Norwegian Cruise Line Holdings Ltd (NCLH) has reported a GAAP net loss of $1.4 bill or EPS of minus $4.16 for the first quarter of this year, compared to net loss of $1.9 bill or EPS of minus $8.80 in 1Q20.
Adjusted Net Loss was $668.6 mill or Adjusted EPS of minus $2.03 in 2021, which included $701.6 mill of adjustments primarily consisting of expenses related to losses on extinguishment and modifications of debt largely related to the repurchase of the L Catterton exchangeable notes.
In 1Q20, NCLH reported an Adjusted Net Loss and Adjusted EPS of $211.3 mill and minus $0.99, respectively.
Revenue for 1Q21 decreased to $3.1 mill, compared to $1.2 bill in 2020, due to the complete suspension of voyages in the quarter.
Total cruise operating expense decreased 79.8% in 2021, compared to 2020. In 2021, cruise operating expenses were primarily related to crew costs, including salaries, food and other travel costs, fuel, and other ongoing costs, such as insurance and ship maintenance.
As a result 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 second quarter this year and expects to report a net loss until it is able to resume regular voyages.
The company’s monthly average cash burn for 1Q21 was around $190 mill, or about $170 mill per month, excluding previously disclosed non-recurring debt modification costs.
NCLH paid around $50 mill of one-time 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 through the1Q22.
For 2Q21, the company said that it expected the average cash burn rate to be around $190 mill per month, as it prepares for a return to service this summer.
“Over a year after the initial global suspension of cruise voyages, we are pleased to have announced our great cruise comeback programme beginning with voyages originating from international ports.
“Our teams have worked tirelessly and enlisted the guidance of top public health officials and scientific experts to develop our robust, science-backed SailSAFETM health and safety programme, which combines mandatory vaccination of all guests and crew with rigorous preventative measures, including universal COVID-19 testing.
“With our SailSAFE programme, we believe we can provide a uniquely safe and healthy experience which exceeds all other vacation options available on land or at sea,” said Frank Del Rio, NCLH’s President and CEO. “As for the resumption of cruises from the US, we continue to engage in dialogue with the US Centers for Disease Control and Prevention.
“Our team is working through the recently issued and modified technical guidance for which additional clarification is needed on how the incorporation of vaccine requirements impacts the Conditional Sail Order and our path forward,” he said.
Mark Kempa, Executive Vice President and CFO, added; “We completed several strategic capital markets transactions in the quarter, raising over $1 bill of incremental liquidity and further extending our debt maturity profile.
“This included the opportunistic repurchase of the L Catterton senior exchangeable notes, which allowed us to pro-actively manage our balance sheet, reduce debt and unlock additional value for our shareholders.
“As we prepare for our imminent resumption of cruising this summer, we will continue to balance our cash needs to maximise financial flexibility and position us well for an extended recovery period,” he concluded.
On 6th April, 2021, NCLH unveiled its two-pronged plan for its return to cruising within and outside the US this summer. The company has announced its phased cruise resumption for voyages embarking outside of the US across its three brands, which include:
- Norwegian Cruise Line (NCL) – NCL will initially offer seven-day cruises to the Greek Isles on ‘Norwegian Jade’ from Athens (Piraeus), Greece beginning 25th July, 2021, and seven-day Caribbean itineraries originating in Montego Bay, Jamaica beginning on 7th August, 2021 on ‘Norwegian Joy’ and from La Romana, Dominican Republic on ‘Norwegian Gem’ beginning 15th August, 2021. Beginning in September, Norwegian Cruise Line will offer voyages in the Mediterranean departing from Barcelona and Rome (Civitavecchia) on ‘Norwegian Epic’ and ‘Norwegian Getaway’.
- Oceania Cruises – Oceania will restart cruise operations with ‘Marina’ in August, resuming her originally published voyage schedule commencing on 29th August, in Copenhagen.
- Regent Seven Seas Cruises – Regent Seven Seas will return to sailing with ‘Seven Seas Splendor’ cruising from the UK beginning 11th September, 2021. The voyage will also mark the resumption of the vessel’s inaugural season, with the ship having only completed two cruises with guests following her christening in February, 2020.
Bookings were strong for future periods, NCLH said, resulting in an elongated booking window, as guests book further into the future, despite reduced sales and marketing investments and a travel agency industry that has not been at full strength for months.
During 1Q21, overall bookings, net of cancellations, were more than double the volumes during the previous quarter.
Next year’s booking and pricing trends were described as very positive driven by strong pent up demand. NCLH said that it was experiencing robust future demand across all brands with the overall cumulative booked position for the first half of 2022 ahead of 2019’s record levels with pricing higher when excluding the dilutive impact of future cruise credits (FCCs).
As of 31st March, 2021, NCLH had $1.3 bill of advance ticket sales, including the long-term portion of advance ticket sales, which includes about $0.85 bill of FCCs.
NCLH also said that it continued to take proactive measures on its financial action plan to conserve cash, control operating and capital expenditures, improve its debt maturity profile and secure additional capital.
At the end of the first quarter, the company’s total debt position was $12.2 bill and the cash and cash equivalents was $3.5 bill.
Since 31st December, 2020, NCLH has taken the following action:
- Raised around $1.6 bill, net of underwriting fees, with an equity offering of about 53 mill ordinary shares in March 2021. Around $1 bill of proceeds were used to re-purchase the L Catterton exchangeable notes due 2026. This repurchase allowed the company to reduce debt and future interest expense while generating incremental liquidity of about $530 mill with limited additional dilution, as the vast majority of shares issued were already reserved for the L Catterton notes.
- Issued $1.1 bill of senior unsecured notes consisting of $575 mill of 5.875% senior unsecured notes due 2026 (tack-on to $850 mill offering in December, 2020) and $525 mill of 6.125% senior unsecured notes due 2028. Proceeds were used in part to fully repay the ‘Norwegian Jewel’ and ‘Pride of America’ credit facilities, which were to mature in 2022 and generated about $650 mill of incremental liquidity.
- Amended all export credit agency backed credit agreements to defer around $680 mill of amortisation payments through 31st March, 2022 and secured covenant waivers and suspensions through 31st December, 2022.
- Deferred certain newbuilding-related payments of about €270 mill through 30th June, 2022.
- Amended Senior Secured Credit Facility to defer around $70 mill of certain amortisation payments due prior to 30th June, 2022 and suspend the testing of certain financial covenants through 31st December, 2022.
