The overall booked position for the first half of 2021 remains below historical ranges while bookings for the second half are in line with historical ranges. Pricing for full year 2021 is in line with pre-pandemic levels, including the dilutive impact of future cruise credits.
As of Sept. 30, 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. This compares to June 30, when NCLH had $1.2bn in advance ticket sales, including approximately $0.8bn of FCCs.
$638.7m adjusted net loss
Q3 adjusted net loss was $638.7m, or $2.35 per share, greater than Wall Street's expectation for a loss of $2.24/share and compared to the $2.23/share profit in Q3 2019. The recent quarter included $38.6m of adjustments primarily consisting of expenses related to non-cash compensation and losses on debt extinguishment and modifications. Year-ago adjustments were $30.9m, mainly for expenses related to non-cash compensation.
The GAAP net loss was $677.4m, or $2.50 per share, compared to the $450.6m GAAP net profit, or $2.09/share in the prior year.
Revenue decreased to $6.5m, lower than the consensus expectation and down from $1.9bn a year ago.
Interest expense, net was $139.7m compared to $60.2m in 2019. The change reflects additional debt outstanding at higher interest rates, partially offset by lower LIBOR. Included in 2020 were losses on extinguishment of debt and debt modification costs of $6.6m. An $11.9m net loss was mainly due to the de-designation of fuel hedges as a result of a reduction in forecasted fuel consumption.
NCLH said pent-up demand for future cruises is demonstrated by record booking achievements in September and October including Oceania Cruises’ Labor Day upgrade sale, the most successful holiday promotion in the line’s history, a new world cruise opening day booking record for Regent Seven Seas Cruises’ 2023 circumnavigation and a new all-time largest single booking day in Regent’s history with the launch of its 2022-2023 Voyage Collection.
'While we have a long road of recovery ahead of us, we are encouraged by the continued demand for future cruise vacations, especially from our loyal past guests, across all three of our brands,' NCLH President and CEO Frank Del Rio said.
'Significant uncertainties' around CDC requirements
Though the Centers for Disease Control and Prevention's Framework for Conditional Sailing Order is a step forward, NCLH said 'significant uncertainties' remain regarding certain requirements, including pending technical instructions for future phases. (The first batch of technical instructions was released last week.)
Debt and liquidity
As of Sept. 30, the company's total debt position was $10.9bn while cash and cash equivalents totaled $2.4bn.
Monthly cash burn could go up
Monthly average cash burn in Q3 was approximately $150m. NCLH said that for comparative purposes, assuming ships remain at minimum manning status, the Q4 average cash burn rate would be higher at approximately $175m, primarily driven by the timing of interest expense. For the second half of 2020, this would result in an average monthly cash burn rate of approximately $160m, in line with the company’s previously disclosed target.
However, due to the fluidity of the voyage resumption schedule and associated expenses, NCLH expects the actual cash burn rate for Q4 will be higher than the comparative number. This is because preparations to return ships to service will entail costs for manning, repositioning, provisioning, implementing new health and safety protocols and a 'disciplined ramp-up of demand-generating marketing investments.'
Cash burn includes ongoing ship operating expenses, administrative operating expenses, interest expense, taxes and expected capital expenditures and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings, other working capital changes and voyage resumption preparation costs and unforeseen expenses. This cash burn rate and estimate also reflect the deferral of debt amortization and newbuild related payments through March 31, 2021.
Anticipated total capital expenditures for Q4 are approximately $150m, including additional health and safety investments.
The company didn't provide capex guidance for future years, given the current uncertainty. But NCLH said the impact of COVID-19 on shipyards will result in some minor delays in deliveries, and could lead to additional delivery delays the future, which may be prolonged
Stock gains nearly 27% then retreats in after-hours trading
NCLH shares closed up $4.54, or 26.75%, at $21.51 on a day when all cruise stocks shot up on promising news about Pfizer's coronavirus vaccine, before slightly retreating in after-hours trading.
The company will discuss results in a conference call Tuesday.