The Company continues to enjoy healthy customer demand with a cumulative reserved position for the fourth quarter of 2023, above 2019 levels, with even higher costs. With 12 months ahead, the Company also continues to be in its optimal reserve position. and at higher costs. Onboard profit generation remains physically powerful with a broad-based force across all profit streams. As of September 30, 2023, the Company’s advance note sales, adding the long-term portion, amounted to $3. 1 billion, an accumulation of approximately 59% as of Q3 2019.
During the third quarter and early fourth quarter, the Company made an impact through operational events around the world, adding the wildfires in Maui and the escalation of clashes in Israel.
Pride of America, which offers inter-island itineraries from Hawaii year-round, replaced some itineraries in August to emphasize local resources on Maui. In early September, with guidance and encouragement from the Governor of Hawaii and the Hawaii Tourism Authority, the company resumed its weekly scheduled stops to Kahului, Maui. However, as a result of the wildfires, the company experienced a transitory slowdown in closed reserves for crossings to Hawaii, most commonly concentrated in the fourth quarter of 2023. Demand has increased in recent weeks and is now reaching normalized levels. In addition to the Pride of America, the company also had another ship operating in the region, Norwegian Spirit, bringing total capacity with calls to Hawaii to approximately 6% by the fourth quarter of 2023.
In addition, due to the escalation of the confrontation in Israel, the Company canceled and redirected all calls to Israel and some calls to the surrounding domain for the remainder of 2023. The Company is also in the process of canceling all calls to Israel. Israel also in 2024, and will continue to closely monitor and compare crossings in the long term and make adjustments as needed. Ahead of the matchup, approximately 7% of capacity in the fourth quarter of 2023 and 4% of capacity for the full year of 2024 will visit the Middle East1.
Price expansion in the third quarter was also strong, with capacity expansion up 20% compared to 2019. Total profit increased 33% in the third quarter compared to 2019, with overall profit consistent with the day of the cruise of approximately 16%, as reported and in consistent currency. Gross margin consistent with the capacity day was approximately $148 per quarter. Net return expansion of approximately 3. 1% compared to 2019 in consistent currencies was in line with expectations.
Looking ahead, the Company expects the fourth quarter to be consistent with diem and net yield expansion to be strong, approximately 15. 00% to 16. 00% and 7. 75% to 8. 75% . % at consistent exchange rate and 2019, respectively. This figure is lower than previous expectations due to the aforementioned external headwinds, as well as near-expected demand for longer exotic itineraries on Norwegian Cruise Line (“NCL”) expired in the season in the Eastern Mediterranean and probably regions of Asia. As NCL has strategically moved toward its new mix of longer, more immersive deployments, booking curves, supply and marketing plans for safe routes continue to be optimized. Although this caused a transitional change from the initial expectations in the fourth quarter of 2023, the plans have now been recalibrated, resulting in a particularly higher reserved position for the same fourth quarter consistent with 2024, to the same period consistent with the last year by 2023. As a result, the company’s full-year 2023 net expansion consistent with diem and net performance is expected to be 9. 25% to 9. 75% and 4. 25% to 4. 75% at consistent exchange rates through 2019, versus previous forecasts of 9. 0% to 10. 5% and 5. 0%. % to 6. 5%.
Once again, the Company has demonstrated continued progress in its ongoing margin improvement initiative and its efforts to maximize profit opportunities and adjust the size of its load base. Gross cruise prices consistent with the day of constant monetary capacity were approximately $311 in the quarter, compared to $315 in the prior quarter. Adjusted cruise prices without fuel consistent with the day of constant monetary capacity in the third quarter of 2023 were approximately $152, an improvement over the second quarter of $156 and in line with guidance, representing the third consecutive quarter since inception. of this sequential improvement initiative in this key metric. As expected, in addition to the savings in base charges achieved during the quarter, the third quarter also included some one-time fee benefits that are not expected to be repeated.
Full-year 2023 adjusted net cruise charges, excluding fuel, consistent with the day of capacity, are now expected to be approximately $155 in constant currency terms, an increase from previous guidance of $156. The Company continues to prioritize the identification and comparison of a variety of projects to its load design and margin profile, while preserving the price of its logo and optimal degrees of visitor satisfaction.
Liquidity and monetary position
The Company is committed to prioritizing its efforts to optimize its balance sheet and reduce its debt. As of September 30, 2023, the Company had total debt of $13. 9 billion and overall net debt of $13. 2 billion and continues to expect an improvement in net leverage. The Company paid approximately $130 million and $1. 5 billion of debt in the third quarter and first nine months of 2023, respectively2.
In October, the refinancing of the operating credit facility was successfully completed, broadening the Company’s debt maturity profile and providing increased liquidity. The revolving loan facility increased from $875 million to $1. 2 billion, with a 3-year maturity maturing in October 20263. In addition, in October, the Company issued $790 million of an aggregate principal amount of 8. 125% senior secured notes due 2029. Net proceeds, combined with liquidity, were used to fully repay approximately $800 million of term loans due January 2025 under operating credits. installation.
At the end of the quarter, liquidity stood at $2. 2 billion, or about $2. 5 billion after adjusting for the October refinancing. This includes approximately $680 million in cash and cash equivalents, $1. 2 billion in cash availability under its revolving loan facility, and an unused commitment of $650 million.
Kempa continued, “We continue to say that our strong liquidity position, coupled with our continued cash generation and expansion profile, allows us to meet our near-term liquidity needs, adding expected bills for debt service and capital expenditures, and particularly reducing leverage. “and reduce the risk of our balance sheet over time.
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2 Does not reflect cash flows, as it reflects the net activity of the revolving loan facility and excludes the repayment of the approximately $600 million Term Loan Facility A in the first quarter of 2023, which was refinanced through the issuance of new notes. 3 Subject to adulthood in spring if certain conditions are met. They are not enforced.
Third Quarter 2023 Results
Gross cruise prices based on capacity day were approximately $311 during the quarter. Adjusted prices for fuel-free cruises based on capacity day in constant currency were approximately $152, reflecting a reduction compared to the second quarter of 2023 due to the Company’s ongoing margin benefits. The improvement initiative continues.
The Company reported fuel expenses of $171 million in the quarter. The value of fuel consistent with the metric ton, net of blankets, decreased to $727 from $830 in 2022. Fuel intake of 235,000 metric tons was about 2% lower than expected, reflecting higher concentration. about fuel efficiency.
Net interest expense: $181. 2 million in 2023, compared to $152. 3 million in 2022. The increase in interest expense is basically due to rising interest rates.
Other sources net of earnings (expenses) $12. 1 million in 2023, compared to a gain of $31. 5 million in 2022. In 2023, gains were basically similar to net gains and losses from currency revaluations.
In addition to announcing third quarter 2023 effects, the company also provided guidance for the fourth quarter and full year 2023, as well as related sensitivities. The Company does not provide certain expected long-term effects estimated on a GAAP basis because it cannot predict, with moderate confidence, long-term adjustments in exchange rates or the long-term impact on earnings and safe expenses. These parts are unsafe and will depend on a number of factors, adding industry conditions, and may have only one effect on the effects of the Company calculated in accordance with GAAP. The Company did not provide reconciliations between the Company’s 2023 guidance and directly comparable maximum GAAP measures, as it would be too complicated to prepare a reliable quantitative reconciliation under U. S. GAAP. In the U. S. , there is no undue effort.
The exchange rates used through the Company in its guidance for the fourth quarter of 2023 are reflected below.
Fuel
The following reflects the Company’s expectations related to fuel consumption and prices, as well as the sensitivities that accompany them.
Lately, the Company has covered approximately 45%, 36% and 9% of its total expected consumption of metric tons of fuel for the remainder of 2023, 2024 and 2025, respectively. The table below shows the quantities covered and the value consistent with the metric ton of heavy fuel. fuel oil (HFO) and marine fuel oil (GMO).
(1) Covered derivatives include accounting and economic hedges.
Capital Expenditures
Non-new structure capital expenditures for the third quarter of 2023 were $70 million. Planned capital expenditures of the new structure for the full year 2023 are expected to be approximately $400 million, adding approximately $135 million in the fourth quarter.
Company updates and other business highlights:
Environmental, Social and Governance (“ESG”)
Fleet & Brand Updates
Other Highlights
The Company scheduled a telephone convention for Wednesday, November 1, 2023 at 10:00 a. m. M. , Eastern Time, to discuss the effects of the third quarter of 2023 and provide an update on its operations. A link to the live webcast and slideshow will be provided. had on the Company’s online investor relations page in https://www. nclhltd. com/investors. There will also be a replay of the convention call on the online page within 30 days of the convention calling.
About Norwegian Cruise Line Holdings Ltd.
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is a leading global cruise line that operates Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises. With a combined fleet of 31 ships and more than 65,000 berths, NCLH offers itineraries to approximately 700 destinations worldwide. NCLH has six more vessels scheduled for delivery under its 3 brands, which will add more than 16,500 berths to its fleet. For more information, www. nclhltd. com.
Terminology
Adjusted EPS. Adjusted net source of income (loss) divided by the number of weighted average diluted shares outstanding.
Adjusted gross margin. Gross margin adjusted for payroll and depreciation, amortization, fuel, food, and related vessels. Gross margin is calculated on a GAAP basis as general profit minus cruise overhead operating expenses and shipping depreciation.
Adjusted Cruise Net Load Fuel. Net cruise charge minus fuel charges adjusted for additional adjustments.
Adjusted net source of income (loss). Net profit (loss), adjusted for the effect of dilutive securities and other additional adjustments.
Days capacity. Seats available for sale were multiplied by the number of cruise days over time for ships in service.
Constant currency. A calculation whereby income and expenses denominated in foreign currency at one time are translated at the U. S. dollar exchange rate of a comparable time to the effects of exchange rate fluctuations.
Dry dock. The procedure by which a shipment is placed in a giant basin where all fresh or seawater is pumped to perform cleaning and maintenance of the parts of the shipment that are below the waterline.
EBITDA. Interest on profits, taxes, and depreciation and amortization.
GAAP. Generally Accepted Accounting Principles in the U. S.
Cruising Brute. The sum of the cruise ship’s total operating expenses and marketing, general and administrative expenses.
Net cruise charge. Gross cruise charge minus commissions, transportation and other expenses, as well as onboard and other expenses.
Net cruise fuel load. Net cruise charge minus fuel expenses.
Net leverage. Net debt divided by adjusted EBITDA.
Net allocation. Adjusted gross margin divided by passengers’ cruise days.
Net profitability. Adjusted gross margin consistent with day of capacity.
Occupancy, occupancy percentage, or load factor. The relationship between passengers’ cruise days and capacity days. A percentage of more than 100 percent indicates that 3 or more passengers occupied some cabins.
Passenger cruise days. The number of passengers carried during the period, multiplied by the number of days on their respective cruises.
Revolving Loan Facility. $875 million senior secured revolving credit facility as of September 30, 2023, amounting to $1. 2 billion in October 2023.
Term Loan Facility A. La Secured Senior Term Loan Facility A had a notable principal amount of approximately $0. 8 billion as of September 30, 2023. Term Loan Facility A was paid off in full in October 2023.
Non-GAAP Financial Measures
As our business includes the acquisition of passengers and the deployment of vessels outside the United States, a portion of our income and expenses are denominated in foreign currencies, namely British Pounds, Canadian Dollars, Euros and Australian Dollars, which are subject to exchange rate fluctuations. against our reporting currency, the U. S. dollar. To monitor the external effects of those fluctuations, we calculate certain non-GAAP measures on a consistent monetary basis, in which existing generated income and expenses denominated in foreign currencies are translated into U. S. dollars using comparable epochal exchange rates. We believe that presenting those non-GAAP measures on an informed basis and on a consistent monetary basis is helpful in providing a more complete view of trends in our business.
Adjusted EBITDA is suitable as a supplemental monetary measure, as it is used through control to compare operational functionality. We also know that adjusted EBITDA is a useful measure in determining our functionality because it reflects certain operating points of our business, such as sales growth. , operating costs, marketing, general and administrative expenses, and other operational sources of revenue and expenses. In addition, control uses adjusted EBITDA as a measure of functionality for our incentive compensation. Adjusted EBITDA is not a GAAP term and is not intended to be a measure of liquidity or cash flows from operations or a comparable measure of the net source of income (loss) as it does not take into account certain needs such as capital and similar expenses. Depreciation, principal and interest payments, and source of income tax. payments and includes other additional adjustments.
In addition, adjusted net income (loss) and adjusted EPS are non-GAAP monetary measures that exclude certain amounts and are used to supplement the net source of income (loss) and GAAP EPS. We use an adjusted net source of income (loss) and EPS as key measures of our earnings functionality. It is favorable for control and investors to refer to those non-GAAP monetary measures when comparing our functionality and when planning, forecasting, and analyzing long-term eras. These non-GAAP monetary measures also facilitate control. internal comparison with our old functionality. In addition, the control uses adjusted EPS as a measure of functionality for our incentive compensation. The amounts excluded in the presentation of these non-GAAP monetary measures are likely to vary from era to era; therefore, our presentation of adjusted net source of income (loss) and adjusted EPS would not possibly be indicative of long-term changes or results.
Net leverage and net debt are functional measures that we provide control and investors a greater understanding of our leverage position and borrowing capacity after taking into account money and money equivalents. money. We encourage you to compare each adjustment used in the calculation of our non-GAAP monetary measures and the reasons why we consider our non-GAAP monetary measures appropriate for further analysis. When comparing our non-GAAP monetary measures, you should be aware that, in the long term, we may incur expenses similar to the changes made to our presentation. Our non-GAAP monetary measures have limitations as analytical tools, and you should not consider those measures in isolation or as a substitute for analysis of our effects as reported under GAAP. Our presentation of our non-GAAP monetary measures should not be construed as an inference that our long-term effects will not be affected by unusual or non-recurring items. Our non-GAAP monetary measures may not be comparable to those of other companies. Please see a back-to-back reconciliation of those measures to the comparable maximum GAAP measure presented in our consolidated monetary statements below.
Certain estimates or projections contained in this release are “forward-looking” within the meaning of the United States federal securities laws, intended to take advantage of the liskill safe harbor established through the Private Securities Litigation Reform Act. 1995 All data other than old facts contained or incorporated by reference in this communication, including, without restriction, those related to our business strategy, monetary condition, effects of operations, plans, customer movements taken or methods taken into consideration regarding our liquidity. position, valuation and testing of our assets and control objectives for long-term operations (adding those related to expected fleet additions, our expectations related to the effect of recent macroeconomic situations and global events, our expectations related to cruises operating position of occupancyArray, call for travel, our plans or objectives for our sustainable skills program and decarbonization efforts, our expectations for long-term cash flow and earning capacity, financing opportunities and extensions, and efforts to reduce operating expenses and capital expenditures) are ahead. looking at s. Many of these, but not all, can be discovered by searching for words like “hope,” “anticipate,” “goal,” “project,” “plan,” “believe,” “seek,” “want,” “possibly. ” , “forecast”, “estimate”, “intend”, “long term” and similar words. Forward-looking announcements are not promises of long-term functionality and may involve dangers, uncertainties and other points that may also cause our genuine effects, functionality or achievements to differ materially from any expressed or implied long-term effects, functionality or achievements. through such s. future. Examples of these risks, uncertainties and other issues include, but are not limited to, the effect of: adverse general economic issues, such as fluctuating or rising levels of interest rates, inflation, unemployment, underemployment and fuel price volatility. , drop in fuel prices. stock and real estate markets, and perceptions of those situations that minimize the point of income source available to the client or the client’s trust; the spread of epidemics, pandemics and viral outbreaks, including the COVID-19 pandemic, and their effect on the ability or preference of other people to travel (including cruises), which has and will likely continue to have an adverse effect on our effects. , operations, customers, plans, objectives, growth, reputation, cash flow, liquidity, travel need and inventory value; implement precautions in coordination with regulators and the global public health government to protect the health, defense and security of guests, equipment and the communities in which we stop and to comply with relevant regulatory restrictions; our indebtedness and the restrictions contained in agreements governing our indebtedness that require us to maintain minimum degrees of liquidity and comply with maintenance covenants and that otherwise restrict our flexibility in the operation of our business, adding draped assets that constitute collateral under those agreements ; our ability to work with lenders and others or seek functions to defer, renegotiate, refinance or restructure our existing debt profile, short-term debt amortization, new bill-like structures and other legal liabilities and to work with credit card processors to meet existing needs or potential long-term money guarantee requests made through clients related to long-term 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 notable ex-transferable notes and any long-term financing that could also be dilutive to existing shareholders; lack of availability of ports of call; long-term value increases, or basic changes, interruptions or discounts in advertising air services; adjustments involving the tax and environmental regulatory regimes in which we operate, adding new regulations aimed at reducing greenhouse fuel emissions; the accuracy of any valuation of our assets due to the effect of the COVID-19 pandemic or otherwise; our good fortune in controlling operating and capital expenditures; trends or adjustments in long-term reserves and our ability to meet long-term reserves and achieve similar deposits; adverse occasions have an effect on travel safety or stopovers or perceptions of travel safety, such as terrorist acts, armed conflicts, such as the Russian invasion of Ukraine or the war between Israel and Hamas, or threats of such occasions , acts of piracy and other foreign occasions. ; adverse incidents involving cruise ships; knowledge security breaches or other disruptions in our data generation and other network processes or our genuine or perceived failure to comply with privacy and knowledge protection requirements; adjustments to fuel rates and the type of fuel we may use and/or other cruise operating costs; mechanical malfunctions and repairs, delays in our shipbuilding, maintenance and renovation program and consolidation of qualified shipyard facilities; increase the dangers and costs relevant to foreign operations; our inability to recruit or retain a qualified corps of painters or the loss of a key corps of painters or problems in relationships with painters; have a similar effect to climate change and our ability to achieve our similar climate skills goals or other objectives; our inability to discharge good enough insurance coverage; pending or threatened litigation, investigations and law enforcement movements; volatility and disruptions in global creditsss and capital markets, which may also impair our borrowing capacity and increase our counterparty credit risks, adding similar risks to our credit facilities, derivatives, contingent legal liabilities, insurance contracts and our promises to pay for progress. of new ships; any other infringement of our trademarks, trade names or goodwill; our dependence on third parties to provide hotel control facilities for certain vessels and other facilities; fluctuations in foreign currency exchange rates; our expansion into new markets and investments in new markets and discovered destination projects; excess capacity in key markets or globally; and other items set forth under the heading “Risk Factors” in our recently filed full Annual Report on Form 10-K and upcoming filings with the Securities and Exchange Commission. The above examples are not exhaustive and new dangers arise from time to time. There may be other dangers that we consider insignificant or unknown. These forward-looking statements are based on our existing beliefs, assumptions, expectations, estimates and projections relating to our long-term offering and business methods and the environment in which we expect to operate in the long term. These forward-looking announcements speak only as of the date on which they are made. We expressly disclaim any legal responsibility or undertake to publicly post any update or revision to any prospectus to reflect any replacement in our expectations with respect to it or any replacement in occasions, situations or cases in which any of them are discovered. required. through the law.
Investor Relations & Media Contacts
InvestorRelations@nclcorp. com(305) 468-2339