Norwegian Cruise Line Reports Results for First Quarter 2012

Norwegian Cruise Line today reported results for the quarter ended March 31, 2012.

Operating income for the first quarter grew 23.8% to $46.4 million, with Adjusted EBITDA posting a 10.3% increase to $93.5 million, from strong revenue performance and the benefits of ongoing business improvement initiatives.  Net Revenue grew 4.6% in the quarter from an increase in Net Yield and a 2.3% increase in Capacity Days. 

Net Yield increased 2.2%, or 2.3% on a Constant Currency basis, as a result of higher average ticket pricing across the fleet coupled with increased onboard and other revenue per Capacity Day, particularly in tour and gaming operations.

Net Cruise Cost per Capacity Day increased slightly by 0.6%, or 0.7% on a Constant Currency basis, as the timing of repairs and maintenance expenses coupled with benefits from business initiatives and improved efficiencies offset a 15% increase in the per metric ton cost of fuel to $598 from $520 in the prior year. 

Excluding fuel expense, Net Cruise Cost per Capacity day decreased 1.9%, or 1.8% on a Constant Currency basis. 

“It is always rewarding to report strong top-to-bottom results,” said Kevin Sheehan, President and CEO of Norwegian Cruise Line.  “Revenue growth was very positive, considering the impact of redeploying Norwegian Jade in late 2011 due to geopolitical disruptions in Egypt and the surrounding region,” continued Sheehan.

Interest expense, net decreased 3.6% mainly due to lower average debt balances in the period.  During the quarter the Company took advantage of favorable market conditions and issued $100 million in senior unsecured notes which were an add-on to the existing notes due in 2018.  The net proceeds were used to repay portions of certain outstanding revolving credit facilities and for general corporate purposes.

The Company posted net income of $3.3 million on revenue of $515.4 million versus a loss of $(7.9) million on revenue of $495.5 million in 2011.

Quarter Highlights

In January, the Company announced a revitalization of its youth and teen programs across the fleet, taking another step in providing guests with the best vacation experience possible.  A contest generated new names for the programs: children through age 12 will participate in one of the four age groups in Splash Academy while 13 to 17 year olds will take part in Entourage.  The curricula for both programs have been enhanced to focus on team building and developing interpersonal and confidence-building skills via activities ranging from sports to the arts.  Each day will feature a different theme, including a circus day where the whole family can participate in workshops on balancing, juggling, stilt walking and much more.

Norwegian also revealed throughout the quarter several innovative features on its newest vessel currently under construction, Norwegian Breakaway.  The ship, debuting in April of 2013, will not only feature the aforementioned Splash Academy and Entourage programs, but the dedicated areas and facilities for these programs will be the largest in the Norwegian fleet.  The Company also unveiled a major innovation in ship design: The Waterfront and 678 Ocean Place.  This new concept includes an oceanfront boardwalk lined with shops, restaurants and bars, combined with three expansive, flowing decks of dining, bars, entertainment, gaming and more.  The Waterfront and 678 Ocean Place will take cruising to new heights and offer an unparalleled experience with a unique connection to the ocean.  Also new will be Norwegian’s first seafood-centric restaurant, Ocean Blu, featuring a raw bar and separate sushi bar.

Several of Norwegian Breakaway’s recreation areas were also revealed, including the fleet’s largest Aqua Park and sports complex.  The Aqua Park features five multi-story waterslides including the Free Fall, a pair of thrilling drop slides that will be the fastest waterslides at sea.  There is also a children’s water area featuring some of Nickelodeon’s best-loved characters.  The three-story sports complex will feature a basketball court, rock-climbing wall, jogging track and Norwegian’s first ropes course, the largest at sea, featuring 40 challenges, including the Plank, which extends over the side of the ship.  Another first for Norwegian is a nine-hole ocean-themed miniature golf course, along with a bungee trampoline and climbing structure with spiral slide.

While reveals for Norwegian Breakaway continue, initial plans for her sister ship, Norwegian Getaway, have also been disclosed.  The Company recently announced that after her debut in the spring of 2014 Norwegian Getaway will homeport year-round in Miami, making her the largest ship to ever homeport year-round in the Magic City.  “Planning and construction on Norwegian Breakaway and Getaway are progressing on schedule and on budget,” said Sheehan. “It’s extremely exciting to see these vessels taking shape knowing that the finished product will take the Norwegian brand to another new level,” continued Sheehan.


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