Norwegian Cruise Line Holdings today reported financial results for the third quarter ended September 30, 2016, and provided guidance for the fourth quarter and full year 2016.

The Company generated GAAP net income of $342.4 million or EPS of $1.50 compared to $251.8 million or $1.09 in the prior year. Adjusted Net Income was $369.3 million or Adjusted EPS of $1.62 compared to $311.1 million or $1.35 in the prior year.

Total revenue increased 15.6% to $1.5 billion. Gross Yield increased 1.5%. Adjusted Net Yield increased 3.4% on a Constant Currency basis.

The Company expects to generate record earnings with full year 2016 Adjusted EPS to be in the range of $3.38 to $3.42.

“In 1966, the M/S Sunward departed on her first voyage from Miami to the Caribbean, marking not just the launch of Norwegian Cruise Line, but the modern cruise industry as we know it today,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “Fast forward fifty years, where we have reached yet another milestone, reporting the highest single quarter revenue and earnings in our history, bolstered by the addition of Norwegian Escape, Oceania Cruises’ Sirena and Seven Seas Explorer to our fleet,” continued Del Rio.

Third Quarter 2016 Results

GAAP net income was $342.4 million or EPS of $1.50 compared to $251.8 million or $1.09 in the prior year. The Company generated Adjusted Net Income of $369.3 million or Adjusted EPS of $1.62 compared to $311.1 million or $1.35 in the prior year.

Revenue increased 15.6% to $1.5 billion compared to $1.3 billion in 2015. Adjusted Net Revenue in the period increased 17.0% to $1.1 billion compared to $978.2 million in 2015. These increases were primarily attributed to the addition of Norwegian Escape, Oceania Sirena, and Regent Seven Seas Explorer to the fleet. Gross Yield increased 1.5% while Adjusted Net Yield improved 3.4% on a Constant Currency basis and 2.8% on an as reported basis primarily due to improved pricing.

Gross Cruise Cost increased 10.5% in 2016 compared to 2015 due to an increase in total cruise operating expense as a result of an increase in Capacity Days along with an increase in marketing expense. Gross Cruise Costs per Capacity Day decreased 3.0%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 1.7% on both a Constant Currency and as reported basis primarily due an increase in marketing expenses.

Fuel price per metric ton, net of hedges decreased 11.5% to $500 from $565 in 2015. The Company reported fuel expense of $86.3 million in the period. In addition, a loss of $2.5 million was recorded in other expense in 2016 related to the ineffective portion of the Company’s fuel hedge portfolio due to market volatility.

Interest expense, net increased to $60.7 million in 2016 from $49.8 million in 2015 primarily due to an increase in average debt balances outstanding primarily associated with the delivery of Norwegian Escape in October 2015 and Seven Seas Explorer in June 2016 as well as slightly higher interest rates due to an increase in LIBOR rates.

Other expense was $5.3 million in 2016 compared to $1.7 million in 2015. In 2016, the expense was primarily related to unrealized and realized losses on fuel swap derivative hedge contracts and foreign exchange derivative hedge contracts and foreign currency transaction losses.

Sale of Hawaii Land-based Operations

In the first quarter of 2016, the Company executed an agreement to divest its interest in a certain land-based operation in Hawaii. The amount of the transaction is considered immaterial to the Company’s consolidated financial statements. The agreement is subject to customary closing conditions, including receipt of all required regulatory approvals which are still pending; therefore, the Company no longer anticipates the transaction will close in 2016. The Company’s third quarter financial results include the results from this operation. For purposes of comparison to the guidance provided by the Company in its prior release, key operational metrics excluding the results of this operation are as follows:

Gross Yield growth would have been 1.5%. Adjusted Net Yield growth would have been 3.5% on a Constant Currency basis or 2.9% on an as reported basis (excluding the results of the aforementioned operation).

Gross Cruise Costs per Capacity Day would have decreased 2.9%. Adjusted Net Cruise Costs Excluding Fuel per Capacity Day growth would have been 1.9% on both a Constant Currency and as reported basis (excluding the results of the aforementioned operation).

Company Outlook

“We are on track to deliver robust double-digit growth in Adjusted EPS in 2016, despite headwinds from geopolitical events earlier in the year which dampened demand for Mediterranean sailings,” said Wendy Beck, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “Looking to the first half of 2017, where deployment is weighted to Caribbean sailings, advanced bookings are ahead of prior year’s record levels at higher prices, while an early look at the full year shows occupancy commensurate with prior year at this same time at slightly lower prices. Recent significant weakening of certain foreign currencies, primarily the British Pound, against the U.S. dollar, combined with an increase in fuel prices have placed pressure on expectations for the coming year. Despite these headwinds, we still anticipate delivering double-digit growth in Adjusted EPS in 2017.”