Norwegian Cruise Line Holdings (NCLH) has posted fairly impressive Q2 2023 financial results, which is good news over much of 2022’s results. In additional news, the company has also boosted its full year 2023 guidance, indicating promise moving into the second half of the year.
Norwegian Cruise Line Holdings Second Quarter 2023 Results
On August 1, 2023, Norwegian Cruise Line Holdings Ltd. — which operates a fleet of 18 cruise ships across Norwegian Cruise Line, 7 with Oceania Cruises, and 5 with Regent Seven Seas Cruises — unveiled its financial performance for Q2 2023, surpassing or outperforming previous projections.
Furthermore, the company, which has been in business for more than 57 years, revised its full-year 2023 guidance in light of its improved financial outlook.
“We are pleased to report strong second quarter results, in which we met or exceeded guidance on all key metrics, allowing us to improve our full year outlook for Adjusted EBITDA and Adjusted EPS,” company CEO Harry Sommer noted.
In addition to achieving or surpassing projections for all significant metrics during its second quarter, NCLH also achieved record-breaking total revenue of $2.2 billion — marking a 33% surge compared to the same period in 2019.
Moreover, the second quarter saw an impressive adjusted EBITDA of around $515 million, plus an adjusted EPS of $0.30, significantly surpassing earlier guidance which came in at $485 million and $0.25.
The company also said that there was an increase of approximately 15% in total revenue per passenger cruise day (a metric used to track a cruise ship’s passenger capacity utilization).
“The continued strength in the demand environment is evident not only in this quarter’s results, in which we generated a meaningful increase in pricing on 19% capacity growth compared to 2019, but also in our forward booked position which is within our optimal range and at higher pricing,” Sommer said.
Overall occupancy showed a positive trend upward as well, reaching approximately 105% during the second quarter of 2023, highlighting the cruise line’s growing popularity and capacity utilization efficiency.
Debt Recovery Plan
NCLH reiterated that it remains committed to improving its balance sheet and reducing leverage. The company, as of June 30, 2023, held a total debt of $13.1 billion.
“During the quarter, we achieved a second consecutive quarter of sequential operating cost improvement, demonstrating our commitment and relentless focus on improving efficiencies, reducing costs and restoring our margins in a strategic and data-driven manner,” CFO Mark A. Kempa explained.
“We were also pleased to have received approximately $500 million of cash collateral back from a credit card processor during the quarter … bringing it [liquidity] to $2.4 billion at quarter-end,” Kempa added.
The cruise line seems confident that its ongoing cash generation, driven by its well-funded newbuild growth pipeline, will help meet its short-term liquidity requirements, including debt payments and capital expenditures.
2023 Updated Guidance and Ship Occupancy
The publicly traded company, headquartered in Miami, Florida, raised its full year 2023 Adjusted EPS guidance to around $0.80, reflecting solid second-quarter performance and continued strength throughout the year. Adjusted EBITDA guidance also got a boost, landing in the $1.85 billion to $1.95 billion range.
As stated, Q2 2023 occupancy came in at about 105%, meeting expectations. Full year 2023 occupancy is predictable to hit 103.5%, in line with prior guidance.
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The company’s tactical move toward longer, more immersive itineraries resulted in slightly lower occupancy for the quarter compared to Q2 2019. However, this shift is expected to attract higher-quality guests and increase net yields in the long run.
NCLH foresees occupancy rates in 2024 — and possibly longer — decreasing by roughly 200 basis points, which is below 2019’s reported occupancy rates. Time will tell what impact this trend may have on overall financial outlooks.
