NCLH bullish for 2022

2021-02-26T20:55:44+00:00 February 26th, 2021|Finance|

Norwegian Cruise Line Holdings (NCLH), together with NCL Corp, has reported a GAAP net loss of $4 bill or EPS of a negative $15.75 for 2020, compared to net income of $930.2 mill or EPS of $4.30 for the previous year.

NCLH also reported adjusted net loss of $2.2 bill or an adjusted EPS of a negative $8.64 in 2020. This compares to a positive $1.1 bill and $5.09, respectively, for 2019.

Revenue decreased 80.2% to $1.3 bill, compared to $6.5 bill in 2019, due to the cancellation of the vast majority of sailings in 2020 as a result of the COVID-19 pandemic, which led to a 78.6% decrease in capacity days.

Cruise operating expenses decreased 53.8% last year, compared to 2019 driven by the suspension of global cruise voyages. Expenses subsequent to the voyage suspensions primarily included the cost of protected commissions, crew costs, including salaries, food and other repatriation costs, fuel and other ongoing costs, such as insurance and ship maintenance.

For the fourth quarter of last year, NCLH said the GAAP net loss was $738.9 mill or an EPS of a negative $2.51, compared to net income of $121.3 mill or an EPS of $0.56 in 4Q19.

The 4Q20 adjusted net loss was $683.8 mill or adjusted EPS of a negative $2.33 in 2020, compared to a positive $155.7 mill and $0.73, respectively, for 4Q19.

Revenue decreased to $9.6 mill, compared to $1.5 bill in 2019, due to the complete suspension of voyages during the quarter.

As a consequence of the COVID-19 pandemic, while the company said that it could not estimate the impact on its business, financial condition or near- or longer-term financial or operational results with certainty, it will report a net loss for the first quarter of 2021 and expects to report a net loss until it is able to resume voyages.

“While 2020 has been without a doubt the most challenging year in the Company’s 50 plus year history, our team responded to the unprecedented environment with swift and decisive action. Our company demonstrated once again its adaptability and resiliency, underscored by the unwavering commitment and dedication from our team members across the globe,” said Frank Del Rio, NCLH President and CEO.

“Looking ahead, we are encouraged by the accelerating rollout of vaccines, the progress towards herd immunity and the strong demand for future cruise vacations.”

NCLH’s current suspension includes all voyages on Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises through 31st May, 2021.

As for bookings, the company’s overall position for the second half of 2021 remains below historical levels, driven by continued uncertainty around timing of the resumption of cruising and the shift of limited marketing investments to 2022 sailings.

Pricing for the second half of 2021 was in line with pre-pandemic levels, even after including the dilutive impact of future cruise credits (FCC).

While still early in the booking cycle, 2022 trends were very positive driven by strong pent up demand. The company is experiencing robust future demand across all brands with the overall cumulative booked position for the first half of 2022 was significantly ahead of 2019’s record levels with pricing in line when excluding the dilutive impact of FCCs, NCLH claimed.

As of 31st December, 2020, the company had $1.2 bill of advance ticket sales, including the long-term portion of advance ticket sales, which includes around $0.85 bill of future cruise credits.

At the end of last year, the company’s total debt position was $11.8 bill and its cash and cash equivalents was $3.3 bill.

NCLH’s monthly average cash burn for 4Q20 was around $190 mill and included about $15 mill per month of additional relaunch-related expenses as the company began preparing vessels for a potential return to service in early 2021, in connection with the CDC Conditional Order, which did not materialise.

For 1Q21, the company expects the average cash burn rate to temporarily remain at around $190 mill per month, or about $170 mill per month, excluding non-recurring debt modification costs, as it ramps down relaunch-related expenses and repatriates crew.

The company has incurred about $60 mill of one-off debt deferral and modification costs and fees in 1Q21, as a result of successful debt deferrals and covenant waivers and suspensions, which combined with newbuilding payment extensions, have resulted in about $1 bill of additional liquidity over the next 12 months.

“We continue to take proactive measures to bolster our efforts to weather the ongoing uncertainty of the public health environment, including two highly successful capital markets transactions executed in the fourth quarter, which raised nearly $1.7 bill and demonstrate the continued confidence of our investors in our business model,” said Mark Kempa, NCLH Executive Vice President and CFO.

“We are seeking to minimise cash burn and maximise financial flexibility in the near-term while balancing preparations for the future resumption of cruising.

“Despite the near-term challenges we face, we remain focused on our long-term strategic priorities and creating a clear path to financial recovery,” he concluded.