Norwegian Reports Q3 2018 Earnings

Norwegian Bliss

Norwegian Cruise Line Holdings today reported financial results for the third quarter ended September 30, 2018, as well as provided guidance for the fourth quarter and full year 2018.

The Company generated GAAP net income of $470.4 million or EPS of $2.11 compared to $400.7 million or $1.74 in the prior year. 

Adjusted Net Income was $506.4 million or Adjusted EPS of $2.27 compared to $427.0 million or $1.86 in the prior year.  Adjusted EPS outperformed guidance by $0.07.

Total revenue increased 12.5% to $1.9 billion. Gross Yield increased 4.5%.  Net Yield increased 4.0% on a Constant Currency basis, outperforming guidance by 50 basis points.  

The Company said it expects to generate record earnings in full year 2018 and has increased its outlook above the high-end of its previous guidance range.  

Adjusted EPS is now expected to be approximately $4.85, which is inclusive of the previously announced impact from itinerary optimization initiatives which will benefit future periods.  

“Our three brands fully benefited from strong demand for peak summer season sailings, with particular strength in premium-priced itineraries in Alaskaand Europe, resulting in the highest quarterly revenue and earnings in our history,” said Mark A. Kempa, executive vice president and chief financial officer.  “As 2018 winds down, our earnings outlook improves as we increase our full year Adjusted EPS above the high-end of our previous guidance range.”

GAAP net income was $470.4 million or EPS of $2.11 compared to $400.7 million or $1.74 in the prior year.  The Company generated Adjusted Net Income of $506.4 million or Adjusted EPS of $2.27 compared to $427.0 million or $1.86 in the prior year.  

Revenue increased 12.5% to $1.9 billion compared to $1.7 billion in 2017. 

Net Revenue increased 11.8% to $1.4 billion compared to $1.3 billion in 2017. 

"These improvements 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 Bliss to the fleet in the second quarter of 2018," the company said.

Gross Yield increased 4.5% and Net Yield increased 4.0% on a Constant Currency basis and 3.9% on an as reported basis.

Total cruise operating expense increased 10.8% in 2018 compared to 2017 primarily due to the aforementioned increase in Capacity Days.  Gross Cruise Costs per Capacity Day increased 4.0% due to higher marketing, general and administrative expenses. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 2.0% on a Constant Currency basis and 2.1% on an as reported basis.

Fuel price per metric ton, net of hedges increased to $510 from $476 in 2017.  The Company reported fuel expense of $99.6 million in the period. 

Interest expense, net was $69.5 million in 2018 compared to $66.3 million in 2017. The increase in interest expense reflects additional debt in connection with the delivery of Norwegian Bliss in the second quarter of 2018, Project Leonardo financing, as well as higher interest rates due to an increase in LIBOR.  The increase in interest expense was partially offset by the benefits from the October 2017 full redemption of our 4.625% Senior Notes due 2020 and the April 2018$135.0 million partial redemption of our 4.75% Senior Notes due 2021.

“The robust booking environment for cruise vacations is alive and well as evidenced by our stellar booked position for 2019, which continues to exceed this year’s record levels, with booking momentum accelerating for sailings throughout 2019 and extending into 2020,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “We are well-positioned to achieve the three-year double-digit Adjusted EPS CAGR, net leverage and Adjusted ROIC targets provided at our 2018 Investor Day, while at the same time returning meaningful capital to shareholders, despite rising fuel prices and fluctuations in foreign exchange rates.”

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