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NCLH loss wider, revenue higher than expected, advance sales 'strong'

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Norwegian Cruise Line Holdings turned in a wider than expected fourth quarter loss though revenue was higher than forecast. Bookings have been 'strong' for future periods.

Given current uncertainty about when cruises will restart, the booking window is elongated as customers book further into the future. Booked position for the second half of 2021 remains below historical levels on continued uncertainty and the shift of limited marketing investments to 2022 sailings. Q2 pricing is in line with pre-pandemic levels, even after including the dilutive impact of future cruise credits.

'Robust' 2022 demand

2022 booking trends are 'very positive driven by strong pent-up demand.' NCLH reported 'robust' future demand across all brands with the overall cumulative booked position for the first half of 2022 significantly ahead of 2019’s record levels with pricing in line when excluding the dilutive impact of FCCs.

At Dec. 31, the company had $1.2bn in advance ticket sales, including the long-term portion of advance ticket sales, which includes approximately $0.85bn of FCCs.

'Looking ahead, we are encouraged by the accelerating rollout of vaccines, the progress towards herd immunity and the strong demand for future cruise vacations,' NCLH President and CEO Frank Del Rio said.

Fourth quarter

Adjusted net loss of $683.8m, or $2.33 per share, was higher than Wall Street's consensus of a $2.17 per share loss and compares to the year-ago profit of $155.7m, or 73 cents per share. US GAAP net loss was $738.9m, or $2.51 per share, compared to net income of $121.3m, or 56 cents per share, in the prior year.

Revenue decreased to $9.6m compared to $1.5bn in Q4 2019 but was higher than the $2.6m consensus forecast.

Full year 2020

For the full year, adjusted net loss was $2.2bn, or $8.64 per share, down from the $1.1bn profit and $5.09 per share in 2019. US GAAP net loss was $4bn, or $15.75 per share, versus 2019's $930.2m profit, or $4.40 per share.

Revenue decreased 80.2% to $1.3bn compared to $6.5bn in 2019.

Liquidity

The company has taken numerous actions to reduce costs, conserve cash and secure additional capital. At Dec. 31, NCLH's total debt was $11.8bn while cash and cash equivalents were $3.3bn. The company was in compliance with all debt covenants as of Dec. 31.

Since the end of September, NCLH has raised $824m, net of underwriting fees, with an equity offering of 40m shares in November. It issued $850m of 5.875% senior unsecured notes due 2026 in an oversubscribed offering in December.

Through amended export credit agency-backed credit agreements, NCLH has deferred approximately $680m of amortization payments through March 31, 2022, and received covenant waivers through 2022.

Certain newbuild-related payments of approximately €220m were deferred through March 31, 2022, while Pride of America and Norwegian Jewel credit facilities were amended to suspend the testing of certain financial covenants. And a senior secured credit facility was amended to defer approximately $70m of amortization payments due prior to June 30, 2022, and suspend the testing of certain financial covenants through 2022.

Cash burn ramp-up, ramp-down on CDC roller-coaster

Q4 monthly average cash burn was approximately $190m and included approximately $15m per month of additional relaunch-related expenses as the company began preparing vessels for a potential return to service in early 2021, in connection with US Centers for Disease Control and Prevention's conditional sailing order, which did not materialize.

For Q1, NCLH expects the average cash burn rate to temporarily remain elevated at approximately $190m per month, or approximately $170m per month excluding non-recurring debt modification costs, as the company ramps down relaunch-related expenses and repatriates crew.

Approximately $60m of one-time debt deferral and modification costs and fees are expected in Q1 as a result of successful debt deferrals and covenant waivers and suspensions which, combined with newbuild payment extensions, have resulted in approximately $1bn of additional liquidity over the next 12 months.

'We continue to take proactive measures to bolster our efforts to weather the ongoing uncertainty of the public health environment, including two highly successful capital markets transactions executed in the fourth quarter which raised nearly $1.7 billion and demonstrate the continued confidence of our investors in our business model,' EVP and CFO Mark Kempa said.

Capex outlook

Anticipated total capital expenditures for Q1 are approximately $90m, including health and safety investments.

The company isn't providing total capital expenditure guidance for full year 2021 or future years at this time given the uncertain and evolving environment. However, after recent deferrals the anticipated expenditures related to ship construction contracts were $0.4bn, $1.6bn and $2.5bn for 2021, 2022 and 2023, respectively. The company has export-credit financing in place for the anticipated expenditures related to newbuild contracts of $0.2bn, $0.8bn and $1.8bn for 2021, 2022 and 2023, respectively.

COVID-19 impacts on shipyards have resulted in some minor delays in ship deliveries, and this could result in additional delays in ship deliveries in the future, 'which may be prolonged.'

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