At the end of last month, Norwegian Cruise Line Holdings (NCLH) (together with NCL Corp) reported financial results for the fourth quarter and full year 2022 and provided guidance for the first quarter and full year 2023.
GAAP net loss for the fourth quarter of 2022 was $482.5 mill or EPS of minus $1.14, compared to net loss of $1.6 bill or EPS of minus $4.01 in the previous year.
NCLH’s 4Q22 adjusted net loss was $439.7 mill, compared to an adjusted net loss of $765 mill in 4Q21. Revenue increased to $1.5 bill, compared to $487.4 mill in the same period last year, due to the phased ramp up of voyages.
Total cruise operating costs increased last year compared to 2021, due to the continued resumption of voyages, which resulted in higher payroll, fuel, and direct variable costs of fully operating ships, compared to 2021 when only 16 ships were returned to service. Costs were also impacted by inflationary pressures.
For the full year, the GAAP net loss was $2.3 bill or EPS of minus $5.41, compared to a net loss of $4.5 bill in 2021. The company reported adjusted net loss of $1.9 bill in 2022, compared to adjusted net loss and adjusted EPS of $2.9 bill and minus $8.07, respectively, for 2021.
NCLH entered this year with a record booked position and at higher pricing. Wave season demand was very strong with the company’s brands experiencing record launches for offers and highest-ever booking months in November, 2022 and January, 2023.
Occupancy is expected to average around 100% for the first quarter of 2023 and is on track to reach historical levels for the second quarter.
Capacity is expected to increase by about 19%, compared to 2019, which will include the delivery of three newbuildings this year – Oceania Cruises’ ‘Vista’, ‘Norwegian Viva’ and Regent’s ‘Seven Seas Grandeur’.
NCLH is undertaking a broad and ongoing margin enhancement initiative and took several steps in recent months to improve operating efficiencies, reduce costs, and maximise revenue generation opportunities, while continuing to provide value to its guests, the company said.
As part of this initiative, operating efficiency and cost reduction efforts are expected to result in a decrease of nearly 15% in adjusted net cruise costs, excluding fuel per capacity day, for full year 2023, compared to the second half of 2022.
Adjusted 2023 EBITDA is expected to be in the range of $1.8 to $1.95 bill, the company said.
Frank Del Rio, NCLH’s President and CEO, commented.“2022 was an eventful year, as we successfully completed our nearly year long great cruise comeback, welcomed our newest ship ‘Norwegian Prima’ to our world class fleet and achieved several key milestones on our post-pandemic financial recovery.
“We are now squarely focused on the future and are taking deliberate and strategic actions to best position the company for its next chapter, which includes an industry-leading growth profile representing approximately 50% capacity growth over 2019.
“Our three award-winning brands continue to resonate with loyal past guests and new guests alike, as evidenced by our strong guest satisfaction scores and the numerous booking records we have achieved in recent months, and we are excited to deliver memorable vacation experiences to the nearly three million guests we expect to welcome aboard in 2023.
“We continue to pursue all opportunities to capitalise on the healthy demand we are experiencing, especially during this important Wave season,” he said.
Non-newbuild capital expenditures for 4Q22 were $89 mill. Anticipated non-newbuild capital expenditures for full year 2023 are expected to be around $450 mill, including about $115 mill in 1Q23.
NCLH has also modified some existing newbuilding contracts, which has resulted in an increase in ship contract costs of around €1.2 bill.
These changes include the modification and enlargement of the last four ‘Prima’ class vessels, as well as additional modifications to the final two ships in this class to accommodate the future use of green methanol as an alternative fuel source.
Compared to the first-generation ‘Prima’ class vessels, these changes will result in about 10% increase in gross tonnage for the third and fourth ships and an around 20% increase in gross tonnage for the fifth and sixth ships.
As a result, delivery dates for these ships have moved and the company now expects one ship to be delivered each year from 2025 through 2028.
The majority of the ship construction costs increase is not effective unless financing is secured and the company is currently in the process of securing additional export-credit agency backed financing to cover the above costs.
In addition, NCLH completed biofuel blends tests on three additional ships, ‘Norwegian Star’, ‘Norwegian Sun’ and ‘Norwegian Epic’. All three ships were tested with a blend of around 30% biofuel and 70% MGO, which was supplied in collaboration with World Fuel Services, as well as GoodFuels for ‘Norwegian Sun’ and PRIO for ‘Norwegian Star’ and ‘Norwegian Epic’.
In addition, key organisational changes took place at the senior executive leadership level effective 1st January, 2023, as part of a succession planning process.
Andrea DeMarco, former Chief Sales and Marketing Officer for Regent Seven Seas Cruises, was appointed to President of Regent Seven Seas Cruises and Frank Del Rio Jr, former Chief Sales and Marketing Officer for Oceania Cruises, was appointed to President of Oceania Cruises.
