Wiesbaden, July 29, 2014 – Norwegian Cruise Line, has reported results for the quarter ended June 30, 2014, and provided guidance for the third quarter and full year 2014.
Second Quarter Highlights
· Adjusted EPS improvement to $0,58 from $0,29 in 2013
· Net Yield increase of 3,3%
· Revenue increase of 18,9% to $765,9 million
· Adjusted EBITDA increase of 44,0% to $219,4 million
Second Quarter Results
“This quarter marks the first full quarter with both Breakaway-class ships in operation”, said Kevin Sheehan, President and CEO of Norwegian Cruise Line. “Along with Norwegian Epic, these newer, premium, earnings-rich ships now comprise a little over a third of our capacity and contributed to the doubling of earnings in the quarter”, continued Sheehan.
For the second quarter of 2014, the Company reported Adjusted EPS of $0,58, on Adjusted Net Income of $121,1 million, compared to $0,29 for the same period in 2013. On a GAAP basis, diluted earnings per share and net income were $0,54 and $111,6 million, respectively.
Net Revenue in the period increased 23,6% to $595,7 million driven by a 19,6% increase in Capacity Days and a 3,3% improvement in Net Yield (3,0% on a Constant Currency basis). The increase in Capacity Days was primarily from the addition of Norwegian Getaway and Norwegian Breakaway to the fleet in January 2014 and April 2013, respectively, and was partially offset by the planned dry dock of Norwegian Jewel. The Net Yield improvement was due to higher Occupancy Percentage, higher on-board and other revenue and benefits from initiatives to reduce our cost of sales. Revenue for the period increased to $765,9 million from $644,4 million in 2013.
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day decreased 2,3% (2,7% on a Constant Currency basis). The Company’s fuel price per metric ton, net of hedges, was $622 compared to $686 in 2013. Fuel consumption per Capacity Day in the quarter decreased 5,1%.
Interest expense, net was $31,9 million for the quarter. Interest expense, net in the same period in 2013 was $103,7 million which included $70,1 million of charges related to the refinancing of certain credit facilities and the redemption of certain of the Company’s senior unsecured notes. Excluding these charges, Adjusted Interest Expense, net was $33,6 million in 2013.
2014 Guidance and Sensitivities
In addition to the results for the second quarter, the Company also provided the following guidance for the third quarter and full year 2014, along with accompanying sensitivities.
“We are pleased to reiterate full year earnings guidance given the current promotional environment”, said Sheehan. “We are taking advantage of opportunities to strategically invest in initiatives to increase brand awareness and enhance the guest experience to drive long term returns.”
(In thousands except per share data)
|
Third Quarter 2014
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Full Year 2014
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As Reported
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Constant Currency
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As Reported
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Constant
Currency | ||||
Net Yield
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2,25 – 2,75%
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2,25 – 2,75%
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3,0 – 3,5%
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3,0 – 3,5%
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Adjusted Net Cruise Cost
Excluding Fuel per Capacity Day (1) |
2,0 – 3,0%
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2,0 – 3,0%
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Flat to Slightly Up
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Flat to Slightly Up
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Adjusted EPS
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$1,05 to $1,10
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$2,20 to $2,35
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Depreciation and amortization
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$62 to $67 million
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$250 to $255 million
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Interest Expense, net
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$32 to $36 million
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$130 to $135 million
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Effect on Adjusted EPS of a
1% change in Net Yield (2) |
$0,03
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$0,06
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(1) Full year includes three dry docks
(2) Based on midpoint of guidance
The following reflects the Company’s expectations regarding fuel consumption and pricing, along with accompanying sensitivities.
Third Quarter 2014
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Full Year 2014
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Fuel consumption in metric tons
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125.000
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502.000
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Fuel price per metric ton, net of hedges
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$650
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$635
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Effect on Adjusted EPS of a 10% change
in fuel prices, net of hedges |
$0,02
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$0,03
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As of June 30, 2014, the Company had hedged approximately 76%, 59%, and 37% of its remaining 2014, 2015 and 2016 projected metric tons of fuel purchases, respectively.
Future capital commitments consist of contracted commitments, including future expected capital expenditures for business enhancements and ship construction contracts. As of June 30, 2014 anticipated capital expenditures together with amounts for ship construction and related export credit financing were as follows (in thousands, based on the euro/U.S. dollar exchange rate as of June 30, 2014):
Remaining Quarters
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Full Year
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2014
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2014
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2015
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2016
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Ship construction
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$ 77.234
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$ 810.496
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$ 975.971
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$116.463
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Ship financing
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(45.898)
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(706.328)
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(771.021)
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(45.898)
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Ship construction net of financing
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$ 31.336
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$ 104.168
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$ 204.950
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$ 70.565
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Business Enhancement Capital Expenditures, including ROI
Capital Expenditures (1) (2) (3) |
$ 56.000
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$ 98.000
|
$ 83.000
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$ 90.000
| ||||
Incremental ROI Capital Expenditures for exhaust gas scrubbers
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$ 20.000
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$ 27.000
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$ 27.000
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$ 10.000
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(1) Remaining Quarters and Full Year 2014 include $29 million and $44 million in ROI Capital Expenditures, respectively.
(2) Remaining Quarters and Full Year 2014, 2015 and 2016 exclude amounts for exhaust gas scrubbers.
(3) Remaining Quarters and Full Year 2014 and 2015 include investment for development of the Company’s future cruise destination in Belize.
Company updates and other business highlights
The Company recently announced an order for two Breakaway Plus-class ships with export credit financing in place. The contract price for the 164.600 gross ton, 4.200-berth vessels is euro 1,6 billion, with deliveries scheduled for spring 2018 and fall 2019. This latest order brings the total number of new builds under contract with Meyer Werft to four, with Norwegian Escape scheduled for delivery in October 2015.
In April, the Company announced the authorization by its Board of Directors of a three-year, $500 million share repurchase programme. During the second quarter, the Company repurchased approximately 2,4 million shares at an average price of $33,02 per share under this programme.
In May, the Company announced Norwegian NEXT, a two-year, $250 million investment in “new enhancements, experiences and transformations” across the fleet. The programme is aimed at elevating the guest experience through ship revitalizations, enhanced dining and beverage programmes, enriched entertainment and destination experiences and technological advances. The programme also includes initiatives aimed at reducing the Company’s impact on the environment, including the installation of exhaust gas scrubbers on six of the Company’s current ships and all four of its upcoming new builds. Fleet wide enhancements to the dining programme include new menus with expanded offerings in complimentary dining venues, the rollout of the popular O’Sheehan’s Neighborhood Bar & Grill and Moderno Churrascaria concepts and the addition of Carlo’s Bake Shop treats to cafes across the fleet. Beverage programme enhancements include a new wine list developed in partnership with the Michael Mondavi Family, destination-specific cocktail menus created by the James Beard Award-nominated mixologists at Bar Lab and the expansion of the Sugarcane Mojito Bar concept. Regarding entertainment, the Company’s new, state-of-the-art rehearsal facility, Norwegian Creative Studios, will be the source for new production shows while the Company expands its Nickelodeon family offerings to include new activities and dining experiences with one’s favourite characters. Investments in technology include an enhanced pre-cruise booking experience and interactive digital displays positioned in strategic locations throughout every ship allowing guests to reserve dining, shore excursions and other activities. The Company is also investing in improvements to its private island in the Bahamas, Great Stirrup Cay, with new venues such as the Bacardi Bar while construction continues on its upcoming eco-friendly western Caribbean destination in Belize, Harvest Caye.
