Norwegian Cruise Line Holdings Ltd (NCLH) is sailing into smoother waters, with its stock experiencing a significant surge following the release of its robust third-quarter earnings report. The company not only beat analysts’ estimates but also announced a raised annual guidance, sending positive ripples across the market.
NCLH’s third-quarter sales saw a healthy 10.7% year-over-year increase, reaching $2.806 billion. This impressive growth was fueled by a 4% capacity expansion, exceeding the consensus estimate of $2.77 billion. The company’s operational efficiency was also evident, with operating income surging 32.1% year-over-year to $691.21 million, resulting in a 400 basis point expansion of its operating margin to 24.6%.
NCLH’s profitability metrics showcased a positive trend. Adjusted earnings per share (EPS) improved to $0.99, outperforming the consensus estimate of $0.94, while adjusted EBITDA climbed 23.8% year-over-year to $930.99 million, accompanied by a 352 basis point expansion of its EBITDA margin to 33.2%.
Passenger occupancy for the quarter was a robust 108.1%, slightly higher than the 106.1% recorded in the same period last year. This strong demand translated into a ~4.8% year-over-year increase in total revenue per passenger cruise day, while gross margin per capacity day saw a notable 19% year-over-year jump.
Despite a total debt of $13.4 billion and a net leverage of 5.58x for the 12 months ending in September, NCLH’s financial health appears sound. The company’s liquidity stood at $2.4 billion at the end of the quarter, comprised of $332.5 million in cash and cash equivalents, $1.2 billion in availability under its revolving loan facility, and a $650 million undrawn backstop commitment.
Looking ahead, NCLH is optimistic about the future. President and CEO Harry Sommer highlighted, “Fueled by robust demand and our relentless focus on cost control and margin enhancement, we’re raising our full-year guidance for a fourth time and expect 2024 to be our best year for revenue, Net Yield growth and Adjusted EBITDA.” This optimistic outlook reflects the company’s confidence in its ability to capitalize on market opportunities while continuing to deliver exceptional customer experiences across its brands.
For the fourth quarter of 2024, NCLH anticipates an adjusted EPS of approximately $0.09 and an adjusted EBITDA of around $445 million. The company is projecting an occupancy rate of approximately 101% for this period.
NCLH has further strengthened its 2024 outlook, raising its adjusted EPS forecast to ~$1.65 (previously ~$1.53), which is higher than the consensus estimate of $1.58. Adjusted EBITDA for 2024 is now projected to be ~$2.425 billion (previously ~$2.35 billion). The company expects 2024 occupancy to remain at a strong ~105% (previously ~105.2%) and anticipates a ~9.5% increase in net yield (previously ~8.2%).
The market reacted positively to the company’s strong performance and positive outlook, with NCLH shares trading significantly higher by 8.2% at $25.80 during Thursday’s trading session. The stock’s upward trajectory reflects investor confidence in the company’s ability to navigate the current economic landscape and capitalize on the growing demand for cruise vacations.
