Norwegian Cruise Line Holdings today reported financial results for the second quarter ended June 30, 2019, as well as provided guidance for the third quarter and full year 2019.

The Company generated GAAP net income of $240.2 million or EPS of $1.11 compared to $226.7 million or $1.01 in the prior year.  Adjusted Net Income was $282.1 million or Adjusted EPS of $1.30 compared to $271.9 million or $1.21 in the prior year.

Total revenue increased 9.3% to $1.7 billion. Gross Yield increased 7.5%.  Net Yield increased 5.8% on a Constant Currency basis.

Full Year Adjusted EPS is now expected to be in the range of $5.00 to $5.10, inclusive of a $0.45 adverse impact from the abrupt change in federal regulations surrounding cruises to Cuba and a $0.07 impact from a technical issue on Norwegian Pearl in July. 

Without these headwinds, the Company’s outlook would have exceeded its May guidance primarily as a result of revenue outperformance in the second quarter, coupled with a stronger revenue outlook for the back half of the year, according to a press release.

“Continued robust demand for our global brands along with our strong consumer focused value proposition, honed revenue management practices and best guest marketing strategy, enabled us to continue to drive ticket pricing higher which, when coupled with strong onboard revenue performance, resulted in record second quarter results,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd.  “The underlying fundamentals of our business remain strong across all core markets, and we continue to expect record financial results in 2019, despite the impact from the change in federal regulations which resulted in the cessation of premium-priced Cuba sailings.”

Second Quarter 2019 Results

GAAP net income was $240.2 million or EPS of $1.11 compared to $226.7 million or $1.01 in the prior year.  The Company generated Adjusted Net Income of $282.1 million or Adjusted EPS of $1.30 compared to $271.9 million or $1.21 in the prior year.

Revenue increased 9.3% to $1.7 billion compared to $1.5 billion in 2018.  This increase was primarily attributed to an increase in Capacity Days as a result of the addition of Norwegian Bliss to the fleet in 2018 along with an increase in Net Yield driven by the repositioning of Norwegian Joy to North America, robust onboard spending along with strong growth in organic pricing across all core markets. Gross Yield increased 7.5%. Net Yield increased 5.8% on a Constant Currency basis and 5.0% on an as reported basis.

Total cruise operating expense increased 11.1% in 2019 compared to 2018, primarily due to an increase in Capacity Days as a result of the addition of Norwegian Bliss to the fleet in 2018 and the redeployment of Norwegian Joy to North America.  Gross Cruise Costs per Capacity Day increased 8.3%.  Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 6.1% on a Constant Currency basis and 5.1% on an as reported basis.

Fuel price per metric ton, net of hedges increased to $493 from $481 in 2018.  The Company reported fuel expense of $100.5 million in the period. 

Interest expense, net decreased to $66.0 million in 2019 from $73.0 million in 2018. The decrease in interest expense reflects lower outstanding debt balances and lower margins associated with recent refinancings, partially offset by newbuild financings and an increase in LIBOR. Interest expense, net also included losses on extinguishment of debt of $1.1 million in 2019 and $6.3 million in 2018.

Other income, net was income of $3.6 million in 2019 compared to income of $12.9 million in 2018. In 2019, the income is primarily related to gains from insurance proceeds and a litigation settlement partially offset by losses on foreign currency exchange, and in 2018, the income primarily related to gains on foreign currency exchange.

2019 Outlook

“The combination of the continued robust demand environment, the building excitement for the upcoming launches of Norwegian Encore and Seven Seas Splendor and the march towards achieving our Full Speed Ahead 2020 Targets is setting up 2020 to be another milestone year,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “We remain committed to maximizing shareholder returns and believe our current valuation does not reflect the strong core fundamentals of our business; therefore, we will be focusing our capital allocation strategy on opportunistic share repurchases.”