Norwegian Cruise Line Holdings has reported financial results for the fourth quarter and full year ended December 31, 2016, as well as provided guidance for the first quarter and full year 2017.

The Company generated GAAP net income of $633.1 million or EPS of $2.78 compared to $427.1 million or $1.86 in the prior year. Adjusted Net Income was $776.3 million or Adjusted EPS of $3.41 compared to $662.7 million or $2.88 in the prior year.

Total revenue increased 12.2% to $4.9 billion. Gross Yield increased 0.7%. Adjusted Net Yield increased 1.8% on a Constant Currency basis.

The Company announced the next generation of newbuilds for Norwegian Cruise Line with a contract to build four 3,300 passenger ships to be delivered in 2022, 2023, 2024 and 2025 with an option for two additional ships to be delivered in 2026 and 2027.

“2016 marks another record year of earnings, continuing our track record of solid EPS growth, which has grown fivefold since 2013, the year of our initial public offering,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “This solid revenue and earnings trend is expected to continue in 2017 as we are now in the best booked position in our company’s history with pricing slightly above the prior year,” continued Del Rio.

Fourth Quarter 2016 Results

GAAP net income was $72.2 million or EPS of $0.32 compared to $38.3 million or $0.17 in the prior year. The Company generated Adjusted Net Income of $127.7 million or Adjusted EPS of $0.56 compared to $117.3 million or $0.51 in the prior year.

Revenue increased 8.5% to $1.1 billion compared to $1.0 billion in 2015. Adjusted Net Revenue increased 7.7% to $861.6 million compared to $799.9 million in 2015. These increases were primarily attributed to the addition of Norwegian Escape, Oceania Cruises’ Sirena, and Regent’s Seven Seas Explorer to the fleet. Gross Yield decreased 1.5% and Adjusted Net Yield decreased 1.7% on a Constant Currency basis and 2.2% on an as reported basis.

Gross Cruise Cost increased 7.0% in 2016 compared to 2015 due to increases in Capacity Days, total cruise operating expense and marketing, general and administrative expenses. Gross Cruise Costs per Capacity Day decreased 2.9%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day decreased 0.7% on a Constant Currency and as reported basis.

Fuel price per metric ton, net of hedges decreased 9.8% to $459 from $509 in 2015. The Company reported fuel expense of $86.6 million in the period. In addition, a loss of $1.5 million was recorded in other income (expense), net in 2016 related to the ineffective portion of the Company’s fuel hedge portfolio due to market volatility.

Interest expense, net increased to $88.0 million in 2016 from $68.7 million in 2015 primarily due to higher interest rates associated with an increase in LIBOR as well as an increase in average debt balances outstanding primarily associated with the delivery of new ships and newbuild installments. Additionally, in connection with refinancings of our senior notes, interest expense, net included losses on extinguishment of debt of $28.0 million in 2016 and $12.6 million in 2015.

Full Year 2016 Results

GAAP net income was $633.1 million or EPS of $2.78 compared to $427.1 million or $1.86 in the prior year. The Company generated Adjusted Net Income of $776.3 million or Adjusted EPS of $3.41 compared to $662.7 million or $2.88 in the prior year. These increases were primarily attributed to the addition of Norwegian Escape, Oceania Cruises’ Sirena, and Regent’s Seven Seas Explorer to the fleet and improved pricing. This strong growth follows a 14.8% increase in GAAP EPS and a 26.9% increase in Adjusted EPS in 2015, further demonstrating the Company’s continued underlying earnings power, despite headwinds faced in 2016.

Revenue increased 12.2% to $4.9 billion compared to $4.3 billion in 2015 primarily due to an increase in Capacity Days and improved pricing. Adjusted Net Revenue increased 12.7% to $3.8 billion compared to $3.3 billion in 2015. Gross Yield increased 0.7% and Adjusted Net Yield increased 1.8% on a Constant Currency basis and 1.2% on an as reported basis primarily due to improved pricing.

Gross Cruise Cost increased 9.5% 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, general and administrative expenses. Gross Cruise Costs per Capacity Day decreased 1.7%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 1.7% on a Constant Currency basis and 1.5% on an as reported basis.

Fuel price per metric ton, net of hedges decreased 13.5% to $466 from $539 in 2015. The Company reported fuel expense of $335.2 million in the period. In addition, a loss of $16.1 million was recorded in other income (expense), net in 2016 related to the ineffective portion of the Company’s fuel hedge portfolio due to market volatility.

Interest expense, net increased to $276.9 million in 2016 from $221.9 million in 2015 primarily due to an increase in average debt balances outstanding primarily associated with the delivery of new ships and newbuild installments as well as higher interest rates due to an increase in LIBOR. Additionally, in connection with the refinancings of our senior notes and certain of our credit facilities, interest expense, net included losses on extinguishment of debt and debt modification costs of $39.2 million in 2016 and losses on extinguishment of debt of $12.6 million in 2015.

Other income (expense), net was an expense of $8.3 million in 2016 compared to an expense of $46.7 million in 2015. In 2016, the expense was primarily related to $16.1 million of unrealized and realized losses on fuel swap derivative hedge contracts, partially offset by $4.5 million of gains on foreign currency exchange and $3.9 million of gains on foreign currency exchange derivative hedge contracts. In 2015, the expense was primarily related to $30.7 million of losses from the dedesignation of certain fuel swap derivative hedge contracts and the ineffectiveness of settled fuel swaps in 2015. Also included in 2015 was an expense of $26.2 million related to the fair value adjustment of a foreign exchange collar which did not receive hedge accounting treatment partially offset by $11.0 million of foreign currency transaction gains.

2017 Outlook

“With our strong booked position and continuing momentum we look forward to another year of solid financial performance, including double-digit Adjusted EPS growth in 2017,” said Wendy Beck, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “In addition, this year marks another key milestone with our much anticipated debut into the Chinese cruise market with the delivery of Norwegian Joy.