Norwegian Cruise Line Holdings Reports First Quarter 2021 Financial Results and Provides Business Update
“Over a year after the initial global suspension of cruise voyages, we are pleased to have announced our Great Cruise Comeback program beginning with voyages originating from international ports. Our teams have worked tirelessly and enlisted the guidance of top public health officials and scientific experts to develop our robust, science-backed SailSAFETM health and safety program, which combines mandatory vaccination of all guests and crew with rigorous preventative measures including universal COVID-19 testing. With our SailSAFE program we believe we can provide a uniquely safe and healthy experience which exceeds all other vacation options available on land or at sea,” said
Health and Safety
The Company is committed to protecting the health and safety of its guests, crew and communities visited and has developed SailSAFE, a robust, science-backed health and safety program which creates multiple layers of protection against COVID-19. The SailSAFE health and safety program is informed by expert guidance from the
The Company also further extended its depth and breadth of experts with the formation of its
For more information on the Company’s SailSAFE health and safety program please visit: http://www.nclhltd.com/Health-and-Safety.
Resumption of Cruise Operations
Norwegian Cruise Line- Norwegian Cruise Linewill initially offer seven-day cruises to the Greek Isles on Norwegian Jade from Athens(Piraeus), Greecebeginning July 25, 2021, and seven-day Caribbeanitineraries originating in Montego Bay, Jamaicabeginning on August 7, 2021on Norwegian Joy and from La Romana, Dominican Republicon Norwegian Gem beginning August 15, 2021. Beginning in September, Norwegian Cruise Linewill offer voyages in the Mediterranean departing from Barcelonaand Rome(Civitavecchia) on Norwegian Epic and Norwegian Getaway. Oceania Cruises- Oceania Cruiseswill restart cruise operations with Marina in August, resuming her originally published voyage schedule commencing on August 29, 2021in Copenhagen. Regent Seven Seas Cruises- Regent Seven Seas Cruiseswill return to sailing with Seven Seas Splendor cruising from the U.K.beginning September 11, 2021. The voyage will also mark the resumption of Seven Seas Splendor’s inaugural season, with the ship having only completed two cruises with guests after being christened in February 2020.
In parallel, the Company submitted a proposal to the
Booking Environment and Outlook
Bookings have been strong for future periods resulting in an elongated booking window as guests book further into the future, despite reduced sales and marketing investments and a travel agency industry that has not been at full strength for months. During the first quarter 2021, overall bookings, net of cancellations, were more than double the volumes during the prior quarter.
2022 booking and pricing trends are very positive driven by strong pent up demand. The Company is experiencing robust future demand across all brands with the overall cumulative booked position for the first half of 2022 meaningfully ahead of 2019’s record levels with pricing higher when excluding the dilutive impact of future cruise credits (“FCCs”).
Liquidity and Financial Action Plan
The Company continues to take proactive measures on its financial action plan to conserve cash, control operating and capital expenditures, improve its debt maturity profile and secure additional capital. As of
The Company has taken the following additional actions to enhance its liquidity since
- Raised approximately
$1.6 billion, net of underwriting fees, with an equity offering of approximately 53 million ordinary shares in March 2021. Approximately $1 billionof proceeds were used to repurchase the L Catterton exchangeable notes due 2026. This repurchase allowed the Company to reduce debt and future interest expense while generating incremental liquidity of approximately $530 millionwith limited additional dilution, as the vast majority of shares issued were already reserved for the L Catterton notes.
$1.1 billionof senior unsecured notes consisting of $575 millionof 5.875% senior unsecured notes due 2026 (tack-on to $850 millionoffering in December 2020) and $525 millionof 6.125% senior unsecured notes due 2028. Proceeds were used in part to fully repay the Norwegian Jewel and Pride of America credit facilities which were to mature in 2022 and generated approximately $650 millionof incremental liquidity.
- Amended all export credit agency backed credit agreements to defer approximately
$680 millionof amortization payments through March 31, 2022and secured covenant waivers and suspensions through December 31, 2022.
- Deferred certain newbuild-related payments of approximately €270 million through
June 30, 2022.
- Amended Senior Secured Credit Facility to defer approximately
$70 millionof certain amortization payments due prior to June 30, 2022and suspend the testing of certain financial covenants through December 31, 2022.
The Company's monthly average cash burn for the first quarter 2021 was in line with prior guidance at approximately
For the second quarter of 2021, the Company expects the average cash burn rate to be approximately
Cash burn rates include ongoing ship operating expenses, administrative operating expenses, interest expense, taxes, debt deferral fees and expected non-newbuild capital expenditures and exclude cash refunds of customer deposits as well as cash inflows from new and existing bookings, newbuild related capital expenditures and other working capital changes. Future cash burn rate estimates also exclude unforeseen expenses. The first quarter 2021 cash burn rate and second quarter 2021 estimate also reflect the deferral of debt amortization and newbuild related payments.
“We completed several strategic capital markets transactions in the quarter, raising over
First Quarter 2021 Results
GAAP net loss was
Revenue decreased to
Total cruise operating expense decreased 79.8% in 2021 compared to 2020. In 2021, cruise operating expenses were primarily related to crew costs, including salaries, food and other travel costs, fuel, and other ongoing costs such as insurance and ship maintenance.
Fuel price per metric ton, net of hedges decreased to
Interest expense, net was
Other income (expense), net was income of
As a result of the COVID-19 pandemic, 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 ending
|Remainder of 2021||2022||2023|
|% of HFO Consumption Hedged1||30%||15%||0%|
|Average USGC Price / Barrel||N/A|
|% of MGO Consumption Hedged||86%1||55%||25%|
|Average Gasoil Price / Barrel|
|(1)||These derivatives were de-designated for accounting purposes in the fourth quarter of 2020 and first quarter of 2021 but still represent economic hedges and may be re-designated in the future.|
Anticipated total capital expenditures for second quarter 2021 are approximately
Interest Expense, net is expected to be approximately
The Company has scheduled a conference call for
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 Net Cruise Cost Excluding Fuel.
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. Available Berths multiplied by the number of cruise days for the period.
Constant Currency. A calculation whereby foreign currency-denominated revenues and expenses in a period are converted at the
EBITDA. Earnings before interest, taxes, and depreciation and amortization.
EPS. Diluted loss per share.
GAAP. Generally accepted accounting principles in the
Gross Cruise Cost. The sum of total cruise operating expense and marketing, general and administrative expense.
Net Cruise Cost Excluding Fuel.
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.
Passenger Cruise Days. The number of passengers carried for the period, multiplied by the number of days in their respective cruises.
Senior Secured Credit Facility. The credit agreement, originally dated as of
Term Loan A Facility. The senior secured term loan A facility having an outstanding principal amount of approximately
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, such as
As our business includes the sourcing of passengers and deployment of vessels outside of the
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, 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 and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income and EPS. We use Adjusted Net 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. 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. For example, for the three months ended
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
Investor Relations & Media Contact
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(in thousands, except share and per share data)|
|Three Months Ended|
|Onboard and other||2,934||406,091|
|Cruise operating expense|
|Commissions, transportation and other||9,033||332,368|
|Onboard and other||1,259||74,973|
|Payroll and related||82,138||247,147|
|Total cruise operating expense||200,855||994,260|
|Other operating expense|
|Marketing, general and administrative||203,195||270,689|
|Depreciation and amortization||170,316||198,197|
|Total other operating expense||373,511||2,076,683|
|Non-operating income (expense)|
|Interest expense, net||(824,441||)||(68,907||)|
|Other income (expense), net||27,243||5,823|
|Total non-operating income (expense)||(797,198||)||(63,084||)|
|Net loss before income taxes||(1,368,464||)||(1,887,145||)|
|Income tax benefit (expense)||(1,728||)||6,173|
|Weighted-average shares outstanding|
|Loss per share|
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS|
|Three Months Ended|
|Net income loss||$||(1,370,192||)||$||(1,880,972||)|
|Other comprehensive loss:|
|Shipboard Retirement Plan||98||102|
|Cash flow hedges:|
|Net unrealized loss||(73,037||)||(305,860||)|
|Amount realized and reclassified into earnings||21,838||21,999|
|Total other comprehensive loss||(51,101||)||(283,759||)|
|Total comprehensive loss||$||(1,421,293||)||$||(2,164,731||)|
|CONSOLIDATED BALANCE SHEETS|
|(in thousands, except share data)|
|Cash and cash equivalents||$||3,508,033||$||3,300,482|
|Accounts receivable, net||18,581||20,578|
|Prepaid expenses and other assets||168,018||154,103|
|Total current assets||3,779,323||3,557,544|
|Property and equipment, net||13,401,337||13,411,226|
|Other long-term assets||1,194,474||831,888|
|Liabilities and shareholders' equity|
|Current portion of long-term debt||$||37,033||$||124,885|
|Accrued expenses and other liabilities||560,186||596,056|
|Advance ticket sales||1,120,124||1,109,826|
|Total current liabilities||1,810,054||1,913,903|
|Other long-term liabilities||604,776||450,075|
|Commitments and contingencies|
|Additional paid-in capital||6,328,120||4,889,355|
|Accumulated other comprehensive income (loss)||(291,218||)||(240,117||)|
|Retained earnings (deficit)||(1,660,011||)||(295,449||)|
|Total shareholders' equity||4,377,261||4,354,105|
|Total liabilities and shareholders' equity||$||18,973,793||$||18,399,317|
|CONSOLIDATED STATEMENTS OF CASH FLOWS|
|Three Months Ended|
|Cash flows from operating activities|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Depreciation and amortization expense||183,808||195,195|
|Deferred income taxes, net||6||(6,120||)|
|(Gain) loss on derivatives||(18,687||)||13,619|
|Loss on extinguishment of debt||621,894||—|
|Provision for bad debts and inventory obsolescence||4,329||8,372|
|Gain on involuntary conversion of assets||(418||)||—|
|Share-based compensation expense||26,601||32,758|
|Net foreign currency adjustments||(5,141||)||(1,386||)|
|Changes in operating assets and liabilities:|
|Accounts receivable, net||(2,648||)||(23,109||)|
|Prepaid expenses and other assets||(406,813||)||145,768|
|Accrued expenses and other liabilities||35,341||(123,552||)|
|Advance ticket sales||75,634||(288,544||)|
|Net cash used in operating activities||(852,011||)||(52,701||)|
|Cash flows from investing activities|
|Additions to property and equipment, net||(136,350||)||(610,155||)|
|Cash paid on settlement of derivatives||(4,642||)||(28,606||)|
|Net cash used in investing activities||(138,266||)||(637,893||)|
|Cash flows from financing activities|
|Repayments of long-term debt||(870,396||)||(181,530||)|
|Proceeds from long-term debt||1,161,672||2,007,870|
|Common share issuance proceeds, net||1,558,412||—|
|Proceeds from employee related plans||1,089||4,100|
|Net share settlement of restricted share units||(16,043||)||(14,975||)|
|Early redemption premium||(611,164||)||—|
|Deferred financing fees and other||(25,742||)||(12,993||)|
|Net cash provided by financing activities||1,197,828||1,802,472|
|Effect of exchange rates on cash and cash equivalents||—||(4,493||)|
|Net increase in cash and cash equivalents||207,551||1,107,385|
|Cash and cash equivalents at beginning of the period||3,300,482||252,876|
|Cash and cash equivalents at end of the period||$||3,508,033||$||1,360,261|
|NON-GAAP RECONCILING INFORMATION
|The following table sets forth selected statistical information:|
|Three Months Ended
|Passenger Cruise Days||—||4,278,602|
|Gross Cruise Cost,
|Three Months Ended
|Total cruise operating expense||$||200,855||$||199,607||$||994,260|
|Marketing, general and administrative expense||203,195||201,503||270,689|
|Gross Cruise Cost||404,050||401,110||1,264,949|
|Commissions, transportation and other expense||9,033||8,981||332,368|
|Onboard and other expense||1,259||1,259||74,973|
|Less: Fuel expense||42,603||42,603||125,024|
|Net Cruise Cost Excluding Fuel||351,155||348,267||732,584|
|Less Non-GAAP Adjustments:|
|Non-cash deferred compensation (1)||905||905||666|
|Non-cash share-based compensation (2)||26,601||26,601||32,758|
|Adjusted Net Cruise Cost Excluding Fuel||$||323,649||$||320,761||$||699,160|
|Gross Cruise Cost per Capacity Day||$||306.74|
|Net Cruise Cost Excluding Fuel per Capacity Day||$||177.65|
|Adjusted Net Cruise Cost Excluding Fuel per Capacity Day||$||169.54|
|(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.
|NON-GAAP RECONCILING INFORMATION|
|Adjusted Net Loss and Adjusted EPS were calculated as follows (in thousands, except share and per share data):|
|Three Months Ended|
|Non-cash deferred compensation (1)||1,003||991|
|Non-cash share-based compensation (2)||26,601||32,758|
|Extinguishment and modification of debt (3)||674,019||-|
|Amortization of intangible assets (4)||-||2,774|
|Impairment loss (5)||-||1,633,162|
|Adjusted Net Loss||$||(668,569||)||$||(211,287||)|
|Diluted weighted-average shares outstanding - Net loss and Adjusted Net Loss||329,377,207||213,630,798|
|Diluted loss per share||$||(4.16||)||$||(8.80||)|
|(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.|
|(4) Amortization of intangible assets related to the Acquisition of Prestige are included in depreciation and amortization expense.|
|(5) Impairment loss consists of goodwill, tradename and property and equipment impairments. The impairments of goodwill and tradenames are included in impairment loss and the impairment of property and equipment is included in depreciation and amortization expense.|
|NON-GAAP RECONCILING INFORMATION|
|EBITDA and Adjusted EBITDA were calculated as follows (in thousands):|
|Three Months Ended|
|Interest expense, net||824,441||68,907|
|Income tax (benefit) expense||1,728||(6,173||)|
|Depreciation and amortization expense||170,316||198,197|
|Other (income) expense, net (1)||(27,243||)||(5,823||)|
|Non-cash deferred compensation (2)||905||666|
|Non-cash share-based compensation (3)||26,601||32,758|
|Impairment loss (4)||-||1,607,797|
|(1) Primarily consists of net gains and losses for fuel swaps not designated as hedges and foreign currency exchange.|
|(2) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are included in payroll and related expense.|
|(3) Non-cash share-based compensation expenses related to equity awards are included in marketing, general and administrative expense and payroll and related expense.|
|(4) Impairment loss consists of goodwill and tradename impairments.|
Source: Norwegian Cruise Line Holdings Ltd.