Norwegian Cruise Line Holdings reported net profit that beat all estimates and lifted its guidance for 2024 after logging record sales in the first three months of the year.
But investors apparently wanted more and were not rewarding the cruise giant for the result, with the stock price plunging 8.9% to $17.25 in early trading on the New York Stock Exchange.
Norwegian, the smallest of Miami’s Big 3 operators, reported net profit of $17.4m for the first quarter, which reverses the loss of $159m reported for the same period of 2023.
Adjusted net income, which excludes non-cash items typically not included in estimates by Wall Street analysts, rose to $69.5m from a loss of $128m in the first three months of last year.
That resulted in an adjusted earnings per share of $0.16, better than the average forecast of $0.11 and topping the highest estimate of all 14 analysts polled by Yahoo Finance.
“We kicked off 2024 with impressive momentum, with record bookings in the first quarter propelling us to continue our all-time high booked position and an unprecedented level of advance ticket sales,” chief executive Harry Sommer said in the earnings statement.
“These achievements demonstrate the continued growing demand we are experiencing for our product and offerings.”
Norwegian, the parent of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises, reported that first-quarter revenue surged 20% to $2.19bn on the back of an 8% increase in fleet capacity.
The company experienced a strong WAVE season — the peak marketing period that takes place during the first few months of each year — that saw advanced ticket sales soar to a record high of $3.8bn, which was 13% higher than the company reported this time last year.
“We are pleased to report that we exceeded our guidance metrics for the first quarter of 2024,” chief financial officer Mark Kempa said.
“Thanks to robust consumer demand and continued success on our operational efficiency efforts, we are raising our 2024 full-year guidance for key metrics including net yield, adjusted Ebitda and adjusted EPS.”
| Q1 2024 | Q1 2023 | |
| Revenue | $2.19bn | $1.82bn |
| Cruise operating expenses | $1.39bn | $1.28bn |
| Operating income | $218m | $10.7m |
| Net income | $17.4m | -$159m |
| Adjusted net income | $69.5m | -$128m |
| Adjusted earnings per share | $0.16 | -$0.30 |
Norwegian added $45m to its guidance for 2024 adjusted net income, lifting it to $680m.
That translated to new EPS guidance of $1.32 for the year, above the average analyst expectation calling for $1.17.
Some of the new cash will help tackle the company’s debt load, accumulated by many cruise ship operators during the Covid-19 industry shutdown, although Norwegian has also announced a major newbuilding programme.
“The momentum we are experiencing allows us to make significant progress on our deleveraging efforts. During the first quarter of 2024 we reduced net leverage by a full turn from the end of 2023, ending the quarter at 6.3x” Kempa said, referring to a net leverage ratio of 6.3 times Ebitda.
“We plan to continue this trend and expect to reduce net leverage 1.5 turns during the year compared to 2023 year-end, marking an important milestone in improving our balance sheet.”
A reduction of 1.5 turns implies a cut to a net leverage ratio of 4.8 times Ebitda.
