Norwegian Cruise Line Holdings today reported financial results for the first quarter ended March 31, 2018, as well as provided guidance for the second quarter and full year 2018.
The company generated GAAP net income of $103.2 million or EPS of $0.45 compared to $61.9 million or $0.27 in the prior year. Adjusted Net Income was $137.8 million or Adjusted EPS of $0.60 compared to $91.2 million or $0.40 in the prior year, Norwegian said.
Total revenue increased 12.4% to $1.3 billion.
Gross Yield increased 1.4%. Net Yield increased 1.0% on a Constant Currency basis.
The company said it expects to generate record earnings for full year 2018 and has increased its outlook, with Adjusted EPS now expected to be in the range of $4.55 to $4.70.
“The year is off to an impressive start with yet another record quarter of earnings, which exceeded expectations,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “The 2018 Wave Season was stellar and has further strengthened our overall future booked position with load factor and pricing continuing to be well ahead of prior year for the remaining quarters of 2018 and throughout 2019.”
GAAP net income was $103.2 million or EPS of $0.45 compared to $61.9 million or $0.27 in the prior year. The Company generated Adjusted Net Income of $137.8 million or Adjusted EPS of $0.60 compared to $91.2 million or $0.40 in the prior year.
Revenue increased 12.4% to $1.3 billion compared to $1.2 billion in 2017. Net Revenue increased 13.1% to $1.0 billion compared to $0.9 billion in 2017. These increases were primarily attributed to strong organic pricing growth across all core markets along with an increase in Capacity Days due to the addition of Norwegian Joy to the fleet. Gross Yield increased 1.4% and Net Yield increased 1.0% on a Constant Currency basis and 2.0% on an as reported basis.
Total cruise operating expense increased 6.7% in 2018 compared to 2017 primarily due to an increase in Capacity Days. Gross Cruise Costs per Capacity Day decreased 1.5% due to a decrease in maintenance and repairs including Dry-dock expenses partially offset by an increase in marketing, general and administrative expenses. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day decreased 2.7% on a Constant Currency basis and 2.1% on an as reported basis.
Fuel price per metric ton, net of hedges decreased to $448 from $453 in 2017. The Company reported fuel expense of $93.4 million in the period.
Interest expense, net was $59.7 million in 2018 compared to $53.0 million in 2017. The increase in interest expense reflects additional debt in connection with the delivery of Norwegian Joy in April 2017, Project Leonardo financing, as well as higher interest rates due to an increase in LIBOR, partially offset by the benefit from the full redemption in October 2017 of our 4.625% Senior Notes due 2020.
Other income (expense), net was an expense of $1.7 million in 2018 compared to an expense of $2.8 million in 2017. In 2018, the expense was primarily related to losses on foreign currency exchange. In 2017, the expense was primarily related to losses on foreign currency exchange and unrealized and realized losses on derivatives.
“The strong global demand for our portfolio of brands which we experienced during 2017 has continued, as demonstrated by the successful, record-breaking launch of Norwegian Bliss, which entered the fleet as the best booked Norwegian Cruise Line newbuild in the history of our company,” said Mark Kempa, interim chief financial officer of Norwegian Cruise Line Holdings Ltd. “While our primary focus continues to be to delever to the low 3 times by year-end 2018, our recently announced $1 billion share repurchase program reflects our ongoing confidence in our financial position and the long-term strength of our business as well as our commitment to provide meaningful capital returns to our shareholders.”
2018 Guidance and Sensitivities
In addition to announcing the results for the first quarter, the Company also provided guidance for the second quarter and full year 2018, along with accompanying sensitivities. The Company does not provide guidance on a GAAP basis because the Company is unable to predict, with reasonable certainty, the future movement of foreign exchange rates or the future impact of certain gains and charges. These items are uncertain and will depend on several factors, including industry conditions, and could be material to the Company’s results computed in accordance with GAAP. The Company has not provided reconciliations between the Company’s 2018 guidance and the most directly comparable GAAP measures because it would be too difficult to prepare a reliable U.S. GAAP quantitative reconciliation without unreasonable effort.