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NCLH Q4 higher than expected but lower than prior year, Q1 seen lower

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Norwegian Cruise Line Holdings’ fourth quarter profit beat expectations but was lower than a year ago while first quarter guidance is lower, excluding coronavirus impact.

Q4 adjusted profit was 73 cents per share, ahead of Wall Street’s 70-cent forecast but lower than the 85-cent EPS a year ago, partly due to Hurricane Dorian.

Guidance and coronavirus impact

First quarter adjusted EPS is estimated at 48 cents, based on approximately 0.25% constant currency net yield growth. This is under the 60-cent/share consensus expectation.

It also excludes impacts from the COVID-19 outbreak, which NCLH currently sees as 75 cents per share for full-year 2020.

$5.40-$5.60 EPS range

For the full year, NCLH expects EPS in a range of $5.40 to $5.60 (excluding coronavirus impact), reflecting a 2% to 3% net yield increase in constant currency. This is higher than Wall Street’s $5.07 expectation.

NCLH said it entered the year in a record booked position with higher pricing. Despite the current known impact from the COVID-19 coronavirus outbreak, as of the week ending Feb. 14, booked position remained ahead of prior year and at higher prices on a comparable basis, which excludes cruises to Cuba in the prior year and the recent redeployment of Norwegian Spirit from Asia in the current year.

‘As a result of the strong global demand for cruises witnessed throughout 2019, we entered 2020 in the best booked position and at prices higher than last year’s record levels,’ President and CEO Frank Del Rio said. ‘This trend continued through late January until the COVID-19 outbreak began having an adverse impact on our business.’

He added: ‘While the effect of these impacts cannot be fully quantified at this time, our company has an exemplary track record of demonstrating its resilience in challenging environments and we remain confident in our ability to deliver strong financial performance over the long-term.’

Fourth quarter

Dorian-related voyage cancellations, itinerary modifications and relief efforts cost the company 9 cents per share in Q4. Adjusted net income was $155.7m, or 73 cents per share, down from $188.8m, or 85 cents EPS, in Q4 2018. US GAAP net income was $121.3m, or 56 cents EPS, compared to $154.6m, or 70 cents EPS.

Revenue increased 7.2%, to $1.5bn compared to $1.4bn in 2018. This was primarily driven by the repositioning of Norwegian Joy from China to North America, an increase in capacity days with the addition of Norwegian Encore, robust on-board spending and strong growth in organic pricing.

Net yield was up 1.8% in constant currency and 1.3% as reported. Adjusted net cruise cost excluding fuel per capacity day rose 4% in constant currency and 3.4% as reported. Fuel price per metric ton, net of hedges, increased to $508 from $496 in 2018. Fuel expense was $111.9m in the period. 

2019 full year

For the full year 2019, adjusted net income was $1.1bn, or $5.09 EPS, compared to $1.1bn, or $4.92, in 2018. GAAP net income was $930.2m, or $4.30 EPS, compared to $954.8m, or $4.25 EPS, the prior year. 

Revenue increased 6.7% to $6.5bn compared to $6.1bn in 2018. This was driven by higher capacity days and improved pricing. Net yield was up 3.6% in constant currency and 2.9% as reported.

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