Norwegian Cruise Line Reports Q3 2021 Earnings

Norwegian Cruise Line Holdings today reported financial results for the third quarter ended September 30, 2021 and provided a business update.

“Our Great Cruise Comeback is on track with 11 ships to-date across our three award-winning brands successfully resuming cruising. Initial trends are extremely positive with strong onboard revenue, high guest satisfaction scores and our comprehensive science-backed SailSAFE health and safety protocols working as designed to minimize the impact of COVID-19,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “While consumer concerns surrounding the Delta variant resulted in a slowdown in bookings during the third quarter, net booking volumes have improved over the past six weeks and we continue to see robust future demand for cruising particularly for the second half of 2022 and beyond when our full fleet is expected to be back in operation at normalized occupancy levels.”

The company said it continues to execute on the phased relaunch plans for its 28-ship fleet. The company had approximately 40% of its capacity operating by the end of the third quarter 2021 with the fleet in service being cash flow positive in the quarter. Occupancy in the third quarter 2021 was 57.4%, reflecting the company’s self-imposed occupancy limits.

Looking ahead, approximately 75% of capacity is expected to be operating by year-end 2021 with the full fleet back in operation by April 1, 2022.

The company continues to expect to reach a critical inflection point in the first quarter 2022 with operating cash flow turning positive. In addition, based on the current trajectory, the company expects to be profitable for the second half of 2022.

All voyages across the company’s three brands continue to operate with its robust science-backed SailSAFE health and safety program. As part of this program, all voyages are operating with a policy of fully vaccinated guests and crew in addition to comprehensive SailSAFE protocols, which include universal COVID-19 testing prior to embarkation. The company’s 100% vaccination policy applies across all voyages on its three brands as the company believes this is the safest way to resume cruising in the current global public health environment. These measures will be continuously evaluated and modified, with guidance from the SailSAFE Global Health and Wellness Council, as science, technology and the prevalence of COVID-19 evolve.

Booking Environment and Outlook

Net booking volumes in the third quarter 2021 were negatively impacted by the Delta variant. The resulting slowdown in net booking volumes was heavily weighted to sailings in the fourth quarter of 2021 and early 2022 and improved sequentially through 2022. The impact has since abated and net bookings have materially improved over the past six weeks with particular strength for bookings related to sailings in the second half of 2022 and into 2023.

Despite the temporary Delta impact, the company’s overall cumulative booked position for full year 2022 is in line with 2019’s record levels at higher pricing even when including the dilutive impact of future cruise credits (“FCCs”). The overall cumulative booked position for the second half of 2022, when the full fleet is expected to be back in operation and at normalized occupancy levels, is meaningfully higher than 2019 and at higher prices.

The company’s advance ticket sales were $1.7 billion, including the long-term portion, which includes approximately $750 million of FCCs as of September 30, 2021. Advance ticket sales increased $0.3 billion on a net basis from the end of the second quarter even with approximately $100 million of revenue recognized in the quarter.

Liquidity, Cash Burn and Financial Action Plan

The company continues to take proactive measures to enhance liquidity and financial flexibility in the current environment. As of September 30, 2021, the company’s total debt position was $12.4 billion and the company’s cash and cash equivalents were $1.9 billion.

The company has taken the following additional actions to enhance its liquidity profile and financial flexibility since June 30, 2021:

In November 2021, the company entered into a $1 billion commitment through August 15, 2022 that provides additional liquidity to the company. If drawn, this commitment will convert into an unsecured note maturing in April 2024. The company has not drawn and currently does not intend to draw under this commitment.

Diversified its credit card processors with the addition of Worldpay from FIS® as a preferred payments processor globally.

In July 2021, the company amended nine credit facilities for newbuild agreements and increased the combined commitments under such credit facilities by approximately $770 million to cover owner’s supply (generally consists of provisions for the ship), modifications and financing premiums.

 The company’s monthly average cash burn for the third quarter 2021 was approximately $275 million, below prior guidance of approximately $285 million. Looking ahead, the company expects fourth quarter 2021 monthly average cash burn to increase to approximately $350 million driven by the continued phased relaunch of additional vessels. This cash burn rate does not include expected cash inflows from new and existing bookings or contribution from ships that have re-entered service.

Cash burn rates include ongoing ship operating expenses, administrative operating expenses, interest expense, taxes, debt deferral fees and expected non-newbuild capital expenditures and exclude cash refunds of customer deposits as well as cash inflows from new and existing bookings, newbuild related capital expenditures and other working capital changes. Future cash burn rate estimates also exclude unforeseen expenses. The third quarter 2021 cash burn rate and fourth quarter estimate also reflect the deferral of debt amortization and newbuild related payments.

“We are incredibly pleased with our team’s flawless execution of our phased voyage resumption plan and are encouraged to see strong consumer demand, onboard spend and high guest satisfaction across all of our brands,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “We took several actions in the quarter to further enhance our liquidity profile and financial flexibility and better position us on our road to recovery as we pivot from defense to offense. As we look ahead, we remain focused on rebuilding our strong track record of financial performance, optimizing our balance sheet and delivering on our attractive and disciplined growth profile beginning with the debut of the record-breaking Norwegian Prima in summer 2022.”

Third Quarter 2021 Results

GAAP net loss was $(845.9) million or EPS of $(2.29) compared to net loss of $(677.4) million or EPS of $(2.50) in the prior year. The company reported Adjusted Net Loss of $(801.4) million or Adjusted EPS of $(2.17) in 2021 which included $44.5 million of adjustments primarily related to non-cash compensation. This compares to Adjusted Net Loss and Adjusted EPS of $(638.7) million and $(2.35), respectively, in 2020.

Revenue increased to $153.1 million compared to $6.5 million in 2020 as cruise voyages resumed in the quarter.

Total cruise operating expense increased 131.3% in 2021 compared to 2020 as cruise voyages resumed in the quarter. In 2021, cruise operating expenses were primarily related to crew costs, including salaries, food and other travel costs as ships were prepared to return to service, fuel, costs related to health and safety protocols and other ongoing costs such as insurance and ship maintenance.

Fuel price per metric ton, net of hedges, increased to $693 from $592 in 2020. The company reported fuel expense of $79.2 million in the period.

Interest expense, net was $161.2 million in 2021 compared to $139.7 million in 2020. The increase in interest expense reflects additional debt outstanding at higher interest rates, partially offset by lower LIBOR.

Other income (expense), net was income of $4.7 million in 2021 compared to expense of $(23.7) million in 2020. In 2021, the income primarily related to gains on fuel swaps not designated as hedges and foreign currency exchange.


As a result of the COVID-19 pandemic, while the company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with certainty, it will report a net loss for the fourth quarter and full year ending December 31, 2021 and expects to report a net loss until the company is able to resume regular voyages. As previously stated, based on its current trajectory and market and public health conditions, the company expects to be profitable for the second half of 2022.

The following reflects the company’s expectations regarding fuel consumption and pricing, along with accompanying sensitivities.


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