NCLH shares rise and Del Rio bows out on his final earnings call

Frank Del Rio delivered his '34th and final' earnings call as president/CEO and a rousing endorsement for his successor, Harry Sommer.

Throughout the call, analysts acknowledged the leadership transition.

'Welcome to the hot seat'

As one put it: 'Frank, congratulations on an amazing career, and Harry, welcome to the hot seat.'

Sommer, who took over the opening remarks on the call and fielded questions, talked about a healthy demand environment, resilient target customer and strong booking window, adding that the banking-sector-driven financial volatility in March didn't have any impact.

Onboard revenue generation is also performing 'exceptionally well' with strength across revenue streams, ships and regions. Revenue per cruise day in the first quarter was nearly 30% higher than in 2019, driven from a focus on 'attracting the best guests,' a bundling strategy and pre-cruise onboard sales, which in Q1 were more than double the same 2019 period.

Cost focus a top priority

Sommer said the company continues to 'right-size our cost base to rebuild and enhance margins.' Q1 showed improvements, however, 'We still have more work to do. This initiative ... will continue to be a top priority under my leadership.'

Sommer became president and CEO-elect in April ahead of Del Rio's retirement effective June 30.

The outgoing CEO reflected how, in 2015, he was given the opportunity to lead NCLH, which brought together Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises. Del Rio had headed Prestige Cruise Holdings (Oceania and Regent) after founding Oceania Cruises in 2002.

Making way for the next generation

'It is now time for me to make way for the next generation of leaders who are ready and energized to take this company on to greater heights,' Del Rio told analysts. He also credited shipboard and shoresise employees as the main driver of NCLH's success and thanked guests, travel partners, lenders, shipyards, investors, analysts and all stakeholders for their support and partnership over years.

'The best days for this company still lie ahead,' Del Rio continued, adding that with Sommer's broad range and depth of experience making him 'one of the premier executives in the industry,' he's leaving NCLH 'in the most capable of hands.' They've worked together more than 30 years, going back to Renaissance Cruises.

Sommer is a 'strategic and innovative leader who has the right talent, skill set and energy to lead the company at this pivotal time in its history, Del Rio said, and brings 'both continuity and a fresh perspective.'

Del Rio noted his departure coincides with the 20th anniversary of Oceania Cruises beginning sailing and as the brand takes delivery of its seventh ship, Vista. Del Rio and Sommer will be on hand for Vista's christening cruise and naming festivities May 8.

30 ships and more than 60,000 berths

This makes 30 ships and more than 60,000 berths for NCLH. Two further newbuilds, Norwegian Viva and Seven Seas Grandeur, join in 2023, with the three new entrants expected to have a 'halo effect' on the company.  

For his part, Sommer expressed his honor and gratitude to be helming the company, something he never could have imagined growing up as the son of immigrant working-class parents in the Bronx.

'Thank you, Frank for your countless contributions, not only to our company, but also the broader cruise industry,' he said.