Norwegian Cruise Line Holdings (NCLH) has reported a 2019 GAAP net income of $930.2 mill, or EPS of $4.3, compared to $954.8 mill, or $4.25 EPS, in the previous year.
The company generated adjusted net income of $1.1 bill, or adjusted EPS of $5.09, compared to $1.1 bill, or $4.92 in 2018.
Revenue increased by 6.7% to $6.5 bill, compared to $6.1 bill in 2018. This rise was primarily due to an increase in capacity days and improved pricing. Gross yield increased 4.6%, while net yield increased 3.6% on a constant currency basis and 2.9% on an as reported basis.
Cruise operating expenses increased 8.5% in 2019 compared to 2018, primarily due to the increase in capacity days, the redeployment of ‘Norwegian Joy’ during 2Q19 and incremental direct costs related to air promotions.
Gross cruise costs per capacity day increased by 6.3%. Adjusted net cruise cost, excluding fuel per capacity day, increased 6.2% on a constant currency basis and 5.5% on an as reported basis. NCLH reported fuel expense of $409.6 mill for the year.
For 4Q19, GAAP net income was $121.3 mill, or EPS of $0.56, compared to $154.6 mill, or $0.7 in 2018. The company generated adjusted net income of $155.7 mill, or adjusted EPS of $0.73, compared to $188.8 mill or $0.85 in 2018.
These results include a $0.09 per share adverse impact from voyage cancellations, itinerary modifications and relief efforts related to Hurricane ‘Dorian’.
Revenue increased 7.2% to $1.5 bill, compared to $1.4 bill in 2018. This increase was primarily driven by the repositioning of ‘Norwegian Joy’ to North America, an increase in capacity days with the addition of ‘Norwegian Encore’ to the fleet, robust on board spending along with strong growth in organic pricing.
Gross yield increased by 4%, while net yield increased by 1.8% on a constant currency basis and 1.3% on an as reported basis.
Total cruise operating expenses increased by 8.6% in 2019, compared to 2018, primarily due to the introduction of ‘Norwegian Encore’ and incremental direct costs related to air promotions.
Gross cruise costs per capacity day increased by 5.6%, while adjusted net cruise cost, excluding fuel per capacity day, increased 4% on a constant currency basis and 3.4% on an as reported basis.
“2020 was set to be a banner year buoyed by the introduction of our two newest vessels, ‘Norwegian Encore’ and Regent’s ‘Seven Seas Splendor’, which are already making significant contributions to our bottom line,” said Mark Kempa, NCLH’s Executive Vice President and CFO.
“We have an exciting growth profile with nine ships on order over the next seven years, which will further amplify our ability to generate cash through revenue and earnings growth. We are confident in the strength of the core fundamentals that drive our business and remain committed to expanding Adjusted ROIC, growing earnings, maintaining a strong balance sheet and returning capital to shareholders over the long-term,” he added.
NCLH said that it had proactively implemented several preventative measures to reduce potential exposure and transmission of COVID-19 and to protect the health, safety, security and well-being of its guests and crew.
These measures include enhanced pre-boarding and on board health protocols that go above and beyond standard operating procedures. Any guest or crew who have travelled to China, Hong Kong or Macau in the past 30 days, regardless of nationality, are not allowed to board the company’s vessels.
Certain itineraries have been modified and the company has the flexibility to alter additional voyages as needed.
Out of caution and as a result of the uncertainty surrounding port entry and berthing availability in various destinations in Asia, NCLH has cancelled all voyages in Asia across its three brands.
A total of 40 voyages were cancelled, modified or redeployed, including 24 voyages on Norwegian Cruise Line, 10 on Oceania Cruises and six on Regent Seven Seas Cruises.
Following these changes, NCLH will not have any vessels deployed in Asia through the end of 3Q20.
As of the middle of February, the known direct impact to full year 2020 adjusted EPS is expected to be about $0.75 and is excluded from the company’s first quarter and full year 2020 guidance.
This direct impact includes customer incentive compensation and the 40 cancelled, modified or redeployed Asia voyages. This also includes the close-in redeployment of 21 cancelled Asia voyages on ‘Norwegian Spirit’, which has been redeployed to the Eastern Mediterranean for this summer with an extremely condensed booking window.
Due to the fluidity and uncertainty as to the duration and extent of the outbreak, it is too early for NCLH to fully quantify impacts from broader headwinds to its business resulting from decreased demand for travel and tourism globally.
The company’s financial performance could be materially impacted if travel restrictions and COVID-19 concerns continue for an extended period of time, it warned.
NCLH’s President and CEO, Frank Del Rio, said; “I am pleased to announce that Norwegian Cruise Line Holdings’ business model once again demonstrated its resilience in the face of significant exogenous headwinds by delivering yet another successful year in 2019, which included the sixth consecutive year of record revenue and earnings per share and seventh consecutive year of net yield growth.
“As a result of the strong global demand for cruises witnessed throughout 2019, we entered 2020 in the best booked position and at prices higher than last year’s record levels. This trend continued through late January until the COVID-19 outbreak began having an adverse impact on our business. We have taken several proactive measures to protect the health and safety of our guests and crew throughout our fleet, including implementing strict protocols regarding passenger embarkation, and in an abundance of caution have cancelled or modified several voyages in the Asia region through the third quarter of this year.
“While the effect of these impacts cannot be fully quantified at this time, our company has an exemplary track record of demonstrating its resilience in challenging environments and we remain confident in our ability to deliver strong financial performance over the long-term,” he stressed.
