Why Norwegian Cruise Line Stock Is Sinking Today

Norwegian Cruise Line Holdings Ltd NCLH stock is sinking Tuesday morning following its weak Occupancy forecast for 2024 and beyond.

NCLH reported second-quarter FY23 sales growth of 85.7% year-on-year to $2.21 billion, beating the analyst consensus of $2.18 billion.

Total revenue was up 33% versus 2019, with total revenue per Passenger Cruise Day up approximately 15% as reported and in constant currency.

Occupancy reached approximately 105%, slightly lower than in the second quarter of 2019, reflecting its strategic shift to longer, more immersive itineraries. 

Total cruise operating expenses were $1.38 billion versus $1.07 billion last year.

The company reported an operating income of $272.5 million with an operating margin of 12.4% versus a loss of $(396.8) million last year.

The company held $899.1 million in cash and equivalents as of June 30, 2023. Operating cash flow for six months totaled $1.53 billion.

Adjusted EPS of $0.30 beat the consensus of $0.27.

Adjusted EBITDA for the quarter was $515 million.

Outlook: NCLH expects adjusted EPS of about $0.80 (prior view $0.75) for FY23 against the consensus of $0.78.

For Q3, the company sees Adjusted EPS of $0.70 for Q3 (consensus $0.79).

It expects Occupancy of 103.5% (consistent with prior guidance) for FY23 and 106% for Q3.

For 2024 and beyond, NCLH expects Occupancy to be approximately 200 basis points lower relative to 2019.

Price Action: NCLH shares are trading lower by 14.7% at $18.83 on the last check Tuesday.