Norwegian Cruise Line Holdings Ltd. (Norwegian Cruise Line (NCLH)) shares took a dip Thursday after the cruise operator reported second-quarter results that were a bit of a mixed bag. The company beat earnings estimates, but a slight revenue miss and a lowered full-year outlook reminded investors that the recovery isn't all smooth sailing.
Adjusted earnings per share came in at 48 cents, topping the 39-cent analyst estimate, though that was down from 51 cents a year ago. Revenue rose 4.9% year over year to $2.641 billion, just a hair below the $2.643 billion forecast. On a GAAP basis, net income jumped to $222.6 million from $30 million, and diluted EPS climbed to 48 cents from 7 cents.
Adjusted EBITDA fell 4.1% to $666 million, but that was better than the company's own guidance of $632 million. Operating income slipped to $363.3 million from $423.8 million. CEO John W. Chidsey put a positive spin on it: "Norwegian Cruise Line Holdings delivered a solid second quarter with profitability ahead of guidance. At the same time, we continued to advance our strategic priorities to strengthen the business for the long term."
Passenger Growth and Cost Performance
Passenger-ticket revenue edged up to $1.73 billion from $1.71 billion, while onboard and other revenue grew to $910.7 million from $808.5 million. The number of passengers carried jumped to 906,689 from 738,635, and Capacity Days rose 8.9% to 6.59 million. Occupancy, however, dipped to 102.4% from 103.9%.
Constant-currency Net Yield fell 2.6%, which was better than the 3.6% decline the company had guided for. Adjusted Net Cruise Cost excluding Fuel per Capacity Day decreased 0.5%, versus guidance for a 1% increase. Fuel expense rose to $219 million from $157 million, and the quarter included $7.5 million in restructuring costs.
Cash, Debt, and Liquidity
First-half operating cash flow was $1.41 billion. As of June 30, Norwegian Cruise had $218 million in cash, $1.5 billion in total liquidity, $15 billion in total debt, and net leverage of 5.3 times.
Booking Environment Update
The company said bookings for the next 12 months remain below target levels, as softer demand at its Norwegian Cruise Line brand persists. That reflects both company-specific execution challenges and the ongoing conflict in the Middle East. On the bright side, Norwegian expects demand for Caribbean itineraries to improve once all amenities at its private island, Great Stirrup Cay, open on Sept. 4. The expansion includes a new pier, the Great Tides Waterpark, the Great Life Lagoon, and Splash Harbor.
Guidance Reflects Demand Pressure
Norwegian narrowed its full-year adjusted EPS guidance from $1.45-$1.79 to about $1.50, well below the $1.67 analyst estimate. It expects adjusted EBITDA of roughly $2.5 billion and a Net Yield decline of about 5%. For the third quarter, the company sees adjusted EPS of 90 cents, matching estimates, and adjusted EBITDA of $874 million.
Price Action
Shares of Norwegian Cruise Line were down 8.35% at $19.04 at the time of publication Thursday, according to market data.
