orwegian Cruise Line Holdings today reported financial results for the quarter ended September 30, 2015 and provided guidance for the fourth quarter and full year 2015.
Third Quarter 2015 Highlights
Adjusted EPS growth of 22% to $1.35 on Adjusted Net Income of $311.1 million.
Increase in Adjusted Net Yield on a Combined Company basis of 2.2%, or 4.7% on a Constant Currency basis, driven by improved pricing in the quarter. Increase of 19.8% on an as reported basis.
Adjusted EBITDA increase of 37% to $447.8 million from $326.7 million.
Third Quarter 2015 Results
“The continued momentum from our revenue enhancement strategies resulted in net yield growth of approximately five percent driving strong earnings performance in the quarter,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings. “What is most impressive is that this yield performance was driven purely by organic growth, demonstrating that robust topline growth need not be predicated solely on the addition of new ships to our fleet.”
The Company generated Adjusted Net Income of $311.1 million, or $1.35 per share. Adjusted EPS increased 22% over prior year and was at the top end of the Company’s guidance range, benefiting from solid Net Yield performance. On a GAAP basis, net income was $251.8 million, or $1.09 per share compared to $201.1 million or $0.97 per share in the prior year.
Adjusted Net Yield improved 19.8% (22.7% on a Constant Currency basis) mainly due to the Acquisition of Prestige which occurred in the fourth quarter of 2014. On a Combined Company basis, which compares current results against the combined results of Norwegian and Prestige in the prior year, Adjusted Net Yield increased 2.2%, (4.7% on a Constant Currency basis), reflecting improved pricing in the quarter which was driven by strength in the Caribbean, Bermuda and Alaska itineraries, partially offset by softness in certain Eastern Mediterranean itineraries. Adjusted Net Revenue in the period was $978.2 million compared to $694.4 million in 2014, an increase of 40.9%, primarily as a result of the Acquisition of Prestige.
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 30.5% (32.1% on a Constant Currency basis), primarily as a result of the Acquisition of Prestige, while on a Combined Company basis increased 6.4% (7.8% on a Constant Currency basis), primarily due to the timing of marketing expenses and incremental discretionary shipboard enhancement and maintenance costs. The Company’s fuel price per metric ton, net of hedges, decreased 11.7% to $566 from $641 in 2014.
Interest expense, net increased to $49.8 million from $32.3 million as a result of the incremental debt incurred in connection with the Acquisition of Prestige.
The Company repurchased 83,396 shares in the quarter at an average price of $55.94 under its three year, $500 million share repurchase program which was authorized in April 2014. As of September 30, 2015, $413 million remained available for repurchases under the program.
Full Year 2015 Outlook
As a result of strong Net Yield performance the Company has increased its full year 2015 Adjusted Net Yield guidance. Adjusted Net Cruise Cost Excluding Fuel is expected to modestly increase due to the aforementioned timing of certain expenses. As a result of these changes, the Company narrowed the range and raised the midpoint of its full year 2015 Adjusted EPS guidance which is now $2.85 to $2.90.
“The alignment of revenue management strategies across our three brands has resulted in a lengthening of the booking curve, enabling us to drive higher pricing, particularly on the Norwegian brand,” said Wendy Beck, executive vice president and chief financial officer of Norwegian Cruise Line Holdings. “This stronger pricing is contributing to robust earnings growth of approximately 27% in 2015, and brings our three year compound annual growth rate to over 40% since our initial public offering in 2013,” continued Beck.
The delivery of Norwegian Escape in October marks the latest chapter in the Company’s measured newbuild program which provides ship deliveries each year through 2019. The Company will take delivery of two additional ships in 2016. Sirena will join Oceania Cruises in March with her first sailing in late April following a 35-day, multi-million dollar upgrade and refurbishment. Seven Seas Explorer will join the Regent fleet in the third quarter.
“The momentum from the initiatives we have implemented is building and is reflected in the solid foundation of bookings which, coupled with the powerful earnings growth from our existing fleet and upcoming ship additions, have positioned 2016 to be a breakout year,” said Del Rio. “With a clear path to significant earnings growth, we are confident in our targets of $5.00 earnings per share in 2017 and growing our already industry leading return on invested capital to 14% by 2018.”