Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Norwegian Cruise Line Holdings Ltd (NCLH, Financial) achieved the highest quarterly gross revenue and adjusted EBITDA in the company's history.
- The company increased its full-year guidance for the fourth time this year, demonstrating strong performance and strategic direction.
- NCLH reported a 31% increase in adjusted EPS to $0.99, surpassing guidance despite a negative impact from foreign exchange rates.
- The company is seeing strong demand and pricing across all geographies, particularly in Alaska and Canada-New England voyages.
- NCLH has made significant advancements in sustainability, receiving an 'A' rating from MSCI and top recognition at the ESG Shipping Awards.
Negative Points
- The company faces a $0.06 negative impact on EPS from foreign exchange rates.
- There are headwinds from rerouted Middle East sailings, which impact fourth-quarter deployment and yield.
- NCLH's leverage remains higher than preferred, although progress is being made to reduce it.
- The company anticipates a challenging comparison for net yield growth in the first quarter of 2025 due to strong prior-year performance.
- There is a need to address upcoming debt maturities, including $1.4 billion notes due in 2026, which will become current in early 2025.
Q & A Highlights
Q: Can you explain the pricing trends and how they have evolved over the last few quarters?
A: Mark Kempa, CFO, explained that pricing has been strong, with per diems accelerating from 5% in Q2 to 7% in Q3. Despite challenges, Q4 pricing is expected to be around 5%, which is a significant improvement from earlier expectations of flat to negative growth.
Q: How should we interpret the yield and cost growth targets set during the Analyst Day?
A: Harry Sommer, CEO, emphasized that while the focus is on achieving the 2026 targets, the yield and cost growth spread may not be consistent every year. The company is committed to achieving operational EBITDA margin, EPS, leverage, and ROIC targets by 2026.
Q: Can you provide more details on the booking trends for 2025 across different brands and geographies?
A: Harry Sommer noted that the company is seeing strong booking trends across all brands and geographies. The focus is on maximizing yield rather than booking position, with robust close-in demand allowing for adjustments in booking curves.
Q: How do you view the potential for yield growth in the cruise industry given recent changes?
A: Harry Sommer stated that while the goal is to grow yields as much as possible, the company is sticking to its algorithm of low to mid-single-digit yield growth. The focus remains on moderate capacity growth and maintaining low inflationary cost increases.
Q: What are the expectations for occupancy trends over the next few years?
A: Harry Sommer indicated that occupancy is expected to remain stable, with ships essentially full from a cabin perspective. Any changes would primarily be due to the number of children on board, which doesn't significantly impact revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
