Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) (together with NCL
Corporation Ltd., “Norwegian Cruise Line Holdings”, “Norwegian” or
the “Company”) today reported financial results for the first
quarter ended March 31, 2022 and provided a business update.
“Last week we reached
the biggest milestone yet in our Great Cruise Comeback as Norwegian
Spirit, the last ship in our fleet to resume sailing, welcomed
guests on board in Papeete, Tahiti. The herculean effort to restart
our fleet would not have been possible without the incredible
fortitude of the entire Norwegian team and the unwavering support
of our key partners and stakeholders around the world,” said Frank
Del Rio, president and chief executive officer of Norwegian Cruise
Line Holdings Ltd. “Looking ahead, our strategy is to ramp up
occupancy in a disciplined manner with the goal of exceeding
historical Net Yield1 levels for full year 2023 while maintaining
the high guest satisfaction scores and strong onboard revenue
generation we are currently experiencing. We are encouraged that
consumer demand remains robust with net booking volumes not only
back to pre-Omicron levels but now approaching historical levels
despite a temporary retreat due to the Russia-Ukraine conflict.
Pricing remains very strong for all future periods and our
value-add bundling strategy is working better than ever.”
Great Cruise
Comeback Update
The Company completed
its phased fleet relaunch on May 7, 2022 and its entire 28-ship
fleet is now back in operation. This significant achievement marks
the completion of a nearly 10-month long process to return ships to
service which began with Norwegian Jade in July 2021.
By the end of the
first quarter of 2022 the Company had 85% of its capacity
operating. Occupancy in the first quarter of 2022 was 48% primarily
reflecting the impact of Omicron which caused operational
challenges and disruptions, including additional travel
restrictions, increased health-related protocols and certain port
closures. During the surge, the Company continued to follow its
core go-to-market strategy and did not discount-to-fill in order to
boost near-term load factors. As the booking impacts of Omicron and
the conflict in Ukraine have faded, net booking volumes and
occupancy levels have sequentially increased each month. Despite
these challenges, strong ticket pricing and onboard revenue drove
positive cash contribution from the fleet that operated in the
quarter.
The Russia-Ukraine
conflict resulted in the cancellation or modification of
approximately 60 sailings in 2022, which included all voyages with
calls to ports in Russia. Three ships were redeployed as a result
of the conflict including Norwegian Getaway to Port Canaveral,
Oceania Cruises’ Marina to the British Isles and Regent’s Seven
Seas Splendor to Northern Europe. In addition, the Company has also
removed all calls to ports in Russia from its itineraries in
2023.
The Company reached a
significant financial inflection point in March with Operating Cash
Flow turning slightly positive. The Company also expects Operating
Cash Flow to be positive for the second quarter of 2022.
Improving
Public Health and Regulatory Environment
In recent months, the
Company has seen a significant improvement in the global public
health and regulatory environment. In March, the U.S. Centers for
Disease Control and Prevention (“CDC”) removed its Travel Health
Notice for cruising for the first time since the start of the
pandemic. The CDC also recently announced a relaxation of certain
protocols and recommendations in its voluntary COVID-19 Program for
Cruise Ships Operating in U.S. Waters. In addition, more ports
globally have re-opened to cruise, and travel restrictions continue
to ease around the world creating a more favorable environment for
ship deployment.
All voyages across the
Company’s three brands continue to operate under its robust
science-backed SailSAFE health and safety program which will evolve
along with the public health environment. The Company also follows
applicable local protocols at the ports and destinations it visits.
As a result of its stringent protocols, the Company has seen
COVID-19 prevalence rates vastly lower than what has been
experienced on land during the pandemic.
Booking
Environment and Outlook
The quarter began with net bookings,
particularly for close-in voyages, negatively impacted by the
Omicron surge, which began to improve in mid-January. This momentum
was temporarily disrupted as the Company experienced elevated
cancellations, primarily for itineraries in the Baltic region, in
the immediate weeks following the start of the Russia-Ukraine
conflict. However, this impact was short-lived and net booking
volumes have since shown sequential improvement, not only
rebounding back to pre-Omicron levels but also now approaching the
booking pace needed to consistently sail at historical load factor
levels.
As a result of the temporary setbacks from
Omicron and the Russia-Ukraine conflict, the Company’s current
cumulative booked position for the second half of 2022 is below the
comparable 2019 period but at meaningfully higher pricing even when
including the dilutive impact of future cruise credits (“FCCs”).
The booked position improves throughout the year with the fourth
quarter of 2022 in line with the comparable 2019 period and at
meaningfully higher prices. Booking trends for 2023 continue to be
positive with both booked position and pricing significantly higher
and at record levels when compared to bookings for 2019 and
pre-pandemic 2020 at a comparable point in the booking curve.
The Company’s advance
ticket sales balance, including the long-term portion, increased
$418 million in the quarter to $2.2 billion as of March 31, 2022.
This includes approximately $0.6 billion of FCCs or 27% of the
total deposit balance. Gross advance ticket sales build was
approximately $1.1 billion during the quarter, the highest level
since the start of the pandemic.
Liquidity,
Cash Burn and Financial Recovery Plan
The Company continues
to take proactive measures to enhance liquidity and financial
flexibility in the current environment and optimize its balance
sheet. As of March 31, 2022, the Company’s total debt position was
$13.6 billion and the Company’s liquidity was $3.1
billion, consisting of cash and cash equivalents and a $1
billion commitment available through August 15, 2022.
As part of its
financial recovery plan, the Company raised approximately $2.1
billion through a series of debt transactions in February 2022 to
further optimize its balance sheet. The proceeds from these
transactions were used to redeem all outstanding 12.25% senior
secured notes due 2024 and 10.25% senior secured notes due 2026,
with the balance of the proceeds expected to be used to make
scheduled principal payments on debt maturing in 2022, including
any accrued and unpaid interest thereon, as well as related
premiums, fees and expenses, in each case. In addition, in
connection with these transactions, debt maturities were extended
and certain collateral and guarantees were released.
The Company's monthly
average cash burn for the first quarter of 2022 was approximately
$375 million2, below the prior estimate of approximately $390
million. This cash burn rate does not include cash inflows from
bookings or contribution from ships that re-entered service.
Beginning in April 2022, the Company resumed debt amortization
payments which were deferred during the pandemic.
“I am incredibly proud
of the significant progress we have made to-date in our operational
and financial recovery, demonstrating our Company’s resilience as
we navigate the evolving public health environment and geopolitical
conflicts,” said Mark A. Kempa, executive vice president and chief
financial officer of Norwegian Cruise Line Holdings Ltd. “With our
entire fleet now back in revenue service we reached a critical
milestone, which we believe will result in positive Operating Cash
Flow for the second quarter. We are focused on building on this
recovery momentum and gearing up to deliver on our industry-leading
growth profile through 2027, representing 50% capacity growth
versus 2019, beginning with the incredible, first in its class,
Norwegian Prima this summer.”
1 See “Terminology”
and “Non-GAAP Financial Measures” below for additional information
about Net Yield.2 Cash burn rates include ongoing ship operating
expenses, administrative operating expenses, interest expense,
taxes, debt deferral fees and expected non-newbuild capital
expenditures and excludes cash refunds of customer deposits as well
as cash inflows from new and existing bookings, newbuild related
capital expenditures and other working capital changes. The first
quarter 2022 cash burn rate reflects the deferral of debt
amortization and previously agreed to newbuild related
payments.
First Quarter 2022 Results
GAAP net loss was $(1.0) billion or EPS of
$(2.35) compared to net loss of $(1.4) billion or EPS of $(4.16) in
the prior year. The Company reported Adjusted Net Loss of $(760.5)
million or Adjusted EPS of $(1.82) in 2022. This compares to
Adjusted Net Loss and Adjusted EPS of $(668.6) million and $(2.03),
respectively, in 2021.
Revenue increased to $521.9 million compared to
$3.1 million in 2021 due to the resumption of cruise voyages.
Total cruise operating expense increased
266.1% in 2022 compared to 2021, primarily due to the resumption of
cruise voyages. The increase in 2022 reflects higher payroll, fuel,
and direct variable costs of fully operating ships. Cost for
certain items such as food, fuel and logistics also increased due
to inflation. Additionally, in 2022, there was an increase in
repair and maintenance costs, including planned Dry-docks.
Fuel price per metric ton, net of hedges,
increased to $724 from $590 in 2021. The Company reported fuel
expense of $135.5 million in the period.
Interest expense, net was $327.7 million in 2022
compared to $824.4 million in 2021. The decrease in interest
expense reflects lower losses from extinguishment of debt and debt
modification costs, which were $188 million in 2022 compared to
$674 million in 2021. The decrease in interest expense also
reflects lower interest expense in connection with the recent
refinancings, partially offset by higher debt balances and higher
LIBOR rates.
Other income (expense), net was income of $38.1
million in 2022 compared to $27.2 million in 2021. In 2022 and
2021, the income primarily related to gains on certain fuel swaps
and foreign currency exchange.
Outlook
As a result of the
COVID-19 pandemic, most recently fueled by the Omicron variant and
the effects of the Russia-Ukraine conflict, 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 the second quarter of
2022. The Company does not provide estimated future results on a
GAAP basis because the Company is unable to predict, with
reasonable certainty, the future movement of foreign exchange rates
or the future impact of certain gains and charges. These items are
uncertain and will depend on several factors, including industry
conditions, and could be material to the Company’s results computed
in accordance with GAAP.
The following reflects the Company’s
expectations regarding fuel consumption and pricing, along with
accompanying sensitivities.
|
|
|
Second Quarter 2022 |
Full Year 2022 |
Fuel consumption in metric tons |
|
|
220,000 |
895,000 |
Fuel
price per metric ton, net of hedges |
|
|
$830 |
$780 |
Effect on Adjusted EPS of a 10% changein fuel prices, net of
hedges |
|
|
$0.02 |
$0.061 |
(1) For the remainder of 2022
As of March 31, 2022, the Company had hedged
approximately 41% and 24% of its total projected metric tons of
fuel consumption for the remainder of 2022 and 2023, respectively.
The following table provides amounts hedged and price per barrel of
heavy fuel oil (“HFO”) which is hedged utilizing U.S. Gulf Coast 3%
(“USGC”), Brent and marine gas oil (“MGO”) which is hedged
utilizing Gasoil.
|
|
|
2022 |
|
|
2023 |
|
|
% of HFO Consumption Hedged1 |
|
30% |
|
|
15% |
|
|
Average USGC Price / Barrel |
$48.36 |
|
N/A |
|
|
Average Brent Price / Barrel |
$66.50 |
|
$64.72 |
|
|
% of MGO Consumption Hedged |
|
51% |
|
|
32% |
|
|
Average Gasoil Price / Barrel |
$70.00 |
|
$69.91 |
|
|
Total % of Consumption Hedged |
|
41% |
|
|
24% |
|
(1) USGC derivatives were
de-designated for accounting purposes in the fourth quarter of
2020. Both our USGC and Brent derivatives represent economic hedges
and may be designated or re-designated as accounting hedges in the
future.
Anticipated non-newbuild capital expenditures
for full year 2022 are expected to be approximately $500 million.
The Company’s anticipated expenditures related to ship construction
contracts were $1.6 billion for the remainder of 2022 and $2.5
billion and $1.4 billion for the years ending December 31, 2023 and
2024, respectively. The Company has export credit financing in
place for the anticipated expenditures related to ship construction
contracts of $0.9 billion for the remainder of 2022 and $2.0
billion and $0.7 billion for the years ending December 31, 2023 and
2024, respectively.
Interest Expense, net is expected to be
approximately $155 million for second quarter 2022 and $605 million
for full year 2022, excluding losses on extinguishment of debt.
Depreciation and Amortization is expected to be approximately $180
million for second quarter 2022 and $750 million for full year
2022.
Company Updates and Other Business
Highlights:
Environmental, Social and Governance
(“ESG”)
- Committed to pursue net zero
emissions by 2050 across the Company’s operations and value chain.
To support its path to net zero, the Company has also committed to
develop short- and near-term greenhouse gas reduction targets.
Learn more here.
- Published first Task Force on
Climate-related Financial Disclosures (“TCFD”) Report which
provides critical transparency to stakeholders. View the full
report here: 2021 TCFD Report.
- President and CEO Frank Del Rio
signed the CEO Action pledge for Diversity & Inclusion in March
2022, further demonstrating commitment to advancing diversity,
equity and inclusion in the workplace.
Fleet and Brand Updates
- Announced world famous superstar
pop icon and "American Idol" judge Katy Perry will serve as the
godmother to Norwegian Cruise Line’s newest ship, Norwegian Prima
and be the headline entertainer for the ship’s christening
ceremony. Learn more here.
- Norwegian Cruise Line launched the
cruise industry’s first NFT collection, open for auction and sale,
and sold a collection of six NFTs to celebrate the launch of the
cutting-edge Norwegian Prima Class. The NFTs were created by Manuel
Di Rita, widely known as "Peeta," the Italian artist who designed
the hull art on the Norwegian Prima and her sister vessel Norwegian
Viva. All proceeds from the NFT auction and sales will be donated
to Teach For America. Learn more here.
- Oceania Cruises set a new
single-day booking record on March 2, 2022 with the launch of its
2024 Around the World in 180 Days voyage and its Grand Voyages in
the Asia-Pacific region, surpassing the previous record set in
September 2021 by almost 12%. Learn more here.
- Celebrated the float out of Oceania
Cruises’ newest 67,000-ton, 1,200-guest ship Vista at the
Fincantieri shipyard in Sestri Ponente, Italy. Vista will debut in
April 2023. Learn more here.
- Announced Oceania Cruises’ Riviera
and Marina to undergo stem-to-stern re-inspiration in 2022 and 2023
as part of the OceaniaNEXT program. Learn more here.
- Regent Seven Seas Cruises marked
the return of its entire fleet to service on March 26, 2022.
Other Highlights
- Activated Company’s Crew Relief
Fund and is providing ongoing communications and logistical support
and counseling to Ukrainian and other team members impacted by the
Russia-Ukraine conflict. Also pledged an additional $100,000 to
Save the Children’s Ukraine Crisis Relief Fund.
- Announced the signing of a
Memorandum of Agreement to develop berthing and upland facilities
in Whittier, Alaska in partnership with the Huna Totem Corporation.
The privately funded development project will consist of a marine
vessel docking facility able to berth vessels from the Company’s
three brands, along with related structures including a cruise ship
terminal and facilities for rail and bus access. Learn more
here.
Conference Call
The Company has scheduled a conference call for
Tuesday, May 10, 2022 at 10:00 a.m. Eastern Time to discuss first
quarter 2022 results and provide a business update. A link to the
live webcast along with a slide presentation can be found on the
Company’s Investor Relations website at
https://www.nclhltd.com/investors. A replay of the conference call
will also be available on the website for 30 days after the
call.
About
Norwegian Cruise Line Holdings Ltd.
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH)
is a leading global cruise company which operates the Norwegian
Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands.
With a combined fleet of 28 ships with nearly 60,000 berths, these
brands offer itineraries to more than 490 destinations worldwide.
The Company has nine additional ships scheduled for delivery from
2022 through 2027, comprising approximately 24,000 berths.
Terminology
Adjusted EBITDA. EBITDA adjusted for other
income (expense), net and other supplemental adjustments.
Adjusted EPS. Adjusted Net Loss divided by the
number of diluted weighted-average shares outstanding.
Adjusted Gross Margin. Gross margin adjusted for
payroll and related, fuel, food, other and ship depreciation. Gross
margin is calculated pursuant to GAAP as total revenue less total
cruise operating expense and ship depreciation.
Adjusted Net Cruise Cost Excluding Fuel. Net
Cruise Cost less fuel expense adjusted for supplemental
adjustments.
Adjusted Net Income. Net income, adjusted
for non-cash compensation expense and any potential impacts
associated with financing activities.
Adjusted Net Loss. Net loss adjusted for
supplemental adjustments.
Berths. Double occupancy capacity per cabin
(single occupancy per studio cabin) even though many cabins can
accommodate three or more passengers.
Capacity Days. Berths available for sale
multiplied by the number of cruise days for the period for ships in
service.
Constant Currency. A calculation whereby foreign
currency-denominated revenues and expenses in a period are
converted at the U.S. dollar exchange rate of a comparable period
in order to eliminate the effects of foreign exchange
fluctuations.
Dry-dock. A process whereby a ship is positioned
in a large basin where all of the fresh/sea water is pumped out in
order to carry out cleaning and repairs of those parts of a ship
which are below the water line.
EBITDA. Earnings before interest, taxes, and
depreciation and amortization.
EPS. Diluted loss per share.
GAAP. Generally accepted accounting principles
in the U.S.
Gross Cruise Cost. The sum of total cruise
operating expense and marketing, general and administrative
expense.
Net Cruise Cost. Gross Cruise Cost less
commissions, transportation and other expense and onboard and other
expense.
Net Cruise Cost Excluding Fuel. Net Cruise Cost
less fuel expense.
Net Yield. Adjusted Gross Margin per Capacity
Day.
Occupancy Percentage or Load Factor. The ratio
of Passenger Cruise Days to Capacity Days. A percentage in excess
of 100% indicates that three or more passengers occupied some
cabins.
Operating Cash Flow. Net cash provided by (used
in) operating activities.
Passenger Cruise Days. The number of passengers
carried for the period, multiplied by the number of days in their
respective cruises.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, such
as Adjusted Gross Margin, Net Yield, Net Cruise Cost, Adjusted Net
Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Loss,
Adjusted Net Income and Adjusted EPS, to enable us to analyze our
performance. See “Terminology” for the definitions of these and
other non-GAAP financial measures. We utilize Adjusted Gross Margin
and Net Yield to manage our business on a day-to-day basis because
it reflects revenue earned net of certain direct variable costs. We
utilize Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel
to manage our business on a day-to-day basis. In measuring our
ability to control costs in a manner that positively impacts net
income (loss), we believe changes in Net Cruise Cost and Adjusted
Net Cruise Cost Excluding Fuel to be the most relevant indicators
of our performance. As a result of our voluntary suspension of
sailings from March 2020 until July 2021 and our gradual phased
return to service beginning in July 2021, per Capacity Day data is
not meaningful for the three months ended March 31, 2022 or March
31, 2021 and is not presented herein.
As our business includes the sourcing of
passengers and deployment of vessels outside of the U.S., a portion
of our revenue and expenses are denominated in foreign currencies,
particularly British pound, Canadian dollar, euro and Australian
dollar, which are subject to fluctuations in currency exchange
rates versus our reporting currency, the U.S. dollar. In order to
monitor results excluding these fluctuations, we calculate certain
non-GAAP measures on a Constant Currency basis, whereby current
period revenue and expenses denominated in foreign currencies are
converted to U.S. dollars using currency exchange rates of the
comparable period. We believe that presenting these non-GAAP
measures on both a reported and Constant Currency basis is useful
in providing a more comprehensive view of trends in our
business.
We believe that Adjusted EBITDA is appropriate
as a supplemental financial measure as it is used by management to
assess operating performance. We also believe that Adjusted EBITDA
is a useful measure in determining our performance as it reflects
certain operating drivers of our business, such as sales growth,
operating costs, marketing, general and administrative expense and
other operating income and expense. Adjusted EBITDA is not a
defined term under GAAP nor is it intended to be a measure of
liquidity or cash flows from operations or a measure comparable to
net income (loss), as it does not take into account certain
requirements such as capital expenditures and related depreciation,
principal and interest payments and tax payments and it includes
other supplemental adjustments.
In addition, Adjusted Net Loss, Adjusted Net
Income and Adjusted EPS are non-GAAP financial measures that
exclude certain amounts and are used to supplement GAAP net loss
and EPS. We use Adjusted Net Loss, Adjusted Net Income and Adjusted
EPS as key performance measures of our earnings performance. We
believe that both management and investors benefit from referring
to these non-GAAP financial measures in assessing our performance
and when planning, forecasting and analyzing future periods. These
non-GAAP financial measures also facilitate management’s internal
comparison to our historical performance. In addition, management
uses Adjusted EPS as a performance measure for our incentive
compensation during normal operations. The amounts excluded in the
presentation of these non-GAAP financial measures may vary from
period to period; accordingly, our presentation of Adjusted Net
Loss and Adjusted EPS may not be indicative of future adjustments
or results.
You are encouraged to evaluate each adjustment
used in calculating our non-GAAP financial measures and the reasons
we consider our non-GAAP financial measures appropriate for
supplemental analysis. In evaluating our non-GAAP financial
measures, you should be aware that in the future we may incur
expenses similar to the adjustments in our presentation. Our
non-GAAP financial measures have limitations as analytical tools,
and you should not consider these measures in isolation or as a
substitute for analysis of our results as reported under GAAP. Our
presentation of our non-GAAP financial measures should not be
construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our non-GAAP
financial measures may not be comparable to other companies. Please
see a historical reconciliation of these measures to the most
comparable GAAP measure presented in our consolidated financial
statements below.
Cautionary Statement Concerning
Forward-Looking Statements
Some of the statements, estimates or projections
contained in this release are “forward-looking statements” within
the meaning of the U.S. federal securities laws intended to qualify
for the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. All statements other than
statements of historical facts contained in this release,
including, without limitation, those regarding our business
strategy, financial position, results of operations, plans,
prospects, actions taken or strategies being considered with
respect to our liquidity position, valuation and appraisals of our
assets and objectives of management for future operations
(including those regarding expected fleet additions, our ability to
weather the impacts of the COVID-19 pandemic, our expectations
regarding the impact of Russia’s recent invasion of Ukraine, our
expectations regarding cruise voyage occupancy, the implementation
of and effectiveness of our health and safety protocols,
operational position, demand for voyages, plans or goals for our
sustainability program and decarbonization efforts, our
expectations for future cash flows and profitability, financing
opportunities and extensions, and future cost mitigation and cash
conservation efforts and efforts to reduce operating expenses and
capital expenditures) are forward-looking statements. Many, but not
all, of these statements can be found by looking for words like
“expect,” “anticipate,” “goal,” “project,” “plan,” “believe,”
“seek,” “will,” “may,” “forecast,” “estimate,” “intend,” “future”
and similar words. Forward-looking statements do not guarantee
future performance and may involve risks, uncertainties and other
factors which could cause our actual results, performance or
achievements to differ materially from the future results,
performance or achievements expressed or implied in those
forward-looking statements. Examples of these risks, uncertainties
and other factors include, but are not limited to the impact of:
the spread of epidemics, pandemics and viral outbreaks and
specifically, the COVID-19 pandemic, including its effect on the
ability or desire of people to travel (including on cruises), which
is expected to continue to adversely impact our results,
operations, outlook, plans, goals, growth, reputation, cash flows,
liquidity, demand for voyages and share price; implementing
precautions in coordination with regulators and global public
health authorities to protect the health, safety and security of
guests, crew and the communities we visit and to comply with
regulatory restrictions related to the pandemic; legislation
prohibiting companies from verifying vaccination status; our
indebtedness and restrictions in the agreements governing our
indebtedness that require us to maintain minimum levels of
liquidity and be in compliance with maintenance covenants and
otherwise limit our flexibility in operating our business,
including the significant portion of assets that are collateral
under these agreements; our ability to work with lenders and others
or otherwise pursue options to defer, renegotiate, refinance or
restructure our existing debt profile, near-term debt amortization,
newbuild related payments and other obligations and to work with
credit card processors to satisfy current or potential future
demands for collateral on cash advanced from customers relating to
future cruises; our need for additional financing or financing to
optimize our balance sheet, which may not be available on favorable
terms, or at all, and our outstanding exchangeable notes and any
future financing which may be dilutive to existing shareholders;
the unavailability of ports of call; future increases in the price
of, or major changes or reduction in, commercial airline services;
changes involving the tax and environmental regulatory regimes in
which we operate, including new regulations aimed at reducing
greenhouse gas emissions; the accuracy of any appraisals of our
assets as a result of the impact of the COVID-19 pandemic or
otherwise; our success in controlling operating expenses and
capital expenditures; trends in, or changes to, future bookings and
our ability to take future reservations and receive deposits
related thereto; adverse events impacting the security of travel,
such as terrorist acts, armed conflict, such as Russia’s recent
invasion of Ukraine, and threats thereof, acts of piracy, and other
international events; adverse incidents involving cruise ships;
adverse general economic and related factors, including as a result
of the impact of the COVID-19 pandemic, Russia’s recent invasion of
Ukraine or otherwise, such as fluctuating or increasing levels of
interest rates, inflation, unemployment, underemployment and the
volatility of fuel prices, declines in the securities and real
estate markets, and perceptions of these conditions that decrease
the level of disposable income of consumers or consumer confidence;
breaches in data security or other disturbances to our information
technology and other networks or our actual or perceived failure to
comply with requirements regarding data privacy and protection;
changes in fuel prices and the type of fuel we are permitted to use
and/or other cruise operating costs; mechanical malfunctions and
repairs, delays in our shipbuilding program, maintenance and
refurbishments and the consolidation of qualified shipyard
facilities; the risks and increased costs associated with operating
internationally; our inability to recruit or retain qualified
personnel or the loss of key personnel or employee relations
issues; our inability to obtain adequate insurance coverage;
pending or threatened litigation, investigations and enforcement
actions; any further impairment of our trademarks, trade names or
goodwill; volatility and disruptions in the global credit and
financial markets, which may adversely affect our ability to borrow
and could increase our counterparty credit risks, including those
under our credit facilities, derivatives, contingent obligations,
insurance contracts and new ship progress payment guarantees; our
reliance on third parties to provide hotel management services for
certain ships and certain other services; fluctuations in foreign
currency exchange rates; our expansion into new markets and
investments in new markets and land-based destination projects;
overcapacity in key markets or globally; and other factors set
forth under “Risk Factors” in our most recently filed Annual Report
on Form 10-K, Quarterly Report on Form 10-Q and subsequent filings
with the Securities and Exchange Commission. Additionally, many of
these risks and uncertainties are currently amplified by and will
continue to be amplified by, or in the future may be amplified by,
the COVID-19 pandemic and Russia’s recent invasion of Ukraine. It
is not possible to predict or identify all such risks. There may be
additional risks that we consider immaterial or which are unknown.
The above examples are not exhaustive and new risks emerge from
time to time. Such forward-looking statements are based on our
current beliefs, assumptions, expectations, estimates and
projections regarding our present and future business strategies
and the environment in which we expect to operate in the future.
These forward-looking statements speak only as of the date made. We
expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statement
to reflect any change in our expectations with regard thereto or
any change of events, conditions or circumstances on which any such
statement was based, except as required by law.
Investor Relations &
Media Contact |
|
Jessica John |
|
(305)
468-2339InvestorRelations@nclcorp.com |
|
NORWEGIAN CRUISE LINE HOLDINGS LTD. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
(in thousands, except share and per share
data) |
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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|
|
|
Revenue |
|
|
|
|
|
|
Passenger ticket |
$ |
342,455 |
|
|
$ |
166 |
|
|
|
Onboard and other |
|
179,485 |
|
|
|
2,934 |
|
|
|
|
|
|
Total revenue |
|
521,940 |
|
|
|
3,100 |
|
|
Cruise operating expense |
|
|
|
|
|
Commissions, transportation and other |
|
87,958 |
|
|
|
9,033 |
|
|
|
Onboard and other |
|
32,550 |
|
|
|
1,259 |
|
|
|
Payroll and related |
|
240,727 |
|
|
|
82,138 |
|
|
|
Fuel |
|
|
|
|
135,509 |
|
|
|
42,603 |
|
|
|
Food |
|
|
|
39,516 |
|
|
|
6,308 |
|
|
|
Other |
|
|
|
199,153 |
|
|
|
59,514 |
|
|
|
|
|
|
Total cruise operating expense |
|
735,413 |
|
|
|
200,855 |
|
|
Other operating expense |
|
|
|
|
|
Marketing, general and administrative |
|
296,207 |
|
|
|
203,195 |
|
|
|
Depreciation and amortization |
|
179,076 |
|
|
|
170,316 |
|
|
|
|
|
|
Total other operating expense |
|
475,283 |
|
|
|
373,511 |
|
|
|
|
|
|
|
Operating loss |
|
(688,756 |
) |
|
|
(571,266 |
) |
|
Non-operating income (expense) |
|
|
|
|
|
Interest expense, net |
|
(327,685 |
) |
|
|
(824,441 |
) |
|
|
Other income (expense), net |
|
38,120 |
|
|
|
27,243 |
|
|
|
|
|
|
Total non-operating income (expense) |
|
(289,565 |
) |
|
|
(797,198 |
) |
|
Net loss before income taxes |
|
(978,321 |
) |
|
|
(1,368,464 |
) |
|
Income tax expense |
|
(4,393 |
) |
|
|
(1,728 |
) |
|
Net loss |
|
$ |
(982,714 |
) |
|
$ |
(1,370,192 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
|
|
Basic |
|
|
|
417,734,591 |
|
|
|
329,377,207 |
|
|
|
Diluted |
|
|
417,734,591 |
|
|
|
329,377,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
Basic |
|
|
$ |
(2.35 |
) |
|
$ |
(4.16 |
) |
|
|
Diluted |
|
$ |
(2.35 |
) |
|
$ |
(4.16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORWEGIAN CRUISE LINE HOLDINGS LTD. |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS |
(Unaudited) |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(982,714 |
) |
|
$ |
(1,370,192 |
) |
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
Shipboard Retirement Plan |
|
|
2,476 |
|
|
|
98 |
|
|
|
Cash flow hedges: |
|
|
|
|
|
|
|
Net unrealized gain (loss) |
|
|
39,304 |
|
|
|
(73,037 |
) |
|
|
|
Amount realized and reclassified into earnings |
|
|
(7,502 |
) |
|
|
21,838 |
|
|
|
|
Total other comprehensive income (loss) |
|
|
34,278 |
|
|
|
(51,101 |
) |
|
|
Total comprehensive loss |
|
$ |
(948,436 |
) |
|
$ |
(1,421,293 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORWEGIAN CRUISE LINE HOLDINGS LTD. |
|
|
CONSOLIDATED BALANCE SHEETS |
|
(Unaudited) |
|
|
(in thousands, except share data) |
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
|
2022 |
|
|
|
|
2021 |
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,136,840 |
|
|
$ |
|
1,506,647 |
|
|
|
Short-term investments |
|
|
— |
|
|
|
|
240,000 |
|
|
|
Accounts receivable, net |
|
|
544,961 |
|
|
|
|
1,167,473 |
|
|
|
Inventories |
|
|
141,956 |
|
|
|
|
118,205 |
|
|
|
Prepaid expenses and other assets |
|
|
390,753 |
|
|
|
|
269,243 |
|
|
|
Total current assets |
|
|
3,214,510 |
|
|
|
|
3,301,568 |
|
|
|
Property and equipment, net |
|
|
13,532,399 |
|
|
|
|
13,528,806 |
|
|
|
Goodwill |
|
|
98,134 |
|
|
|
|
98,134 |
|
|
|
Tradenames |
|
|
500,525 |
|
|
|
|
500,525 |
|
|
|
Other long-term assets |
|
|
1,909,924 |
|
|
|
|
1,300,804 |
|
|
|
Total assets |
|
$ |
19,255,492 |
|
|
|
$ |
18,729,837 |
|
|
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
1,009,741 |
|
|
|
$ |
876,890 |
|
|
|
Accounts payable |
|
|
91,786 |
|
|
|
|
233,172 |
|
|
|
Accrued expenses and other liabilities |
|
|
1,097,828 |
|
|
|
|
1,059,034 |
|
|
|
Advance ticket sales |
|
|
1,977,325 |
|
|
|
|
1,561,336 |
|
|
|
Total current liabilities |
|
|
4,176,680 |
|
|
|
|
3,730,432 |
|
|
|
Long-term debt |
|
|
12,563,518 |
|
|
|
|
11,569,700 |
|
|
|
Other long-term liabilities |
|
|
1,007,692 |
|
|
|
|
997,055 |
|
|
|
Total liabilities |
|
|
17,747,890 |
|
|
|
|
16,297,187 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
Ordinary shares, $0.001 par value; 980,000,000 shares authorized;
419,100,690 shares issued and |
|
|
|
|
|
outstanding at March 31, 2022 and 416,891,915 shares issued and
outstanding at December 31, 2021 |
|
|
419 |
|
|
|
|
417 |
|
|
|
Additional paid-in capital |
|
|
7,537,111 |
|
|
|
|
7,513,725 |
|
|
|
Accumulated other comprehensive income (loss) |
|
|
(250,808 |
) |
|
|
|
(285,086 |
) |
|
|
Accumulated deficit |
|
|
(5,779,120 |
) |
|
|
|
(4,796,406 |
) |
|
|
Total shareholders' equity |
|
|
1,507,602 |
|
|
|
|
2,432,650 |
|
|
|
Total liabilities and shareholders' equity |
|
$ |
19,255,492 |
|
|
|
$ |
18,729,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORWEGIAN CRUISE LINE HOLDINGS LTD. |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(Unaudited) |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Cash flows from operating activities |
|
|
|
|
|
Net loss |
|
|
$ |
(982,714 |
) |
|
$ |
(1,370,192 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
195,464 |
|
|
|
183,808 |
|
|
|
Gain on derivatives |
|
|
(19,779 |
) |
|
|
(18,687 |
) |
|
|
Loss on extinguishment of debt |
|
|
188,433 |
|
|
|
621,894 |
|
|
|
Provision for bad debts and inventory obsolescence |
|
|
1,294 |
|
|
|
4,329 |
|
|
|
Gain on involuntary conversion of assets |
|
|
- |
|
|
|
(418 |
) |
|
|
Share-based compensation expense |
|
|
32,792 |
|
|
|
26,601 |
|
|
|
Net foreign currency adjustments |
|
|
(4,126 |
) |
|
|
(5,141 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
618,853 |
|
|
|
(2,648 |
) |
|
|
|
Inventories |
|
|
(24,141 |
) |
|
|
(2,351 |
) |
|
|
|
Prepaid expenses and other assets |
|
|
(632,610 |
) |
|
|
(406,807 |
) |
|
|
|
Accounts payable |
|
|
(136,767 |
) |
|
|
6,626 |
|
|
|
|
Accrued expenses and other liabilities |
|
|
(25,587 |
) |
|
|
35,341 |
|
|
|
|
Advance ticket sales |
|
|
417,877 |
|
|
|
75,634 |
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(371,011 |
) |
|
|
(852,011 |
) |
|
Cash flows from investing activities |
|
|
|
|
|
Additions to property and equipment, net |
|
|
(165,284 |
) |
|
|
(136,350 |
) |
|
Purchases of short-term investments |
|
|
- |
|
|
|
(205,000 |
) |
|
Proceeds from maturities of short-term investments |
|
|
240,000 |
|
|
|
- |
|
|
Cash paid on settlement of derivatives |
|
|
- |
|
|
|
(4,642 |
) |
|
Other |
|
|
|
|
|
4,940 |
|
|
|
2,726 |
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
79,656 |
|
|
|
(343,266 |
) |
|
Cash flows from financing activities |
|
|
|
|
|
Repayments of long-term debt |
|
|
(935,444 |
) |
|
|
(870,396 |
) |
|
Proceeds from long-term debt |
|
|
2,073,175 |
|
|
|
1,161,672 |
|
|
Common share issuance proceeds, net |
|
|
- |
|
|
|
1,558,412 |
|
|
Proceeds from employee related plans |
|
|
2,557 |
|
|
|
1,089 |
|
|
Net share settlement of restricted share units |
|
|
(11,961 |
) |
|
|
(16,043 |
) |
|
Early redemption premium |
|
|
(172,012 |
) |
|
|
(611,164 |
) |
|
Deferred financing fees |
|
|
(34,767 |
) |
|
|
(25,742 |
) |
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
921,548 |
|
|
|
1,197,828 |
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
630,193 |
|
|
|
2,551 |
|
|
Cash and cash equivalents at beginning of the period |
|
|
1,506,647 |
|
|
|
3,300,482 |
|
|
Cash and cash equivalents at end of the period |
|
$ |
2,136,840 |
|
|
$ |
3,303,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORWEGIAN CRUISE LINE HOLDINGS LTD. |
NON-GAAP RECONCILING INFORMATION |
(Unaudited) |
|
|
|
|
|
|
|
|
|
The following table sets forth selected statistical
information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Passengers carried |
|
|
|
191,150 |
|
|
|
— |
|
|
|
Passenger Cruise Days |
|
|
|
1,429,446 |
|
|
|
— |
|
|
|
Capacity Days |
|
|
|
2,978,353 |
|
|
|
— |
|
|
|
Occupancy Percentage |
|
|
|
48.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin and Adjusted Gross Margin were calculated as follows
(in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
Constant |
|
|
|
|
|
|
2022 |
|
|
Currency |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
521,940 |
|
|
$ |
522,774 |
|
|
$ |
3,100 |
|
|
|
Less: |
|
|
|
|
|
|
|
Total cruise operating expense |
|
735,413 |
|
|
|
737,768 |
|
|
|
200,855 |
|
|
|
Ship depreciation |
|
166,656 |
|
|
|
166,656 |
|
|
|
159,631 |
|
|
|
Gross margin |
|
(380,129 |
) |
|
|
(381,650 |
) |
|
|
(357,386 |
) |
|
|
Ship depreciation |
|
166,656 |
|
|
|
166,656 |
|
|
|
159,631 |
|
|
|
Payroll and related |
|
240,727 |
|
|
|
240,721 |
|
|
|
82,138 |
|
|
|
Fuel |
|
135,509 |
|
|
|
135,509 |
|
|
|
42,603 |
|
|
|
Food |
|
39,516 |
|
|
|
39,622 |
|
|
|
6,308 |
|
|
|
Other |
|
199,153 |
|
|
|
201,179 |
|
|
|
59,514 |
|
|
|
Adjusted Gross Margin |
$ |
401,432 |
|
|
$ |
402,037 |
|
|
$ |
(7,192 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORWEGIAN CRUISE LINE HOLDINGS LTD. |
|
NON-GAAP RECONCILING INFORMATION |
(Unaudited) |
|
Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel
and Adjusted Net Cruise Cost Excluding Fuel were calculated as
follows (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
Constant |
|
|
|
|
|
|
2022 |
|
|
Currency |
|
|
2021 |
|
|
|
Total cruise operating expense |
$ |
735,413 |
|
|
$ |
737,768 |
|
|
$ |
200,855 |
|
|
|
Marketing, general and
administrative expense |
|
296,207 |
|
|
|
297,565 |
|
|
|
203,195 |
|
|
|
Gross Cruise Cost |
|
1,031,620 |
|
|
|
1,035,333 |
|
|
|
404,050 |
|
|
|
Less: |
|
|
|
|
|
|
|
Commissions, transportation
and other expense |
|
87,958 |
|
|
|
88,186 |
|
|
|
9,033 |
|
|
|
Onboard and other expense |
|
32,550 |
|
|
|
32,550 |
|
|
|
1,259 |
|
|
|
Net Cruise Cost |
|
911,112 |
|
|
|
914,597 |
|
|
|
393,758 |
|
|
|
Less: Fuel expense |
|
135,509 |
|
|
|
135,509 |
|
|
|
42,603 |
|
|
|
Net Cruise Cost Excluding Fuel |
|
775,603 |
|
|
|
779,088 |
|
|
|
351,155 |
|
|
|
Less Non-GAAP Adjustments: |
|
|
|
|
|
|
|
Non-cash deferred compensation (1) |
|
699 |
|
|
|
699 |
|
|
|
905 |
|
|
|
Non-cash share-based compensation (2) |
|
32,792 |
|
|
|
32,792 |
|
|
|
26,601 |
|
|
|
Adjusted Net Cruise Cost Excluding Fuel |
$ |
742,112 |
|
|
$ |
745,597 |
|
|
$ |
323,649 |
|
|
|
|
|
|
|
|
|
|
|
(1) Non-cash deferred compensation expenses related to the crew
pension plan and other crew expenses, which are included in payroll
and related expense. |
|
(2) Non-cash share-based compensation expense related to equity
awards, which are included in marketing, general and administrative
expense and payroll and related expense. |
|
|
|
|
|
|
|
|
NORWEGIAN CRUISE LINE HOLDINGS LTD. |
|
NON-GAAP RECONCILING INFORMATION |
|
(Unaudited) |
|
|
|
|
|
|
|
Adjusted Net Loss and Adjusted EPS were calculated as follows (in
thousands, except share and per share data): |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(982,714 |
) |
|
$ |
(1,370,192 |
) |
|
|
Non-GAAP Adjustments: |
|
|
|
|
|
Non-cash deferred compensation (1) |
|
1,012 |
|
|
|
1,003 |
|
|
|
Non-cash share-based compensation (2) |
|
32,792 |
|
|
|
26,601 |
|
|
|
Extinguishment and modification of debt (3) |
|
188,433 |
|
|
|
674,019 |
|
|
|
Adjusted Net Loss |
$ |
(760,477 |
) |
|
$ |
(668,569 |
) |
|
|
Diluted weighted-average shares outstanding - Net loss and Adjusted
Net Loss |
|
417,734,591 |
|
|
|
329,377,207 |
|
|
|
Diluted loss per share |
$ |
(2.35 |
) |
|
$ |
(4.16 |
) |
|
|
Adjusted EPS |
$ |
(1.82 |
) |
|
$ |
(2.03 |
) |
|
|
|
|
|
|
|
|
(1) Non-cash deferred compensation expenses related to the crew
pension plan and other crew expenses are included in payroll and
related expense and other income (expense), net. |
(2) Non-cash share-based compensation expenses related to equity
awards are included in marketing, general and administrative
expense and payroll and related expense. |
(3) Losses on extinguishments and modifications of debt are
included in interest expense, net. |
|
NORWEGIAN CRUISE LINE HOLDINGS LTD. |
|
NON-GAAP RECONCILING INFORMATION |
|
(Unaudited) |
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA were calculated as follows (in
thousands): |
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(982,714 |
) |
|
$ |
(1,370,192 |
) |
|
|
Interest expense, net |
|
327,685 |
|
|
|
824,441 |
|
|
|
Income tax expense |
|
4,393 |
|
|
|
1,728 |
|
|
|
Depreciation and amortization expense |
|
179,076 |
|
|
|
170,316 |
|
|
|
EBITDA |
|
(471,560 |
) |
|
|
(373,707 |
) |
|
|
|
|
|
|
|
|
Other (income) expense, net (1) |
|
(38,120 |
) |
|
|
(27,243 |
) |
|
|
Other Non-GAAP Adjustments: |
|
|
|
|
|
Non-cash deferred compensation (2) |
|
699 |
|
|
|
905 |
|
|
|
Non-cash share-based compensation (3) |
|
32,792 |
|
|
|
26,601 |
|
|
|
Adjusted EBITDA |
$ |
(476,189 |
) |
|
$ |
(373,444 |
) |
|
|
|
|
|
|
|
|
(1) Primarily consists of gains and losses, net for fuel swaps not
designated as hedges and foreign currency exchanges. |
|
(2) Non-cash deferred compensation expenses related to the crew
pension plan and other crew expenses, which are included in payroll
and related expense. |
|
(3) Non-cash share-based compensation expenses related to equity
awards, which are included in marketing, general and administrative
expense and payroll and related expense. |
|
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