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NCLH narrows Q4 loss, returns to annual profit

Norwegian Cruise Line Holdings reduced its fourth quarter loss and returned to a full-year profit for the first time since the pandemic. Shares rose 9% pre-market open.

The company also issued guidance for 12 cents adjusted EPS in the first quarter, above the consensus forecast for a 2-cent/share loss, and $1.23 for the full year, squarely in line with Wall Street's expectation.

'We are determined to capitalize on our recent achievements and take advantage of the positive momentum and strong demand for cruise which resulted in turning the year at all-time highs in both our booked position and pricing,' NCLH CEO Harry Sommer said.

Q4 results

Adjusted net loss was $77.1m, or 18 cents per share, down from the $1.04/share loss a year ago and higher than the consensus forecast for a 14-cent/share loss. US GAAP net loss was $106.5m, or 25 cents per share.

Net yield growth was approximately 8.2%, or 8.6% versus 2019 on a constant currency basis, in line with guidance.

Adjusted EBITDA was approximately $359.6m, in line with guidance, driven primarily by solid revenue performance and lower adjusted net cruise costs excluding fuel.

Revenues were $1.98b, slightly above the $1.97b consensus forecast.

Israel/Red Sea

As a result of the ongoing conflict in Israel and the Red Sea, Q4 calls to Israel were canceled and redirected, resulting in 99.2% occupancy. Before the itinerary changes, some 7% of the company's capacity had been in the Middle East in Q4 and 4% in 2024. Prior to the recent cancellations, approximately 1% of 2024 capacity was expected to sail through the Red Sea.

Oceania and Regent were more highly impacted, previously having 12% and 8% of capacity, respectively, in the Middle East/Red Sea. This means 60 to 70 days, a sizable impact for smaller fleets, Sommer noted.

Full year 2023

For the full year, NCLH returned to a profit for the first time since 2019, with adjusted EPS of 70 cents on revenues of $8.5b, a 32% increase from 2019.

Margin enhancement initiatives drove improvement in operating costs, with adjusted net cruise costs excluding fuel per capacity day approximately $154, 21% less than in 2022.

Occupancy was 102.9%, in line with guidance of 102.6%.

'Exceptional demand' for NCL brand

NCLH reported continued 'exceptional demand' for Norwegian Cruise Line, with bookings and pricing at higher levels than 2023 for all four quarters of 2024. Oceania Cruises and Regent Seven Seas Cruises also continue to see 'strong demand' across all geographies with the exception of redeployed itineraries due to the Middle East and Red Sea cancellations.

NCLH said it continues to experience healthy consumer demand and the company is at an all-time high booked position with pricing reflective of some of the best booking weeks in its history, beginning with Black Friday and Cyber Monday.

Additionally, on-board revenue per passenger cruise day remains robust, up 20% in the quarter compared to 2019, with broad-based strength across all revenue streams.

Advance ticket sales were at a year-end record of $3.2b, approximately 56% higher than at the end of 2019.

2024 outlook

The company entered the year at peak booked position and pricing for 2024 voyages. Net yield is expected to increase approximately 5.5% as reported and about 5.4% in constant currency versus 2023.

During 2024 adjusted net cruise costs excluding fuel per capacity day are expected to be $159, a 3.4% increase in constant currency, which includes approximately 325 basis points for higher dry dock days. Without this, the number would be essentially flat year-over-year.

Full-year occupancy is forecast to reach 105.1%.

Adjusted EPS is expected to grow 76% to approximately $1.23.

Debt and liquidity

As of Dec. 31, NCLH had total debt of $14.1b and total net debt of $13.7b. Continued leverage improvement is expected. The company repaid $1.9b of debt in 2023, which included the full pay-down of its $875m revolving loan facility.  

Year-end liquidity was $2.3b.

In March, the company expects to refinance its $650m backstop commitment, replacing the secured commitment with an unsecured commitment. Additionally, as part of this refinancing, it plans to repay its $250m 9.75% senior secured notes due 2028, NCLH's highest interest rate debt.

See also 'NCLH's new transformation office drives cultural shift on costs'