Norwegian Cruise Line Holdings Ltd.
CEO : Mr. Harry J. Sommer
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 85.8% YoY | -168.7% | -116.4% | 2023-08-01 |
Harry Sommer says,
New Leadership and Strategic Vision
- The CEO emphasizes the responsibility to stakeholders and commitment to positioning the company for success.
- A new leadership team brings fresh perspective and energy to challenge the status quo.
- The executive team has extensive experience in the cruise industry and is expected to take the company to greater heights.
Capitalizing on Healthy Demand Environment
- The company aims to remain within a booked position of approximately 60% to 65% on a 12-month forward basis while increasing pricing and maximizing onboard revenue generation.
- Revenue management process is dynamic, with adjustments made based on market environment to maximize each voyage’s contribution to the bottom line.
Rightsizing Cost Base
- The company is focused on margin enhancement initiatives to optimize the cost structure and support the unique business model.
- A strategic and data-driven approach is being taken to identify efficiencies and adapt quickly to market or consumer preferences.
- The culture of the company is changing to emphasize efficiency and cost mindfulness without impacting the guest experience.
Enhancing Offerings to Align with Guest Needs
- Smart investments are being made to enhance product and service offerings and maximize guest satisfaction.
- Initiatives include a streamlined booking process using generative AI technology to personalize the experience for guests.
- The goal is to have more satisfied guests who spend more on board and return to sail with the company more frequently.
New Ship Deliveries and Future Growth
- Two new ships, Norwegian Viva and Regent Seven Seas Grandeur, are scheduled for delivery.
- The company expects to benefit from organic growth and the annualization of the 2023 new builds in the coming years.
- The new build pipeline represents approximately 50% capacity growth by 2028.
Reducing Leverage and Derisking Balance Sheet
- The company aims to reduce leverage and return to an investment-grade like financial position.
- Expected cash flow generation and debt installment payments are expected to result in significant organic improvement in net leverage.
- A multiyear pathway to reduce leverage will be defined.
Mark Kempa says,
Second Quarter 2023 Financial Results
- Revenue per up 33% and net per diems increasing approximately 6.5%, surpassing the high end of guidance
- Net yield was in line with guidance at 2.9%
- Adjusted net cruise costs, excluding fuel per capacity day, came in below in the quarter, primarily driven by lower food costs and crew optimization efforts
- Adjusted EBITDA was approximately $30 million higher than guidance at approximately $515 million
- Adjusted EPS of $0.30 beat projection by $0.05, the first time positive EPS generated since 2019
Third Quarter 2023 Guidance
- Projected net per diem growth of approximately 7% to 8% and net yield growth of approximately 2.25% to 3.25%
Fourth Quarter 2023 Guidance
- Pricing and yield expected to exhibit mid-teens growth compared to 2019
- Net per diem growth expected to be up approximately 10%, reflecting organic pricing power and strong consumer demand
Full Year 2023 Guidance
- Adjusted EBITDA guidance raised to a range of $1.85 billion to $1.95 billion
- Adjusted EPS of approximately $0.80, $0.05 above prior guidance
- Net per diem growth of approximately 9% to 10.5% and net yield growth of approximately 5% to 6.5%
- Adjusted net cruise costs, excluding fuel per capacity day, expected to average approximately $156 for the full year
Cost Savings Initiatives
- Significant savings identified in fuel, food and consumables, and marketing
- Optimizing crew movements and reducing ship crew transfers to result in multimillion dollar savings
- Engaged third-party consultant to benchmark best practices and identify incremental areas of opportunity
Balance Sheet and Debt
- Generated over $1.5 billion of cash flow from operations in the first half of the year
- Repayed approximately $1.4 billion of debt, including full paydown of revolving credit facility
- Net leverage expected to reduce below 6x over the course of the first half of 2024
- Liquidity position remains strong at approximately $2.4 billion
Q & A sessions,
Key Takeaways
- The company is focused on executing near-term priorities, including the delivery of 2 new builds and fine-tuning their vision of the future.
- The target higher-end demographic is healthy and resilient, with strong demand for travel and experiences, resulting in strong revenue performance.
- The company is demonstrating the results of their margin enhancement initiatives, with sequential improvement in key cost metrics over the past two quarters.
- The company’s liquidity position is solid, and they are committed to prioritizing the restoration of their balance sheet and reducing leverage in the coming years.
Revenue Performance and Bookings
- Record revenue up 33% in Q2 2023, with strong book position and higher prices.
- Advanced customer deposits of $3.5 billion, 52% over Q2 2019.
- Strong rebooking behavior, with record levels of guests rebooking within the first year or two compared to previous periods.
- Continued strong booking volume, with every month from January to July 2023 being a record month for new bookings.
Margin Enhancement Initiatives
- Sequential improvement in key cost metrics over the past two quarters.
- Commitment to identify and implement additional measures to accelerate margin recovery while maintaining exceptional product and service offerings.
Long-term Outlook and Yield Growth
- Expectation of continued strong yield growth, driven by tailwinds and healthy consumer demand metrics.
- Commitment to low to mid-single-digit yield increases with moderate and disciplined capacity growth.
- Plan to provide long-term metrics on EBITDA margin, yield, and cost components of the business in early 2024.
Premium Deployment Strategy
- Shift towards more premium itineraries that are booked further in advance, allowing for a longer booking curve and a more stable and predictable demand profile.
- Expectation of higher rebooking rates, higher BNS ticket sales, higher revenue, and a higher booking window as a result of the premium deployment strategy.
- Commitment to getting back to pre-pandemic EBITDA margins over time.
No bad stock 