Strong revenues, cost controls lift NCLH's Q2 and full year outlook goes up

Shares rose more than 4% in pre-market-open trading. Market close update: NCLH settled at $18.43, down 13 cents.

Record revenue, and adjusted EPS of 40 cents

Revenue rose more than 8% to a record $2.4b, on 4% capacity growth. US GAAP net income was $163.4m, or 35 cents per share, while adjusted net income was $203.7m, or 40 cents per share, higher than guidance of 32 cents and above Wall Street's 35-cent expectation.

Adjusted EBITDA grew 14% to $587.7m, above guidance of $555m. Net yield growth was up approximately 6.3% versus 2023 on an as reported and constant currency basis, above guidance by 200 basis points due to strong close-in demand and onboard revenue performance.

Adjusted net cruise costs excluding fuel per capacity day were approximately $163 on an as reported and constant currency basis, better than guidance, and flat year-over-year when excluding the expected approximately $9 impact of incremental dry docks and the related reduction in capacity days.

Occupancy was 105.9% for the quarter, slightly above guidance. Full year occupancy is expected to average 105.2%, slightly above prior guidance.

Advance ticket sales at all-time high

NCLH said it continues to experience strong consumer demand as the majority of new bookings are pivoting to 2025 sailings. The quarter ended with advance ticket sales at an all-time high of $3.9b, approximately 11% higher than the same period in 2023.

For the full year, NCLH increased its net yield guidance by 100 basis points from prior guidance, to growth of approximately 8.2% from approximately 7.2% on a constant currency basis compared to 2023. This increase is driven by strong demand across all three brands and itineraries.

Full year adjusted net cruise cost excluding fuel per capacity day guidance remains unchanged and is expected to be approximately $159, increasing approximately 3.5% in constant currency, which includes an approximate 300 basis point impact from dry dock days and related costs in the year.

Full year EPS guidance goes to $1.53

NCLH now expects full year earnings per share of approximately $1.53, up from its $1.42 guidance and higher than Wall Street's $1.44 consensus.

'As we raise our full-year guidance a third time, we expect our adjusted EPS to grow approximately 120% compared to 2023, driven mainly by our ability to capitalize on the robust market demand and ensuring our guests are vacationing better and experiencing more across our brands,' NCLH CEO Harry Sommer said.

Q3 EPS guidance

Third quarter EPS is now forecast as 93 cents.

Debt and leverage

NCLH ended the quarter with total debt of $13.4b. Net leverage was 5.9x for the 12 months ending June 30, achieving the company's year-end goal of reducing net leverage by about 1.5x from year-end 2023 six months early.

The company announced at its May 20 Investor Day that it plans to reduce net leverage to the mid 4’s by 2026.

According to CFO Mark Kempa, NCLH is on track to achieve double-digit adjusted return on invested capital by year-end.

See also 'Sommer rejects hotels comp: "No cracks" in NCLH customer spending'