Norwegian Cruise Line Sets Sail For Stellar Outlook; Stock Jumps

Norwegian Cruise Line Holdings Ltd NCLH reported fourth-quarter fiscal 2023 sales growth of 30.8% year-on-year to $1.986 billion, marginally beating the consensus of $1.97 billion.

Total revenue was up 34% versus 2019, with total revenue per Passenger Cruise Day up approximately 21%, with capacity growth of 17% compared to 2019.

Adjusted EPS improved to $(0.18) from $(1.04) a year ago, missing the consensus of $(0.14).

Due to the ongoing conflict in Israel and the Red Sea, Norwegian Cruise canceled and redirected all calls to Israel during Q4. As a result, Occupancy was 99.2% for the quarter of 2023 and 102.9% for 2023, in line with guidance. 

Total cruise operating expenses increased to $1.32 billion versus $1.22 billion last year.

Gross Cruise Costs per Capacity Day was ~$280; Adjusted Net Cruise Costs excluding Fuel per Capacity Day was ~$151 (-19% Y/Y).

The company recorded an operating income of $124.33 million versus a loss of $(280.97) million last year.

The company’s fuel expense was $187 million for the quarter; Fuel price per metric ton, net of hedges, decreased to $726 from $755 in 2022. Fuel consumption of 257,000 metric tons was in line with projections.

At the end of the quarter, liquidity was $2.3 billion, consisting of $402.4 million of cash and cash equivalents, $1.2 billion of availability under the Revolving Loan Facility, and a $650 million undrawn backstop commitment. 

Adjusted EBITDA for the quarter was $359.6 million versus a loss of $(41.37) million a year ago, and the margin stood at 18.1%.

“Looking ahead, we are determined to capitalize on our recent achievements and take advantage of the positive momentum and strong demand for cruise which resulted in turning the year at all-time highs in both our booked position and pricing,” said Harry Sommer, president and chief executive officer of Norwegian Cruise Line.

2024 Outlook: NCLH expects Adjusted EPS of ~$1.23 versus consensus of $1.23 and expects Adjusted EBITDA of ~$2.2 billion.

The company expects 2024 occupancy of ~105.1%. Net Yield is expected to increase ~5.5% as reported and ~5.4% in Constant Currency YoY.

Q1 Outlook: NCLH expects adjusted EPS of about $0.12 against the consensus of $(0.20) and Adjusted EBITDA of ~$450 million.

Price Action: NCLH shares are trading higher by 17.5% at $18.72 on the last check Tuesday.

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