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Strong demand offset Hurricane Dorian impact in Norwegian's Q3

Strong demand more than offset the impact of Hurricane Dorian in Norwegian Cruise Line Holdings’ third quarter as the company beat profit forecasts. However, Dorian will take a little luster from full-year earnings.

Adjusted EPS $2.23

Adjusted net income was $481.5m, or $2.23 per share, compared to $506.4m, or $2.27, in the prior year. This was higher than Wall Street’s $2.16 forecast. GAAP net income was $450.6m, or $2.09 EPS, compared to $470.4m, or $2.11, in the prior year.

These results include a 6-cent-per-share impact from voyage cancellations, itinerary modifications and relief efforts related to Hurricane Dorian. The abrupt end to Cuba sailings caused by the Trump administration's short-notice policy change cost 22 cents per share and Norwegian Pearl's technical issues in Europe, 7 cents per share.

Norwegian Joy, on-board spend, pricing bolster Q3

Total revenue increased 3%, to $1.9bn, on a 1.8% decrease in capacity days. Net yield was up 3.9% in constant currency, outperforming August guidance by 215 basis points. Net yield was bolstered by Norwegian Joy’s repositioning to North America from China, robust on-board spending and strong growth in organic pricing across all core markets.

Total cruise operating expense increased 6.7% compared to the prior year, primarily due to continuing effects from the redeployment of Norwegian Joy during the second quarter of 2019 and incremental direct costs related to air promotions. Adjusted net cruise cost excluding fuel per capacity day increased 11 in constant currency and 10.2% as reported.

2019 adjusted EPS forecast $5.05

Full year adjusted EPS is expected to be approximately $5.05, including 15 cents per share adverse impact from Hurricane Dorian. This is in line with the midpoint of August guidance of $5 to $5.10 and just under Wall Street’s $5.07 expectation.

Q4 outperformance in the Caribbean

Without the hurricane headwind, the company’s full year outlook would have exceeded the high end of its August guidance range, primarily as a result of revenue outperformance in the third quarter, coupled with a stronger revenue outlook for the fourth quarter driven mainly by outperformance in the core Caribbean market.

Strong demand in core markets more than offset the approximately 25-basis-point impact on full year net yield growth from Hurricane Dorian, leading the company to raise its outlook for net yield growth to approximately 3% in constant currency.

Fourth quarter adjusted EPS is now forecast at approximately 69 cents per share. Wall Street had estimated 78 cents.

2020 momentum

‘The underlying fundamentals of our business remain as strong as ever, allowing us to post another solid quarter of financial results despite the impacts from Hurricane Dorian. The top line exceeded expectations and we recorded the highest quarterly revenue in our history,’ NCLH President and CEO Frank Del Rio said. ‘We are on track to deliver yet another record-breaking year in 2019, and the positive momentum for our global brands is carrying over into 2020, as demand, occupancy and pricing continue to outpace 2019 record levels, buoyed by the addition of Norwegian Encore and Seven Seas Splendor.’

NCLH said it is on a solid trajectory to achieve its Full Speed Ahead 2020 targets provided at its 2018 Investor Day.

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