Norwegian Cruise Line reports Financial Results for Q3 2016
Norwegian Cruise Line Holdings Ltd. today reported financial results for the third quarter ended September 30, 2016, and provided guidance for the fourth quarter and full year 2016.
GAAP net income was $342.4 million or EPS of $1.50 compared to $251.8 million or $1.09 in the prior year. The Company generated Adjusted Net Income of $369.3 million or Adjusted EPS of $1.62 compared to $311.1 million or $1.35 in the prior year.
Revenue increased 15.6% to $1.5 billion compared to $1.3 billion in 2015. Adjusted Net Revenue in the period increased 17.0% to $1.1 billion compared to $978.2 million in 2015. These increases were primarily attributed to the addition of Norwegian Escape, Oceania Sirena, and Regent Seven Seas Explorer to the fleet. Gross Yield increased 1.5% while Adjusted Net Yield improved 3.4% on a Constant Currency basis and 2.8% on an as reported basis primarily due to improved pricing.
Gross Cruise Cost increased 10.5% in 2016 compared to 2015 due to an increase in total cruise operating expense as a result of an increase in Capacity Days along with an increase in marketing expense. Gross Cruise Costs per Capacity Day decreased 3.0%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 1.7% on both a Constant Currency and as reported basis primarily due an increase in marketing expenses.
Fuel price per metric ton, net of hedges decreased 11.5% to $500 from $565 in 2015. The Company reported fuel expense of $86.3 million in the period. In addition, a loss of $2.5 million was recorded in other expense in 2016 related to the ineffective portion of the Company's fuel hedge portfolio due to market volatility.
Interest expense, net increased to $60.7 million in 2016 from $49.8 million in 2015 primarily due to an increase in average debt balances outstanding primarily associated with the delivery of Norwegian Escape in October 2015 and Seven Seas Explorer in June 2016 as well as slightly higher interest rates due to an increase in LIBOR rates.
Other expense was $5.3 million in 2016 compared to $1.7 million in 2015. In 2016, the expense was primarily related to unrealized and realized losses on fuel swap derivative hedge contracts and foreign exchange derivative hedge contracts and foreign currency transaction losses.
In the first quarter of 2016, the Company executed an agreement to divest its interest in a certain land-based operation in Hawaii. The amount of the transaction is considered immaterial to the Company's consolidated financial statements. The agreement is subject to customary closing conditions, including receipt of all required regulatory approvals which are still pending; therefore, the Company no longer anticipates the transaction will close in 2016. The Company's third quarter financial results include the results from this operation. For purposes of comparison to the guidance provided by the Company in its prior release, key operational metrics excluding the results of this operation are as follows:
Gross Yield growth would have been 1.5%. Adjusted Net Yield growth would have been 3.5% on a Constant Currency basis or 2.9% on an as reported basis (excluding the results of the aforementioned operation).
Gross Cruise Costs per Capacity Day would have decreased 2.9%. Adjusted Net Cruise Costs Excluding Fuel per Capacity Day growth would have been 1.9% on both a Constant Currency and as reported basis (excluding the results of the aforementioned operation).
About Norwegian Cruise Line Holdings Ltd.
Norwegian Cruise Line Holdings Ltd. 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 24 ships with approximately 46,500 berths, these brands offer itineraries to more than 510 destinations worldwide. The Company will introduce four additional ships through 2020.
Norwegian Cruise Line is an innovator in cruise travel with a history of breaking the boundaries of traditional cruising, most notably with the introduction of "Freestyle Cruising," which revolutionized the industry by giving guests more freedom and flexibility. Norwegian Cruise Line offers The Haven by Norwegian, a luxury enclave with suites, private pools and dining, concierge service and personal butlers. Oceania Cruises offers an unrivaled vacation experience renowned for the finest cuisine at sea and destination-rich itineraries that span the globe. Expertly crafted voyages aboard designer-inspired, intimate ships call on ports across Europe, Asia, Africa, Australia, New Zealand, the South Pacific and the Americas. Regent Seven Seas Cruises offers the industry's most inclusive luxury experience aboard its all-suite fleet. Accompanying the unprecedented personalized service, gourmet cuisine and world-class entertainment, a voyage with Regent Seven Seas Cruises also includes round-trip air transportation to the port of origin with business class air provided for any intercontinental flights, fine wines and spirits throughout the ship, unlimited free internet access, ground transfers, pre-paid gratuities and complimentary sightseeing excursions at every destination visited.
