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NCLH details Q2 loss, 2021 booked position 'within historical ranges'

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Norwegian Cruise Line Holdings turned in a second quarter loss, as expected during a period when no sailings operated, but said 2021 bookings are 'within historical ranges.'

Specifically, overall cumulative booked position and pricing for 2021 are within historical ranges including bookings made with future cruise credits.

60% of those on canceled voyages seek refunds

All three NCLH brands offer incentives for travelers on canceled trips to rebook. These include future cruise credits of, typically, 125%, valid for any sailing through 2022. As of Aug. 3, approximately 60% of those whose voyages were canceled requested cash refunds.

This sounds higher than the 'approximately half' reported in April

As of June 30, the company had $1.2bn in advance ticket sales, including the long-term portion, which includes approximately $0.8bn of future cruise credits. NCLH said it continues to take future bookings and receive new customer deposits and final payments on these bookings.

$666.4m adjusted net loss

Q2 adjusted net loss was $666.4m, or $2.78 per share, higher than the consensus forecast of a loss of $2.26 per share. 

This included $48.8m of adjustments, primarily expenses related to non-cash compensation and losses on extinguishment and modifications of debt. The year-ago adjusted profit was $282.1m, or $1.30 per share.

The GAAP loss was $715.2m, or $2.99 per share, compared to a $240.2m profit, or $1.11 per share, in Q2 2019.

Revenue drops to $16.9m from year-ago $1.7bn

Revenue decreased to $16.9m from $1.7bn a year ago due to the complete suspension of voyages in the quarter.

NCLH reiterated its expectation for Q3 and full-year 2020 losses.

Monthly cash burn $160m, higher than prior guided range

Cash burn is averaging approximately $160m per month during the suspension of operations. This 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. This also excludes debt amortization and newbuild related payments which are currently deferred through March 31, 2021.

This monthly cash burn estimate is higher than the previously disclosed estimate of $110m to $150m due to additional interest expense related to the July capital raise, maintaining more ships in warm layup due to various port requirements and weather restrictions, increased costs associated with fluctuating travel restrictions for crew and additional marketing investments.

$2.8bn total liquidity

'In recent weeks, we have taken further action to bolster our liquidity position in response to the COVID-19 global pandemic, including our highly successful $1.5 billion gross triple-tranche capital raise in July, which we believe positions us to withstand a scenario of prolonged voyage suspensions,' NCLH President and CEO Frank Del Rio said. 'Our guests continue to demonstrate their desire for cruise vacations in the future.'

As of June 30, NCLH's total debt position was $10.3bn and the company’s cash and cash equivalents were $2.3bn.

July's series of capital markets transactions further bolstered liquidity and extended the company's debt maturity profile. The gross proceeds totaled approximately $1.5bn. A triple-tranche transaction consisted of a $288m public offering of common equity, $450m of 5.375% exchangeable senior notes and $750m of 10.25% senior secured notes, with proceeds used, in part, to repay an existing $675m short-term revolving credit facility.

Following these transactions, the repayment of the short-term revolving credit facility and customer deposit refunds payable, total pro-forma liquidity was approximately $2.8bn as of June 30. As of July 21, total shares issued and outstanding were 275.6m.

Remaining capex for 2020

Anticipated total capital expenditures for the remainder of 2020 are approximately $160m, net of financing, once deferrals of newbuild related payments are finalized. NCLH didn't provide capex guidance for future years due to the uncertain and evolving current environment.

Future ship construction delays 'may be prolonged'

The impacts of COVID-19 on the shipyards NCLH ships are under construction, or will be constructed, have resulted in some delivery delays, and could result in additional delays in the future, which may be prolonged. The company did not elaborate further.

Crew repatriation

Most crew have been repatriated. To date, that numbers more than 21,000 shipboard team members to over 75 countries, through a combination of chartered and commercial flights and some ships. Repatriation efforts are expected to be largely completed within 45 days.