Norwegian Cruise Line Holdings generated GAAP net income of $198.5 mill or EPS of $0.87 in the second quarter of 2017, compared to $145.2 mill or $0.64 in 2Q16.
Adjusted net income was $232.7 mill or adjusted EPS of $1.02, compared to $192.6 mill or $0.85 in 2Q16.
In 2Q17, total revenue increased 13.3% to $1.3 bill and the gross yield increased 7.4%. Adjusted net yield increased 8.1% on a constant currency basis.
NCH said that it expected to generate record earnings for full year 2017, surpassing the high end of its previous full year guidance. Adjusted EPS is now expected to be in the range of $3.93 to $4.03, up $0.14 from the previous guidance of $3.79 to $3.89.
“Positive consumer sentiment in North American and key international markets has resulted in a robust booking environment that continues to be one of the strongest in recent history which, combined with our targeted strategic revenue initiatives, drove second quarter revenue and yield growth well above expectations,” said Frank Del Rio, NCH president and CEO. “All three of our brands benefited from strength across each of their respective markets and contributed to our second quarter earnings beat.”
The increase in revenue was primarily due to an increase in capacity days as a result of a reduction in the amount of drydockings during the period, as well as the benefit of sailings from the addition of Regent brand’s ‘Seven Seas Explorer’ and Oceania Cruises’ ‘Sirena’ to the fleet in 2016 along with an increase in net yield, due to strength in ticket pricing and higher on board and other revenue. Gross Yield increased 7.4%, wh
Gross cruise cost increased 10.6%, compared to 2016, due to an increase in total cruise operating expense and marketing, general and administrative expenses. Gross cruise costs per capacity day increased 4.9%. Adjusted net cruise cost excluding fuel per capacity day increased 2.7% on a constant currency basis and 2.6% on an as reported basis, primarily due to an increase in marketing, general and administrative expenses partially offset by lower other cruise operating expenses.
Fuel price per tonne, net of hedges was $469, which is commensurate with 2016 price level. NCH reported fuel expense of $86.7 mill for 2Q17.
Interest expense, net decreased to $64.2 mill in 2Q17 from $68.4 mill in 2Q16. Interest expense for 2017 reflects an increase in average debt balances outstanding primarily associated with the delivery of new ships and newbuild instalments, as well as higher interest rates due to an increase in LIBOR. Interest expense for 2016 included a write-off of $11.4 mill of deferred financing fees related to the refinancing of certain credit facilities last year.
“We are pleased to report strong booking trends across all markets for the back half of 2017 where pricing and occupancy are now up mid-single digits over prior year,” said Wendy Beck, executive vice president and CFO. “Strong booking volumes and firm pricing have benefited our booked business for the next four quarters, contributing to the increase of our 2017 full year outlook and further solidifying our expectation for strong earnings growth.”
