA for the fourth quarter of 2010 increased 69.7% to $63.4 million from $37.4 million in 2009 (Adjusted EBITDA was $64.3 million in 2010 and $41.6 million in 2009). Net Revenue increased 23.7% to $355.7 million from $287.6 million in 2009 driven by a 7.0% improvement in Net Yield and a 15.6% increase in Capacity Days. The improvement in Net Yield was a result of improved ticket pricing as well as improved onboard and other revenue per Capacity Day. Capacity Days increased due to the addition of Norwegian Epic to the fleet. Occupancy percentage for the quarter was 104.6% versus 106.0% in 2009.
Net Cruise Cost per Capacity Day in the quarter increased 1.0% over prior year. An increase in Other Cruise Operating Expense per Capacity Day, together with an increase in the average cost of fuel to $486 per metric ton from $467 per metric ton in 2009 were offset by lower general and administrative, payroll, and food expense per Capacity Day.
Interest expense, net of capitalized interest, increased to $54.7 million for the quarter compared to $37.5 million in 2009 due to an increase in borrowings related to the addition of Norwegian Epic and higher average interest rates. Taking into account the higher interest expense, net loss for the fourth quarter of 2010 was flat to prior year at $39.3 million compared to $39.0 million in 2009.