Norwegian Cruise Line Holdings Reports First Quarter 2024 Financial Results

Norwegian Cruise Line Ship

Norwegian Cruise Line Holdings today reported financial results for the first quarter ended March 31, 2024 and provided guidance for the second quarter and full year 2024.

First Quarter 2024 Highlights:

  • Generated total revenue of $2.2 billion, a 20% increase compared to the same period in 2023 on 8% capacity growth, with GAAP net income of $17.4 million, or EPS of $0.04.
  • Adjusted EBITDA nearly doubled over the prior year to $464.0 million, above guidance of $450 million. Achieved Adjusted EPS of $0.16, exceeding guidance of $0.12, compared to a loss of $(0.30) in the first quarter of 2023. Quarter performance was driven by strong revenue growth and continued focus on cost reductions and efficiencies.1
  • The Company’s ongoing margin enhancement initiative drove continued improvement in operating costs. Gross Cruise Costs per Capacity Day was approximately $300 for the quarter. Adjusted Net Cruise Costs excluding Fuel per Capacity Day was approximately $165, or $164 in Constant Currency, in line with guidance, and flat year-over-year when the $5 Dry-dock impact is excluded.
  • Occupancy was 104.6% for the quarter, in line with guidance, and total revenue per Passenger Cruise Day increased approximately 8%, compared to Q1 2023.
  • Gross margin per Capacity Day was up 53% versus 2023 on an as reported and Constant Currency basis. Net Yield growth beat guidance increasing approximately 16.4%, or 16.2% versus 2023 on a Constant Currency basis.
  • Total debt was $13.7 billion. Net Leverage declined a full turn from December 31, 2023, ending the quarter at 6.3x.

Recent Highlights

  • Announced the most transformative newbuild program in the Company’s history—a total of eight state-of-the-art vessels, representing nearly 25,000 additional berths, with new classes of ships for each of its three award-winning brands—and the construction of a multi-ship pier at Great Stirrup Cay, the Company’s private island destination in the Bahamas.
  • S&P Global Ratings (S&P) upgraded both NCLC’s issuer credit rating and issue-level ratings. NCLC’s issuer credit rating has been upgraded to B+, marking a notable improvement in the Company’s creditworthiness. In addition, S&P raised the issue-level ratings on NCLC’s existing secured and unsecured debt. The Company’s senior secured debt ratings were raised to BB/BB- and its unsecured debt rating was upgraded two notches to B.

2024 Outlook

  • Record bookings during the first quarter, drove a record booked position for the next twelve months.
  • 2024 full year Net Yield guidance on a Constant Currency basis increased 100 basis points from the prior guidance to approximately 6.4% from 5.4%.
  • 2024 full year Adjusted EBITDA guidance increased $50 million from the prior guidance to approximately $2.25 billion from $2.20 billion.
  • Full year Adjusted Net Income guidance increased $45 million from prior guidance to $680 million from $635 million, and Adjusted EPS guidance increased $0.09 from prior guidance to $1.32 from $1.23.

“We kicked off 2024 with impressive momentum, with record bookings in the first quarter propelling us to continue our all-time high booked position and an unprecedented level of advance ticket sales. These achievements demonstrate the continued growing demand we are experiencing for our product and offerings,” remarked Harry Sommer, president and chief executive officer of Norwegian Cruise Line Holdings Ltd.

“Recently, we announced the most comprehensive newbuild program in our Company’s history- eight state-of-the-art vessels, each a new class for our three award-winning brands as well as the construction of a new pier at Great Stirrup Cay. Later this month at our Investor Day, we will be unveiling our comprehensive multi-year strategic, operational and financial updates, which will underscore our focus on delivering experiences that our guests truly value. By enhancing our capacity and elevating our product to create the best, largest, and most efficient vessels in our fleet, we are honoring our 57-year history of innovation that has always driven our growth and continues to be at the forefront of what we do,” continued Sommer.

Business, Operations and Booking Environment Update

The Company continues to experience healthy consumer demand and thanks to a strong WAVE season, had record bookings during the first quarter leading to a continued record booked position for the next twelve months. Additionally, onboard revenue per Capacity Day remains robust, up 11% in the quarter compared to 2023, with broad-based strength across all revenue streams. The Company’s advance ticket sales balance, including the long-term portion, ended the first quarter of 2024 at an all-time record high of $3.8 billion, approximately 13% higher than the same period of 2023.

Occupancy was 104.6% for the first quarter of 2024, in line with guidance. Full year 2024 Occupancy is expected to average 105.1%, consistent with prior guidance. In addition, pricing growth in the first quarter was also strong with total revenue per Passenger Cruise Day up approximately 8%, with capacity growth of 8% compared to 2023. Gross margin per Capacity Day was approximately $102 in the quarter, up 53% versus 2023 on an as reported and Constant Currency basis. Net Yield growth was up approximately 16.4%, or 16.2% versus 2023 on a Constant Currency basis, above guidance.

The Company demonstrated continued progress on its ongoing margin enhancement initiative and efforts to maximize revenue opportunities and rightsize its cost base. Gross Cruise Costs per Capacity Day was approximately $300 in the first quarter, compared to $298 last year. Adjusted Net Cruise Costs excluding Fuel per Capacity Day in the first quarter of 2024 was approximately $165, or $164 in Constant Currency, which included a $5 impact from increased Dry-dock days and related costs, in line with guidance and essentially flat year-over-year without the impact of these Dry-docks.

For the full year 2024, the Company increased its Net Yield guidance by 100 basis points from prior guidance to growth of approximately 6.4% from approximately 5.4% on a Constant Currency basis compared to 2023. The increase in guidance is driven by exceptional demand across all three brands which almost fully offsets the impact from the redeployed voyages related to the Middle East and Red Sea. Full year Adjusted Net Cruise Cost Excluding Fuel per Capacity Day guidance remained unchanged and is expected to be approximately $159, increasing approximately 3.4% in Constant Currency, which includes an approximate 300 basis point impact from Dry-dock days and related costs in the year. Excluding this impact, Adjusted Net Cruise Cost Excluding Fuel per Capacity Day would be essentially flat year-over-year. As a result, full year 2024 Adjusted EBITDA guidance increased by $50 million to $2.25 billion from $2.20 billion and Adjusted EPS guidance was increased by $0.09 to approximately $1.32 from approximately $1.23.

Liquidity and Financial Position

The Company is committed to prioritizing efforts to optimize its balance sheet and reduce leverage. As of March 31, 2024, the Company had total debt of $13.7 billion and Net Debt of $13.2 billion and improved its Net Leverage by a full turn compared to December 31, 2023, ending the first quarter of 2024 with Net Leverage of 6.3x.

At quarter-end, liquidity was $2.4 billion. This consists of approximately $559.8 million of cash and cash equivalents, $1.2 billion of availability under the company’s undrawn Revolving Loan Facility and a $650 million undrawn backstop commitment.

“In March 2024 we successfully refinanced our $650 million backstop commitment, replacing the secured commitment with an unsecured commitment. Additionally, as part of this refinancing, we repaid our $250 million 9.75% senior secured notes due 2028, our highest interest rate debt,” the company stated.

“We are pleased to report that we exceeded our guidance metrics for the first quarter of 2024. Thanks to robust consumer demand and continued success on our operational efficiency efforts, we are raising our 2024 full-year guidance for key metrics including Net Yield, Adjusted EBITDA and Adjusted EPS,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd.

Kempa continued, “the momentum we are experiencing allows us to make significant progress on our deleveraging efforts. During the first quarter of 2024 we reduced Net Leverage by a full turn from the end of 2023, ending the quarter at 6.3x. We plan to continue this trend and expect to reduce Net Leverage 1.5 turns during the year compared to 2023 year-end, marking an important milestone in improving our balance sheet.”

First Quarter 2024 Results

GAAP net income was $17.4 million or EPS of $0.04 compared to net loss of $(159.3) million or EPS of $(0.38) in the prior year. The Company reported Adjusted Net Income of $69.5 million or Adjusted EPS of $0.16 in the first quarter of 2024. This compares to Adjusted Net Loss and Adjusted EPS of $(127.7) million and $(0.30), respectively, in the first quarter of 2023. Adjusted EBITDA in the first quarter was approximately $464.0 million, better than guidance of $450 million, and almost doubled compared to 2023, driven primarily by solid revenue performance and Adjusted Net Cruise Cost Excluding Fuel that was essentially flat year-on-year excluding the impact of Dry-docks.

Gross Cruise Costs per Capacity Day was approximately $300 in the quarter. Adjusted Net Cruise Costs excluding Fuel per Capacity Day was approximately $165, or $164 in Constant Currency, which includes $5 related to Dry-dock days, and would have been essentially flat year-over-year without these Dry-dock impacts, reflecting the benefits from the Company’s ongoing margin enhancement initiative.

The Company reported fuel expense of $198 million in the quarter. Fuel price per metric ton, net of hedges, decreased to $735 from $779 in 2023. Fuel consumption of 269,000 metric tons was slightly better than projections.

Interest expense, net was $218.2 million in 2024 compared to $171.3 million in 2023. The increase in interest expense reflects higher losses in 2024 from extinguishment of debt and debt modification costs, which were $29.0 million in 2024 compared to $2.4 million in 2023. Excluding these losses, the increase in interest expense was primarily a result of higher debt outstanding and higher rates.

Other income (expense), net was an income of $18.1 million in 2024 compared to an expense of $(9.0) million in 2023.

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