NCLH’s losses increase

2022-02-26T00:19:51+00:00 February 26th, 2022|Finance|

Norwegian Cruise Line Holdings (NCLH) reported a GAAP net loss of $4.5 bill or EPS of minus $12.33 for 2021, compared to a net loss of $4 bill or EPS of minus $15.75 for the previous year.

The company’s adjusted net loss was $2.9 bill or EPS of minus $8.07 in 2021, compared to $2.2 bill and $8.64, respectively, in 2020.

Total revenue decreased 49.4% to $0.6 bill in 2021, compared to $1.3 bill in 2020. The revenue fall was due to the suspension of all cruise voyages in March, 2020 through 1H21 and the phased relaunch of some cruise voyages with ships initially operating at reduced occupancy levels in 2H21, as a result of the COVID-19 pandemic, which resulted in a decrease in capacity days of 18.1%.

For the fourth quarter of last year, NCLH reported a GAAP net loss of $1.6 bill or EPS of minus $4.01, compared to net loss of $0.7 bill or EPS of minus $2.51 in 4Q20.

Adjusted net loss for 4Q21 was $765 mill or adjusted EPS of minus $1.95, compared to $683.8 mill and minus $2.33, respectively, in 4Q20.

Revenue increased to $487.4 mill, compared to $9.6 mill in 2020, as cruise voyages resumed during the quarter.

As a result of the COVID-19 pandemic, while the company cannot 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 1Q22 and expects to report a net loss until it is able to resume regular voyages, it said.

As previously stated, based on its current trajectory and market and public health conditions, NCLH said it expected to have positive adjusted net income for the second half of this year.

“We launched our Great Cruise Comeback in late July, 2021 and in five short months, the teams at Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises have restarted operations on 75% of our capacity, safely carrying over 230,000 guests and delivering the unique vacation experiences that our award-winning cruise brands are famous for,” said Frank Del Rio, NCLH President and CEO (pictured).

“These last few months have also had their share of challenges caused by the impacts from the Delta and Omicron COVID surges, but despite these challenges, which were mostly out of our control, our booked position and pricing remain strong, particularly for the second half of 2022 and into 2023, demonstrating the strong fundamental demand for our cruise offerings,” he said.

NCLH said that it continued to work on the phased relaunch plans for its 28-ship fleet. Beginning in December, 2021, the spread of the Omicron variant of COVID-19, with its increased transmissibility, caused several operational challenges and disruptions, including additional travel restrictions, increased health-related protocols and certain port closures, which led to the temporary and voluntary cancellation of certain voyages in 4Q21 and 1Q22, and the postponement of the restart of some of the vessels.

By year end 2021, the company had about 70% of its capacity operating, or 75% when a vessel that had returned to service and subsequently paused, due to being unable to operate its scheduled voyages in South Africa during the height of its Omicron surge, was included.

Strong ticket pricing and on board revenue spend drove positive contribution from the fleet operating in 4Q21. Occupancy in the quarter was 51.4% reflecting the NCLH’s self-imposed occupancy limits, the effect of COVID-related booking cancellations and a significant capacity increase from the previous quarter.

As a result of Omicron-related disruptions, the company said that it now expected to have 85% of its capacity operating by the end of the first quarter of this year, with the full fleet expected to be back in operation during the early part of 2Q22.

In addition, the company expected to reach a critical inflection point during 2Q22 with net cash provided by operating activities turning positive. Based on the current booked position and trajectory, the company predicted having a positive adjusted net income for 2H22.

NCLH also said that it continued to take proactive measures to enhance liquidity and financial flexibility in the current environment and optimise its balance sheet.

As of 31st December, 2021, the company’s total debt was $12.4 bill and liquidity was $2.7 bill, consisting of cash and cash equivalents, short-term investments and a $1 bill commitment available through 15th August, 2022.

The company’s monthly average cash burn for 4Q21 was around $345 mill, slightly below the previous estimate. Looking ahead, NCLH expects 1Q22 monthly average cash burn to increase to about $390 mill driven by the phased relaunch of more vessels.

“Momentum continues building, as we approach 85% of our capacity expected to be in operation at the end of the first quarter. We are keenly focused on executing our financial plan on the path to our next significant milestone, as we expect to achieve positive operating cash flow in the second quarter,” said Mark Kempa, NCLH Executive Vice President and CFO.

“We continue to be opportunistic in accessing the capital markets to optimise our capital structure by eliminating high-cost debt incurred during the crisis.”