Norwegian Cruise Line Boosts 2024 Guidance Yet Again: Q2 Profits Surge As Demand Stays High

Norwegian Cruise Line Holdings Ltd NCLH reported second-quarter fiscal 2024 sales growth of 7.6% year-over-year to $2.372 billion on 4% capacity growth, missing the consensus of $2.383 billion.

Operating income for the quarter was $341.56 million (+25.3% YoY), and the margin expanded by 204 bps to 14.4%.

Adjusted EPS improved to $0.40 from $0.30 a year ago, beating the consensus of $0.35.

Adjusted EBITDA increased 14.2% YoY to $587.67 million, and the margin expanded by 143 bps to 24.8%.

Occupancy for the quarter was 105.9%, and total revenue per Passenger Cruise Day increased ~2% YoY. Gross margin per Capacity Day was up 7% YoY.

NCLH’s total debt was $13.4 billion. Net Leverage was 5.9x for the 12 months ended June. Total cruise operating expenses increased to $1.454 billion versus $1.383 billion last year.

Gross Cruise Costs per Capacity Day were ~$315; Adjusted Net Cruise Costs, excluding Fuel per Capacity Day, were ~$163 (flat Y/Y when the $9 Dry-dock impact is excluded).

The company's fuel expense was $175 million for the quarter; Fuel price per metric ton, net of hedges, decreased to $719 from $715 in 2023. Fuel consumption of 243,000 metric tons was slightly better than projections.

At the end of the quarter, liquidity was $2.7 billion, consisting of $594.1 million of cash and cash equivalents, $1.2 billion of availability under the Revolving Loan Facility, and a $650 million undrawn backstop commitment.

“We continue to see robust demand heading into the back half of the year and are committed to improving efficiencies, reducing costs, and restoring our margins in a strategic and disciplined manner. Given our strong progress to date and current demand expectations, we are raising our 2024 full-year guidance for a third time this year for key metrics resulting in expected Adjusted EPS growth of 120% versus 2023, while keeping our cost guidance for the year unchanged at flat to prior year," commented Mark A. Kempa, executive vice president and chief financial officer.

Q3 Outlook: NCLH expects adjusted EPS of about $0.92 against the consensus of $0.92 and Adjusted EBITDA of ~$870 million. The company expects an Occupancy of ~108.2%.           

2024 Outlook: Norwegian Cruise Line expects Adjusted EPS of ~$1.53 (prior $1.42) versus consensus of $1.44 and expects Adjusted EBITDA of ~$2.35 billion (prior $2.30 billion).

The company expects 2024 occupancy of ~105.2% (prior ~105.1%). Net Yield is now expected to increase ~8.2% (prior ~7.2%) as reported and in constant currency.

Price Action: NCLH shares are trading higher by 0.95% at $18.74 at the last check Wednesday.

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