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Norwegian Cruise (NCLH) Posts Wider-Than-Expected Q3 Loss
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Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) reported weak third-quarter 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. Following the results, the company’s shares are down 2% in the pre-market trading session.
The company continues to execute phased relaunch plans for all 28 ships. The company was operating at nearly 40% of its capacity by the end of the third quarter of 2021. In the quarter under review, occupancy was 57.4%. Norwegian Cruise anticipates operating at 75% capacity by the end of 2021 and full fleet operation is expected by April 1, 2022. It’s 11 ships have resumed operations to date.
Frank Del Rio, president and CEO of Norwegian Cruise, stated, “While consumer concerns surrounding the Delta variant resulted in a slowdown in bookings during the third quarter, net booking volumes have improved over the past six weeks and we continue to see robust future demand for cruising particularly for the second half of 2022 and beyond when our full fleet is expected to be back in operation at normalized occupancy levels.”
Earnings & Revenue Discussion
Norwegian Cruise reported an adjusted loss per share of $2.17, wider than the Zacks Consensus Estimate of a loss of $2.11. In the prior-year quarter, the company reported a loss per share of $2.35.
Revenues of $153.1 million lagged the consensus mark of $190 million. In the prior-year quarter, the company had reported revenues of $6.5 million. The upside can primarily be attributed to resumption of cruise operations. In the quarter under review, passenger ticket revenues were $86.1 million compared with $4.7 million in the prior-year quarter. Onboard and other revenues increased to $67 million from $1.2 million.
Norwegian Cruise Line Holdings Ltd. Price, Consensus and EPS Surprise
Total cruise operating expenses increased 131.3% for the quarter under review from the year-ago quarter’s levels. The company’s expenses in the quarter primarily stemmed from crew costs, which include salaries, food and other repatriation costs, fuel, and other ongoing expenses such as insurance and ship maintenance.
Gross cruise costs in the third quarter were up 92.9% year over year to $668.9 million. Adjusted net cruise costs (excluding fuel) amounted to $497.2 million compared with $494.7 million in the prior-year quarter. Fuel price per metric ton (net of hedges) increased to $693 from $592 in 2020.
Net interest expenses in the quarter were $161.2 million, up from $139.7 million in the year-ago quarter.
Balance Sheet
Cash and cash equivalents as of Sep 30, 2021 were $1.9 billion, up from $3.3 billion at the end of Dec 31, 2020. Long-term debt as of Sep 30, 2021 was $11.9 billion compared with $11.7 billion as of Dec 31, 2021.
The company's monthly average cash burn for third-quarter 2021 was approximately $275 million compared with $200 million in the previous quarter. The figure, however, was below the prior guidance of $285 million. For fourth-quarter 2021, it expects the average cash burn rate to temporarily remain elevated at approximately $350 million per month due to the phased relaunch of additional vessels.
Other Updates
Despite the impact of the Delta variant, the company’s overall cumulative booked position for full year 2022 is in line with 2019’s record levels. This includes incorporation of higher pricing as well as the dilutive impact of future cruise credits (FCCs). As of Sep 30, the company’s advance ticket sales (including long-term portion) were $1.7 billion. The amount includes FCCs worth approximately $750 million.
Image: Bigstock
Norwegian Cruise (NCLH) Posts Wider-Than-Expected Q3 Loss
Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) reported weak third-quarter 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. Following the results, the company’s shares are down 2% in the pre-market trading session.
The company continues to execute phased relaunch plans for all 28 ships. The company was operating at nearly 40% of its capacity by the end of the third quarter of 2021. In the quarter under review, occupancy was 57.4%. Norwegian Cruise anticipates operating at 75% capacity by the end of 2021 and full fleet operation is expected by April 1, 2022. It’s 11 ships have resumed operations to date.
Frank Del Rio, president and CEO of Norwegian Cruise, stated, “While consumer concerns surrounding the Delta variant resulted in a slowdown in bookings during the third quarter, net booking volumes have improved over the past six weeks and we continue to see robust future demand for cruising particularly for the second half of 2022 and beyond when our full fleet is expected to be back in operation at normalized occupancy levels.”
Earnings & Revenue Discussion
Norwegian Cruise reported an adjusted loss per share of $2.17, wider than the Zacks Consensus Estimate of a loss of $2.11. In the prior-year quarter, the company reported a loss per share of $2.35.
Revenues of $153.1 million lagged the consensus mark of $190 million. In the prior-year quarter, the company had reported revenues of $6.5 million. The upside can primarily be attributed to resumption of cruise operations. In the quarter under review, passenger ticket revenues were $86.1 million compared with $4.7 million in the prior-year quarter. Onboard and other revenues increased to $67 million from $1.2 million.
Norwegian Cruise Line Holdings Ltd. Price, Consensus and EPS Surprise
Norwegian Cruise Line Holdings Ltd. price-consensus-eps-surprise-chart | Norwegian Cruise Line Holdings Ltd. Quote
Expenses & Operating Results
Total cruise operating expenses increased 131.3% for the quarter under review from the year-ago quarter’s levels. The company’s expenses in the quarter primarily stemmed from crew costs, which include salaries, food and other repatriation costs, fuel, and other ongoing expenses such as insurance and ship maintenance.
Gross cruise costs in the third quarter were up 92.9% year over year to $668.9 million. Adjusted net cruise costs (excluding fuel) amounted to $497.2 million compared with $494.7 million in the prior-year quarter. Fuel price per metric ton (net of hedges) increased to $693 from $592 in 2020.
Net interest expenses in the quarter were $161.2 million, up from $139.7 million in the year-ago quarter.
Balance Sheet
Cash and cash equivalents as of Sep 30, 2021 were $1.9 billion, up from $3.3 billion at the end of Dec 31, 2020. Long-term debt as of Sep 30, 2021 was $11.9 billion compared with $11.7 billion as of Dec 31, 2021.
The company's monthly average cash burn for third-quarter 2021 was approximately $275 million compared with $200 million in the previous quarter. The figure, however, was below the prior guidance of $285 million. For fourth-quarter 2021, it expects the average cash burn rate to temporarily remain elevated at approximately $350 million per month due to the phased relaunch of additional vessels.
Other Updates
Despite the impact of the Delta variant, the company’s overall cumulative booked position for full year 2022 is in line with 2019’s record levels. This includes incorporation of higher pricing as well as the dilutive impact of future cruise credits (FCCs). As of Sep 30, the company’s advance ticket sales (including long-term portion) were $1.7 billion. The amount includes FCCs worth approximately $750 million.
Zacks Rank & a Stock to Consider
Norwegian Cruise — which shares space with Royal Caribbean Cruises Ltd (RCL - Free Report) and Carnival Corporation & plc (CCL - Free Report) , in the Zacks Leisure and Recreation Services industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock worth considering in the leisure space is AMC Entertainment Holdings, Inc. (AMC - Free Report) , carrying a Zacks Rank #2 (Buy).
Shares of AMC Entertainment have gained a whopping 313.1% in the past six months.