Norwegian Cruise Line Holdings Ltd. (NYSE:
NCLH) (together with NCL Corporation Ltd., (“NCLC”), “Norwegian
Cruise Line Holdings”, “Norwegian”, “NCLH” or the “Company”) will
hold its Investor Day today at the New York Stock Exchange where it
will discuss its new comprehensive
“Charting the
Course” strategy, which includes a refreshed vision;
strategic initiatives centered around four pillars encompassing
people, product, growth platform and performance; and three-year
financial and sustainability targets geared at enhancing
shareholder returns. In conjunction with the new strategy
announcement, the Company is also raising its guidance for full
year 2024 across several metrics.
NCLH’s “Charting the Course” strategy leads off with a bold new
vision to “Vacation Better. Experience More.” that aims to resonate
with guests of its three award-winning cruise brands—Norwegian
Cruise Line, Oceania Cruises and Regent Seven Seas Cruises—and
inspire team members, both shipboard and shoreside, to deliver on
this vision to the nearly three million guests that sail on the
Company’s brands each year. Under this new vision, the Company
positions itself as a leader in vacation experiences, both at sea
and on land.
This new vision is bolstered by strategic initiatives under four
pillars—People Excellence, Guest-centric Product, Long-term Growth
Platform and Exceptional Performance. These pillars look to
transform the Company’s culture, target investments towards
offerings that guests value, capitalize on high growth
opportunities, and drive the Company’s financial performance
through operational excellence, all underpinned by its Sail &
Sustain sustainability strategy.
“We are thrilled to begin charting our new course with a
transformational strategy that will guide our plans for future
growth. Our new ’Vacation Better. Experience More.’ vision not only
captures our commitment to offer our guests unforgettable vacation
experiences, but focuses our over approximately 40,000 team members
to deliver on that commitment through the several strategic
initiatives that comprise our ‘Charting the Course’ strategy,” said
Harry Sommer, president and CEO, Norwegian Cruise Line Holdings
Ltd. "This strategy has already been set in motion with initiatives
such as our recent announcement regarding eight transformational
newbuilds for our three brands and infrastructure improvements for
our private island in the Bahamas, Great Stirrup Cay. We will
continue to innovate and build on our foundation of success—not
just financially, but also sustainably through our Sail &
Sustain program."
The Company’s strategic initiatives aim to drive performance to
achieve its “Charting the Course” financial and sustainability
targets1, by the end of 2026:
- Adjusted Operational EBITDA Margin
of approximately 39%, approaching historical levels.
- Adjusted EPS of approximately $2.45,
representing a 2-year CAGR from 2024 to 2026 of over 30%.
- A reduction of Net Leverage to the
mid-four turn levels, continuing its commitment to strengthening
its balance sheet.
- Record Adjusted ROIC of 12%
exceeding pre-2020 levels.
- Renewing its commitment to a 10%
greenhouse gas intensity reduction from 2019 baseline levels2.
Based on current strong demand and an improved outlook for the
year, the Company is increasing its full year 2024 guidance,
raising expectations for Net Yield growth from 6.4% to 7.2%,
increasing Adjusted EBITDA from $2.25 billion to $2.30 billion and
upping its Adjusted EPS from $1.32 to $1.42.
“We have continued to see very strong demand and record
bookings. We are now thrilled to launch this financial plan by
setting long term targets with increased 2024 guidance, putting
ourselves on solid footing to enhance shareholder value in the
coming years,” said Mark Kempa, chief financial officer at
Norwegian Cruise Line Holdings Ltd.
Updated 2024 guidance1 |
|
|
Full Year 2024 |
|
|
As Reported |
ConstantCurrency |
|
Net Yield |
~7.2% ~$287 |
~7.2% ~$287 |
|
Adjusted Net Cruise CostExcluding Fuel per Capacity Day3 |
~3.5% ~$159 |
~3.4% ~$159 |
|
Capacity Days |
~23.50 million |
|
Occupancy |
~105.1% |
|
Adjusted EBITDA |
~$2.30 billion |
|
Adjusted Net Income |
~$730 million |
|
Adjusted EPS4 |
~$1.42 |
|
Diluted Weighted-Average Shares Outstanding5 |
~516 million |
|
Depreciation and Amortization |
~$895 million |
|
Adjusted Interest Expense, net6 |
~$740 million |
|
Effect of a 1% change in Net Yield onAdjusted EBITDA / Adjusted
EPS |
~ $67 million ~ $0.13 |
Effect of a $1 change in Adjusted NetCruise Cost Excluding Fuel per
CapacityDay on Adjusted EBITDA / Adjusted EPS |
~$24 million ~$0.05 |
Webcast
The Company has scheduled a webcast of the Investor Day for
Monday, May 20, 2024 at 9:00 a.m. Eastern Time. A link to the live
webcast can be found on the Company’s Investor Relations website at
https://www.nclhltd.com/investors. A replay of the event and
related presentations 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 Norwegian Cruise Line,
Oceania Cruises and Regent Seven Seas Cruises. With a combined
fleet of 32 ships and approximately 66,500 berths, NCLH offers
itineraries to approximately 700 destinations worldwide. NCLH
expects to add 13 additional ships across its three brands through
2036, which will add approximately 41,000 berths to its fleet. To
learn more, visit www.nclhltd.com.
Terminology
Adjusted EBITDA. EBITDA adjusted for other
income (expense), net and other supplemental adjustments.Adjusted
EPS. Adjusted Net Income (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 Operational EBITDA Margin. Adjusted EBITDA
divided by Adjusted Gross Margin.Adjusted Net Cruise Cost Excluding
Fuel. Net Cruise Cost Excluding Fuel adjusted for supplemental
adjustments.Adjusted Net Income (Loss). Net income (loss) adjusted
for the effect of dilutive securities and other 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.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.Adjusted ROIC. An amount expressed as a
percentage equal to (i) Adjusted EBITDA less depreciation and
amortization, divided by (ii) the sum of total long-term debt and
shareholders’ equity as of the end of a respective quarter,
averaged for the most recent five fiscal quarters ending with the
last date of the applicable fiscal year.EBITDA. Earnings before
interest, taxes, and depreciation and amortization.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 Debt. Long-term debt, including current
portion, less cash and cash equivalents.Net Leverage. Net Debt
divided by Adjusted EBITDA.Net Yield. Adjusted Gross Margin per
Capacity Day.Occupancy or Occupancy Percentage. The ratio of
Passenger Cruise Days to Capacity Days. A percentage greater than
100% indicates that three or more passengers occupied some
cabins.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, Adjusted Operational EBITDA Margin, Net
Yield, Net Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel,
Adjusted EBITDA, Net Leverage, Net Debt, Adjusted Net Income
(Loss), Adjusted EPS, and Adjusted ROIC, to enable us to analyze
our performance. See “Terminology” for the definitions of these and
other non-GAAP financial measures. Our management believes the
presentation of Adjusted ROIC provides a useful performance metric
to both management and investors for evaluating our effective use
of capital and has used it as a performance measure for our
incentive compensation. We utilize Adjusted Gross Margin and Net
Yield to manage our business on a day-to-day basis because they
reflect revenue earned net of certain direct variable costs. We
utilize Adjusted Operational EBITDA Margin to assess operating
performance. We also 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
Adjusted Gross Margin, Adjusted Operational EBITDA Margin, Net
Yield, Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel
to be the most relevant indicators of our performance.
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. In addition, management uses
Adjusted EBITDA as a performance measure for our incentive
compensation. 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 Income (Loss) and
Adjusted EPS are non-GAAP financial measures that exclude certain
amounts and are used to supplement GAAP net income (loss) and EPS.
We use Adjusted Net Income (Loss) 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.
Net Leverage and Net Debt are performance
measures that we believe provide management and investors a more
complete understanding of our leverage position and borrowing
capacity after factoring in cash and cash equivalents.
The amounts excluded in the presentation of
these non-GAAP financial measures may vary from period to period;
accordingly, our presentation of these non-GAAP financial measures
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, or incorporated by
reference, in this release, including, without limitation, our
expectations regarding our future financial position, including our
liquidity requirements and future capital expenditures, plans,
prospects, actions taken or strategies being considered with
respect to our liquidity position, including with respect to
refinancing, amending the terms of, or extending the maturity of
our indebtedness, our ability to comply with covenants under our
debt agreements, expectations regarding our exchangeable notes,
valuation and appraisals of our assets, expected fleet additions
and cancellations, including expected timing thereof, our
expectations regarding the impact of macroeconomic conditions and
recent global events, and expectations relating to our
sustainability program and decarbonization efforts may be
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: adverse general economic factors,
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; 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
related regulatory restrictions; 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, disruptions 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; 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, or customer perceptions of
the security of travel, such as terrorist acts, armed conflict,
such as Russia’s invasion of Ukraine or the Israel-Hamas war, or
threats thereof, acts of piracy, and other international events;
public health crises, including the COVID-19 pandemic, and their
effect on the ability or desire of people to travel (including on
cruises); adverse incidents involving cruise ships; our ability to
maintain and strengthen our brand; breaches in data security or
other disturbances to our information technology systems 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; impacts related to
climate change and our ability to achieve our climate-related or
other sustainability goals; our inability to obtain adequate
insurance coverage; pending or threatened litigation,
investigations and enforcement actions; 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; any further impairment of our
trademarks, trade names or goodwill; 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 and subsequent
filings with the Securities and Exchange Commission. The above
examples are not exhaustive and new risks emerge from time to time.
There may be additional risks that we consider immaterial or which
are unknown. 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 |
Sarah Inmon(786)
812-3233InvestorRelations@nclcorp.comNCLHmedia@nclcorp.com |
1 The Company does not provide certain estimated future results
and targets 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 Company has
not provided reconciliations between the Company’s 2024 guidance
and 2026 targets and the most directly comparable GAAP measure
because it would be too difficult to prepare a reliable U.S. GAAP
quantitative reconciliation without unreasonable effort.2 GHG
intensity is measured by MTCO2e on a per Capacity Day basis. The
targets cover NCLH’s emissions from its fleet of ships, islands and
facilities (Scopes 1 & 2) as well as upstream fuel- and
energy-related activities, including well-to-tank emissions
(portion of Scope 3). Capacity Days is defined as Berths available
for sale multiplied by the number of cruise days for the period for
ships in service.3 Full Year 2024 includes an approximate 300 basis
point, or $5, impact of increased Dry-dock days and related costs.
Excluding this impact, the Adjusted Net Cruise Cost Excluding Fuel
per Capacity Day would be essentially flat year-over-year,
amounting to $154 in 2024 as reported and in Constant Currency.4
Based on guidance and using diluted weighted-average shares
outstanding of approximately 516 million for full year 2024.
Adjusted EPS for the full year 2024 assumes that all four of the
Company’s outstanding exchangeable notes are fully dilutive and
therefore excludes approximately $62 million of interest expense,
respectively, associated with the Company’s exchangeable notes.5
Full year 2024 assumes all four of the Company’s exchangeable notes
are dilutive and therefore are included in diluted weighted-average
shares outstanding.6 Based on the Company’s March 31, 2024
outstanding variable rate debt balance, a one percentage point
increase in annual SOFR interest rates would increase the Company’s
annual interest expense by approximately $7 million excluding the
effects of capitalization of interest.
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