Norwegian Cruise Line Q3: Sails Past Expectations, Occupancy Jumps & More

Norwegian Cruise Line Holdings Ltd NCLH shares are trading higher after the company reported better-than-expected third-quarter results and raised its annual guidance.

NCLH reported third-quarter sales growth of 10.7% year over year to $2.806 billion, based on 4% capacity growth, beating the consensus of $2.77 billion.

Operating income for the quarter was $691.21 million (+32.1% YoY), and the margin expanded by 400 bps to 24.6%.

Adjusted EPS improved to $0.99 from $0.76 a year ago, beating the consensus of $0.94.

Adjusted EBITDA increased 23.8% YoY to $930.99 million, and the margin expanded by 352 bps to 33.2%.

Occupancy for the quarter was 108.1% (106.1% a year ago), and total revenue per Passenger Cruise Day increased ~4.8% YoY. Gross margin per Capacity Day was up 19% YoY.

NCLH’s total debt was $13.4 billion, and its net leverage was 5.58x for the 12 months ending in September. Total cruise operating expenses increased to $1.54 billion, compared to $1.48 billion last year.

Gross Cruise Costs per Capacity Day were ~$314; Adjusted Net Cruise Costs, excluding Fuel per Capacity Day, were ~$155.

The company’s fuel expense was $165 million for the quarter. Fuel price per metric ton, net of hedges, decreased to $699 from $727 in 2023. Fuel consumption of 236,000 metric tons was in line with projections.

At the end of the quarter, liquidity was $2.4 billion, consisting of $332.5 million of cash and cash equivalents, $1.2 billion of availability under the Revolving Loan Facility, and a $650 million undrawn backstop commitment.

“Fueled by robust demand and our relentless focus on cost control and margin enhancement, we’re raising our full-year guidance for a fourth time and expect 2024 to be our best year for revenue, Net Yield growth and Adjusted EBITDA. We now project Adjusted EBITDA to be $225 million above our initial guidance, growing 30% year-over-year, and Adjusted EPS to be $0.42 above initial guidance, growing approximately 136% year-over-year, reflecting our ability to capitalize on market opportunities while delivering outstanding experiences across our brands,” commented Harry Sommer, President and chief executive officer of Norwegian Cruise Line.

Q4 Outlook: NCLH expects adjusted EPS of about $0.09 and Adjusted EBITDA of ~$445 million. The company expects an Occupancy of ~101%.          

2024 Outlook raised: Norwegian Cruise Line expects Adjusted EPS of ~$1.65 (prior ~$1.53) versus consensus of $1.58 and expects Adjusted EBITDA of ~$2.425 billion (prior ~$2.35 billion).

The company expects 2024 occupancy of ~105% (prior ~105.2%). Net Yield is now likely to increase ~9.5% (prior ~8.2%) as reported.

Price Action: NCLH shares are trading higher by 8.2% at $25.80 at the last check Thursday.