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Norwegian Cruise (NCLH) Q2 Earnings & Revenues Top Estimates

Zacks Equity Research

Norwegian Cruise Line Holdings Ltd. NCLH has reported better-than-expected results for the second quarter of 2019. With this, the company’s earnings surpassed the Zacks Consensus Estimate for 10 consecutive quarters. Its revenues also exceeded the consensus mark in four of the trailing five quarters.

The company’s quarterly results were aided by strong demand and a record booking trend. However, it lowered the guidance for 2019, which may have not gone down well with investors. Resultantly, shares of the company dropped more than 2% in the pre-market trading. However, so far this year, Norwegian Cruise has witnessed 12.3% growth in shares, outpacing the industry’s 3.4% rally.

 

 

Earnings & Revenue Discussion

Adjusted earnings of $1.30 per share surpassed the Zacks Consensus Estimate of $1.26 by 3.2%. The bottom line also grew 7.4% from the year-ago quarter.

Revenues were $1,664.3 million in the second quarter, slightly surpassing the consensus mark of $1,624 million, and grew 9.3% year over year. Revenues were driven by an improvement of 9.5% in passenger ticket revenues, and 8.9% increase in onboard and other revenues.

Total revenues were also favored by the addition of Norwegian Bliss along with robust growth in organic pricing across all core markets. Strong onboard spending had positive bearings on the quarter’s revenues as well. Moreover, an increase in net yield, driven by the repositioning of Norwegian Joy to North America, boosted revenues.

Gross yield (total revenue per Capacity Day) grew 7.5% in the quarter on a year-over-year basis. On a constant-currency basis, net yield rose 5.8% in the second quarter of 2019. The measure was up 5% on a reported basis.

Expenses & Operating Results

Total cruise operating expenses rose 11.1% in the quarter under review from the year-ago quarter. This increase can be attributable to growth Capacity Days.

Gross cruise costs per capacity day rose 8.3%. Adjusted Net cruise costs (excluding fuel) per Capacity Day grew 6.1% on a constant-currency basis and 5.1% on a reported basis. Fuel price per metric ton (net of hedges) was up 2.5% to $493 in the quarter under review.

Net interest expenses were $66 million in the second quarter of 2019, down from $73 million in the second quarter of 2018.

Norwegian Cruise Line Holdings Ltd. Price, Consensus and EPS Surprise

 

Norwegian Cruise Line Holdings Ltd. Price, Consensus and EPS Surprise

Norwegian Cruise Line Holdings Ltd. price-consensus-eps-surprise-chart | Norwegian Cruise Line Holdings Ltd. Quote

Balance Sheet

Cash and cash equivalents as of Jun 30, 2019, were $419.9 million, up from $163.9 million as of Dec 31, 2018. Long-term debt at the end of the second quarter totaled $5.7 billion, slightly lower than $5.8 billion at the end of 2018.

Third-Quarter 2019 Guidance

For the third quarter of 2019, Norwegian Cruise expects adjusted earnings to be $2.15 per share, below the consensus estimate of $2.26.

Net yield is expected to be 1.75% at constant currency. The company expects net cruise costs (excluding Fuel per Capacity Day) to be roughly 8.3% in constant currency.

2019 Outlook

For 2019, Norwegian Cruise expects adjusted earnings per share of $5.00-$5.10, down from the earlier $5.40-$5.50. The Zacks Consensus Estimate for its earnings in 2019 stands at $5.14, above the company’s guided range.

Net yield is expected to be 2.6%, lower than Norwegian Cruise’s prior guidance of 4.5%.  Meanwhile adjusted net cruise costs are anticipated to be roughly 4.5% in constant currency, higher than previously mentioned 3.5%.

Zacks Rank & Stock to Consider

Norwegian Cruise, which shares space with Royal Caribbean RCL and Carnival CCL, currently has a Zacks Rank #4 (Sell). A better-ranked stock in the industry is Planet Fitness PLNT, presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Planet Fitness’ earnings in the long-term are projected to increase 21.6%.

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