NCLH beats Q3 profit forecasts, raises full-year guidance

Buoyed by strong pricing for peak season Alaska and Europe sailings and more capacity from the addition of Norwegian Bliss, Norwegian Cruise Line Holdings sailed past third quarter profit expectations and raised guidance for the full year.

2019 bookings and pricing 'well ahead'

In addition, the company said 2019 bookings and pricing are 'well ahead; for its three brands.

NCLH generated adjusted net income of $506.4m, or $2.27 per share, 7 cents higher than forecast and 6 cents above Wall Street's expectation. This was up from $427m, or $1.86 EPS, a year ago. US GAAP net income was $470.4m, or $2.11 EPS, compared to $400.7m, or $1.74 in the prior year.

Total revenue increased 12.5% to $1.9bn, up from $1.7bn.

Net yield up 4%

Net yield increased 4% on a constant currency basis, outperforming guidance by 50 basis points.

NCLH expects to generate record earnings in full year 2018 and raised its outlook above the high-end of its previous guidance range ($4.70 to $4.80). Adjusted EPS is now expected to be approximately $4.85, inclusive of the previously announced impact from itinerary optimization initiatives that will benefit future periods.

This beats Wall Street's $4.82 consensus.

'Our three brands fully benefited from strong demand for peak summer season sailings, with particular strength in premium-priced itineraries in Alaska and Europe, resulting in the highest quarterly revenue and earnings in our history,' EVP and CFO Mark Kempa said.

Adjusted net cruise cost excluding fuel per capacity day increased 2% on a constant currency basis. Fuel price per metric ton, net of hedges, was $510, up from $476 in 2017. The company reported fuel expense of $99.6m in the period.

Interest expense, net, was $69.5m, compared to $66.3m the prior year, reflecting additional debt in connection with the delivery of Norwegian Bliss in Q2, Project Leonardo financing and higher interest rates due to an increase in LIBOR. This was partially offset by the benefits from the October 2017 full redemption of 4.625% senior notes due 2020 and the April 2018 $135m partial redemption of 4.75% senior notes due 2021.

2019 booked position ahead of this year

'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,' president and CEO Frank Del Rio said. 'We are well-positioned to achieve the three-year double-digit adjusted EPS [compound annual growth rate], net leverage and adjusted [return on invested capital] 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.'

Fourth quarter net yield is projected to rise 4% in constant currency, and NCLH expects adjusted EPS of approximately 78 cents.

Posted 08 November 2018

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Anne Kalosh

Editor, Seatrade Cruise News & Senior Associate Editor Seatrade Cruise Review