Norwegian Cruise Line (NCL Corporation Ltd., "Norwegian" or "the Company") today reported results for the third quarter ended September 30, 2010.
EBITDA for the third quarter of 2010 improved 21.4% to $184.1 million versus $151.6 million for the same period in 2009. The addition of Norwegian Epic to the fleet in June 2010 together with an improvement in Net Yield of 9.5% resulted in Net Revenue for the third quarter of 2010 increasing to $469.8 million from $390.0 million in the same period in 2009. The increase in Net Yield was a result of both improved passenger ticket pricing and increased onboard revenue per Capacity Day. Capacity days increased 10.1% with the addition of Norwegian Epic, which started regular service in mid-July, partially offset by the departure of Norwegian Majesty from the fleet in October 2009. Occupancy Percentage for the quarter was 113.2% versus 114.8% in 2009 with the slight decrease attributable to the initial phase-in period of Norwegian Epic. Net income for the quarter was $93.0 million on revenue of $634.1 million compared to net income of $85.6 million on revenue of $550.7 million in 2009.
Net Cruise Cost per Capacity Day increased 8.9% primarily due to initial start-up costs related to the introduction of Norwegian Epic (which included inaugural events and advertising and promotion expenses), timing differences of maintenance and repair expenses including dry-dock costs, and a 13.9% increase in the average cost of fuel to $507 per metric ton in 2010 from $445 per metric ton in 2009.
"Both improved ticket pricing across our fleet and the introduction of Norwegian Epic into regular service contributed to our strong results for the quarter," said Kevin Sheehan, chief executive officer of Norwegian Cruise Line. "Our 21% improvement in EBITDA was achieved despite one-time costs related to Norwegian Epic's start-up and inaugural activities, as well as an increase in the price of fuel. We continue to keep a razor-sharp focus on our cost discipline and containment measures."
Interest expense, net of capitalized interest, increased to $46.2 million in the quarter compared to $25.8 million in 2009 due to higher average interest rates and an increase in borrowings related to the addition of Norwegian Epic. Other income improved to $1.6 million in 2010 versus an expense of $2.1 million in 2009 primarily due to gains on fuel derivatives in 2010 versus foreign currency losses in 2009.
The Company recently announced an agreement to build two new 4,000 passenger berth vessels for delivery in the spring of 2013 and 2014 at an aggregate contract price of approximately ¬1.2 billion. The ships will include signature elements from Norwegian's current fleet, including many from the Company's newest ship, Norwegian Epic. This is the Company's first order for new vessels since 2006 and marks a return to a longstanding relationship with Germany's Meyer Werft shipyard. "With the enthusiastic feedback we've received surrounding Norwegian Epic, and our guests' continued passion for Freestyle Cruising, it was only natural that we extend what we've learned in our 40-plus years of innovation in the cruise industry into a new, exciting class of vessel," commented Sheehan. "This agreement is an important step forward for Norwegian as we continue to build upon the excitement surrounding our brand." The Company has commitments in place from a syndicate of banks for export credit financing in connection with this project.