Norwegian Cruise Line Holdings (NCLH) generated record third quarter total revenue of $2.8 bill, an ~11% increase, compared to the same period in 2023 on 4% capacity growth.
GAAP net income was $474.9 mill, a 37% increase compared to 3Q23, with EPS increasing $0.24, or 34%, to $0.95. Performance was driven by strong revenue growth and continued execution on cost reductions and efficiencies, which offset a $0.06 per share negative impact from foreign exchange rates in the quarter.
The company’s sustained focus on margin enhancement drove another quarter of improvement in operatingg costs. Gross cruise costs per capacity day was about $314 for the quarter. Adjusted net cruise cost, excluding fuel per capacity day was around $155 on an as reported and constant currency basis, and was better than guidance of $156, due to timing differences of costs, which will now shift to the fourth quarter.
Adjusted EBITDA grew 24% to $931 mill, a quarterly record high, compared to $752.1 mill for the same period of 2023 and above guidance of about $870 mill. Adjusted EPS grew $0.24, or 31%, to $0.99, exceeding guidance of $0.92.
Gross margin per capacity day was up 19% versus 2023 on an as reported and up 20% on a constant currency basis. Net Yield growth beat guidance by 260 basis points, increasing over prior year by around 8.7% on an as reported and 9% on a constant currency basis, due to strong demand and pricing across the deployment, particularly in Alaska and Canada/New England, as well as on board spend.
Total debt was $13.4 bill. Net Leverage was 5.58x for the 12-months ended 30th September, 2024, an ~1.75x reduction from 31st December, 2023.
This year’s full year net yield guidance on a constant currency basis increased 120 basis points from the previous guidance to about 9.4% from 8.2%. The increase in guidance was driven by strong demand across all three brands and itineraries in 2H24.
Full year adjusted EBITDA guidance increased $75 mill from the previous guidance to about $2.425 bill from $2.350 bill. This raise is due to better than expected 3Q24 results and increased guidance for 4Q24.
Adjusted operational EBITDA margin for the full year increased to 35.3%, up from previous guidance of 34.5%.
Full year adjusted net cruise cost, excluding fuel per capacity day guidance remained unchanged at flat to previous year, excluding the impact of drydockings, as cost savings measures fully offset inflation and increased variable compensation, due to strong performance of the business.
Full year adjusted net income guidance increased $65 mill from previous guidance to about $855 mill from $790 mill, and adjusted EPS guidance increased around 8%, or $0.12 to $1.65 from $1.53.
“Our exceptional third quarter results, with record revenue, net income and adjusted EBITDA, surpassed guidance across all key metrics, underscoring the strength of our business, the attractiveness of our product offering across all brands and the superior execution and delivery by our teams both shoreside and shipboard,” said Harry Sommer, NCLH President and CEO (pictured).
“Fuelled by robust demand and our relentless focus on cost control and margin enhancement, we’re raising our full-year guidance for a fourth time and expect 2024 to be our best year for revenue, Net yield growth and adjusted EBITDA.
“We now project adjusted EBITDA to be $225 mill above our initial guidance, growing 30% year-over-year, and adjusted EPS to be $0.42 above initial guidance, growing around 136% year-over-year, reflecting our ability to capitalise on market opportunities while delivering outstanding experiences across our brands.
“We expect 2024 to result in record revenue, adjusted EBITDA and net yield growth as compared to each full year since the company’s initial public offering when normalising yearly net yield growth for acquisitions such as the acquisition of Prestige Cruise Holdings in 2014,” he said.
As of 30th September, 2024, NCLH had total debt of $13.4 bill and net debt of $13.1 bill. Net leverage improved by approximately 1.75 turns, compared to 31st December, 2023, ending the third quarter of 2024 at 5.58x.
At quarter-end, liquidity was $2.4 bill, including about $332.5 mill of cash and cash equivalents, $1.2 bill of availability under our undrawn revolving loan facility, and a $650 mill undrawn backstop commitment.
“This quarter, we made significant strides in strengthening our financial position. We successfully refinanced $315 mill of notes coming due in 2024 with 6.250% unsecured notes due 2030 with the remaining balance of $250 mill to be paid at maturity.
“This transaction represents another key step in our ongoing efforts to optimise our capital structure and de-risk the business. Furthermore, our robust adjusted EBITDA growth drove further reduction in our net leverage, which decreased to 5.58 times, an ~1.75x reduction from year-end 2023.
“As we look ahead, we remain committed to our disciplined approach to financial management. The combination of our successful cost optimisation initiatives and the strong demand environment positions us well to further reduce our net leverage, which is expected to end the year at ~5.4 times,” said Mark Kempa, Executive Vice President and CFO.
