Summary

  • Norwegian Cruise Line Holdings Ltd. is a global cruise company established 1996 in Miami. Until the company has acquired Prestige in November, 2014, it operated only Norwegian Cruise Line and now also operates Oceania Cruises, and Regent Seven Seas Cruises.
  • The company has a combined fleet of 29 ships with approximately 60,000 berths, and offers itineraries to over 500 destinations worldwide. The Company has eight additional ships scheduled for delivery through 2028, comprising approximately 20,000 berths.
  • n 2022, passengers tickets account for 67.2% of the total revenue, and onboard and other sources represent 32.8%. The company has carried 1,663,275 passengers in 2022, and 232,448 passengers in 2021.
  • During the first quarter of 2023,
  • Due to the impacts of Covid-19, the company voluntarily suspended all of its voyages in March 2020 and started phase relaunch in the third quarter of 2021. By May 2022, the company has fully returned to its operation.
  • Given the situation of Covid-19, total revenue of the company has increased 647.5% to $4.8 billion to $4.84 billion for the year ended December 31, 2022 compared to $0.6 billion for the year ended December 31, 2021.
  • For the year ended December 31, 2022, the company had net loss and diluted EPS of $(2.3) billion and $(5.41), respectively.

Brief Company Overview

Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH), also simply known as the Norwegian, is a global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. The company was established in 1966 by Knut Kloster and Ted Arison. Norwegian is headquartered in Miami, Florida, United States. It took the current form following a corporate restructure when NCLH was incorporated in Bermuda in 2011 and the shareholders of NCLC exchanged their shares for that of NCLH, thus NCLH became the owner of 100% of the ordinary shares and parent company of NCLC. The company has a combined fleet of 29 ships with approximately 60,000 berths, and offers itineraries to over 500 destinations worldwide. The Company has eight additional ships scheduled for delivery through 2028, comprising approximately 20,000 berths.

As of December 31, 2022, Norwegian employed approximately 5,100 full-time employees worldwide in their shoreside operations and approximately 33,800 shipboard employees. Frank J. Del Rio is the current president and Chief Executive Officer of NCLH.

norwegian cruise line cover photo

NCLH does not pay dividends to its shareholders. The company has 980,000,000 authorized ordinary shares and 421,413,565 shares issued and outstanding at December 31, 2022. As of April 2023, 52-week high and low price range of the company stock has been from $21.05 to $10.31. Trailing P/E of the company is 3.81; price to sales ratio is 1.10; profit margin of the latest financial year is -46.86%; return on assets (TTM) is -5.20%; return on equity (TTM) -181.50% as of April, 2023.

Recent Developments

  • On January 31, 2023, Oceania Cruises introduced Allura, the second Allura Class ship and sister ship to Vista which will set its maiden sail in May, 2023.1
  • Frank J. Del Rio has decided to retire and step down from his position as the Company’s President and Chief Executive Officer, and from its Board of Directors, effective June 30, 2023. Del Rio will serve in a consultant capacity as a Senior Advisor to the Board through 2025. Harry J. Sommer, who has served as President and Chief Executive Officer of NCL since 2020, has been appointed to succeed Del Rio and will also join the Company's Board of Directors, effective July 1, 2023.2

Recent Financing Activities

  • In February 2022, NCLH received a total of $2.1 billion in debt financing through various sources. The company used the proceeds to redeem all of the outstanding 2024 Senior Secured Notes and 2026 Senior Secured Notes and to pay debt liabilities for 2022.
  • In December 2022, the company amended the Senior Secured Credit Facility to extend approximately $1.4 billion of maturities by one year to January 2025.
  • In February 2023, NCLC issued $600 million aggregate principal amount of 8.375% senior secured notes due 2028. The proceeds from the notes were used to repay the loans outstanding under Term Loan A Facility that otherwise would have become due in January 2024.
  • In July 2022, the company amended their $1 billion commitment, which provided additional liquidity to the Company through March 31, 2023. In February 2023, the commitment was further extended through February 2024, with an option for NCLC to further extend the commitments through February 2025 at its election. Simultaneously, the amount of the commitment was reduced to $650 million.
  • In April 2023, the Company increased its export-credit agency backed commitments by approximately €1.7 billion to finance improvements, changes and modifications to certain newbuilds, owners’ supplies associated with preparing these ships to enter service and related financing premiums.

Financial Highlights

Q1'23 Financial Highlights

During the first quarter of 2023, revenue increased to $1.8 billion compared to $521.9 million in first quarter 2022 due to the phased ramp up of cruise voyages. Net loss was $(159.3) million or EPS of $(0.38) compared to net loss of $(982.7) million or EPS of $(2.35) in the prior year. The Company reported Adjusted Net Loss of $(127.7) million or Adjusted EPS of $(0.30) in first quarter 2023. This compares to Adjusted Net Loss and Adjusted EPS of $(760.5) million and $(1.82), respectively, in first quarter 2022. Adjusted EBITDA in the first quarter was approximately $234.2 million.

Fuel price per metric ton, net of hedges, increased to $779 from $724 in 2022. The Company reported fuel expense of $194.9 million in the period. Interest expense, net was $171.3 million in 2023 compared to $327.7 million in 2022. 2023 included lower extinguishment of debt and debt modification costs, which were $2.4 million in 2023 compared to $188.4 million in 2022. Excluding this, interest expense increased primarily as a result of higher rates.

As of March 31, 2023, the Company’s total debt position was $13.1 billion and the Company’s liquidity was approximately $1.9 billion, consisting of $701 million of cash and cash equivalents, nearly $600 million of availability under its Revolving Loan Facility and a $650 million undrawn commitment. The Company also has an incremental $300 million unsecured and undrawn commitment through January 2, 2024, which enhances future liquidity as it becomes available to draw on October 4, 2023.

Annual Performance Highlights

Due to the impact of COVID-19, travel restrictions and limited access to ports around the world, in March 2020, like the other cruising companies, Norwegian also implemented a voluntary suspension of all cruise voyages across their three brands. In the third quarter of 2021, the company began a phased relaunch of certain cruise voyages with ships initially operating at reduced occupancy levels. In early May 2022, NCLH completed the phased relaunch of their entire fleet with all ships now in operation with guests on board. Occupancy levels have sequentially increased in recent quarters, most recently averaging 87% in the fourth quarter 2022, with the Company expecting to return to historical Occupancy levels for the second quarter of 2023.

Given the situation as such, total revenue of the company has increased 647.5% to $4.8 billion to $4.84 billion for the year ended December 31, 2022 compared to $0.6 billion for the year ended December 31, 2021. Capacity Days increased by 420.2%. For the year ended December 31, 2022, the company had net loss and diluted EPS of $(2.3) billion and $(5.41), respectively. For the year ended December 31, 2021, NCLH had net loss and diluted EPS of $(4.5) billion and $(12.33), respectively. Operating loss decreased 39.2% to $(1.6) billion for the year ended December 31, 2022 from $(2.6) billion for the year ended December 31, 2021.

In 2022, passengers tickets account for 67.2% of the total revenue, and onboard and other sources represent 32.8%. The company has carried 1,663,275 passengers in 2022, and 232,448 passengers in 2021. Total passenger cruise days has been 12,791,773 days and 1,778,899 days for the years, respectively. Total occupancy percentage has been 72.8% and 52.7% for the years, respectively. The company has reported adjusted EBITDA of $(673,931) in 2022 and $(1,723,807) a year earlier.

Net cash provided by operating activities was $210.0 million in 2022 compared to net cash used in operating activities of $2.5 billion in 2021. Net cash used in investing activities was $1.8 billion in 2022, primarily related to the delivery of Norwegian Prima. Net cash used in investing activities was $1.0 billion in 2021, primarily related to newbuild payments and ship improvement projects and net purchases and maturities of short-term investments. Net cash provided by financing activities was $1.0 billion in 2022, primarily due to newbuild loans and the proceeds of $2.1 billion from various note offerings partially offset by debt repayments and related redemption premiums associated with extinguishment of certain senior secured notes. Net cash provided by financing activities was $1.7 billion in 2021.

Business Overview

Norwegian Cruise Line Holdings Ltd. is a global cruise company that operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. As of December 31, 2022, the company had 29 ships with approximately 62,000 Berths and had orders for eight additional ships to be delivered. For the Norwegian brand, the company has five Prima Class Ships on order, with currently scheduled delivery dates from 2023 through 2028. For Regent Seven Seas Cruises, they have one Explorer Class Ship on order for delivery in 2023. For Oceania Cruises, NCLH has two Allura Class Ships on order for delivery in 2023 and 2025. These additions to the fleet will increase their total Berths to approximately 82,000. The company has converted some double occupancy cabins to studio cabins and it expects to convert approximately 900 additional cabins in 2023. Additionally, in February 2023, Norwegian amended the delivery dates of the last two Prima Class Ships to 2027 and 2028.

Norwegian Cruise Line inside

The brands of the company offer itineraries to worldwide destinations including Europe, Asia, Australia, New Zealand, South America, Africa, Canada, Bermuda, Caribbean, Alaska and Hawaii. Due to COVID-19, the company temporarily suspended all global cruise voyages from March 2020 until July 2021, when it resumed cruise
voyages on a limited basis. In early May 2022, NCLH completed the phased relaunch of their entire fleet with all ships now in operation with guests on board.

Business of the company is seasonal - typically the summer months in the norther hemisphere represents higher demand. Primary competition of the company is from operators such as Carnival and Royal Caribbean, as well as other cruise lines such as MSC Cruises, Viking Ocean Cruises and Virgin Voyages. The largest capital expenditures of the company are for ship construction and acquisition. Largest operating expenditures of the company are for payroll, fuel, airfare, food and beverage, advertising and marketing and travel advisor services.

Revenue Model

Primary source of revenue for the company is passenger ticket revenue. The cruise ticket prices generally include cruise fare and a wide variety of onboard activities and amenities, meals, entertainment and port fees and taxes. In some instances, cruise ticket prices include round-trip airfare to and from the port of embarkation, complimentary beverages, unlimited shore excursions, internet, valet laundry services, pre-cruise hotel packages, and on some of the exotic itineraries pre or post land packages. Prices vary depending on the particular cruise itinerary, stateroom category selected and the time of year that the voyage takes place. All three brands generate onboard and other revenue for additional products and services which are not included in the cruise fare, including casino operations, certain food and beverage, shore excursions, gift shop purchases, spa services, Wi-Fi services and other similar items. Food and beverage, casino operations and shore excursions are generally managed directly by the company while retail shops, spa services, art auctions and internet services may be managed through contracts with third-party concessionaires. These contracts generally entitle the company to a percentage of the gross sales derived from these concessions.

Business Segments

Norwegian Cruise Line (NCL)

norwegian cruise line logoNCL has 18 ships in its fleet with total berths equivalent to 46,520. This line has 42 departure ports, covers 300+ destinations across 7 continents and welcomes approximately 2.2 million guests each year. Fifteen ships of the fleet are divided among six different classes, including the Sun, Dawn, Jewel, Breakaway, Breakaway Plus Class, and Prima Class. Norwegian Epic, Pride of America and Norwegian Spirit are in their own classes, adding to the brand’s variety of vessels. 

In 2022, Norwegian Cruise Line welcomed Norwegian Prima into the fleet, the first ship of the next generation Prima Class. The Company has placed an additional five ships on order from 2023 to 2028.

Ship NameShip NameShip Name
Norwegian BlishNorwegian BreakawayNorwegian Dawn
Norwegian EncoreNorwegian EpicNorwegian Escape
Norwegian GemNorwegian GetawayNorwegian Jade
Norwegian JewelNorwegian JoyNorwegian Pearl
Norwegian PrimaNorwegian SkyNorwegian Spirit
Norwegian StarNorwegian SunPride of America

Oceania Cruises

Oceania Cruises has 6 ships, approximately 5,240 berths, and covers 400+ destinations around the world. The line positions itself as The Finest Cuisine at Sea®, Destination Specialists and Small & Luxurious Ships. The ships of this cruise line are Insignia, Marina, Nautica, Regatta, Riviera, Sirena and Vista. One additional Allura Class ship is in the pipeline to Oceania Cruises, expected to be delivered in 2025.

Regent Seven Seas Cruises

It is a luxury cruise line delivering an Unrivaled Experience®. The Regent Seven Seas Cruises was established in 1992. The ships of this line carry no more than 750 guests and explores more than 450 destinations globally. The ships are - Seven Seas Explorer®, Seven Seas Mariner®, Seven Seas Navigator®, Seven Seas Splendor® and Seven Seas Voyager®. This line has 5 ships, approximately 3,390 berths, and covers 450+ destinations.

Company History

History of the company began in 1966 as Norwegian Caribbean Lines, the first cruise line to offer weekly departures to the Caribbean. On December 19, 1966, he M/S Sunward, a 8,666-ton, 140m cruise ship/car ferry, made her first voyage from Miami to the Caribbean signifying the birth of Norwegian Caribbean Lines. The cruise line was founded by Knut Kloster and Ted Arison. Arison soon left to form Carnival Cruise Lines, while Kloster acquired additional ships for service in the Caribbean. Norwegian's second ship was Starward which had to capability of carrying cars. The company pioneered many firsts in the cruise industry including the first combined air-sea program (marketed as "Cloud 9 Cruises") which combined low cost air fares with the cruise. It was also the first cruise line to develop new ports in the Caribbean, including Ocho Rios in Jamaica.3

Norwegian made headlines with the acquisition of the France in 1979, rebuilding the liner as a cruise ship and renaming her Norway. The conversion cost more than $100 million. At the time, the Norway was significantly larger than any existing cruise ship, and exploited the extra space available by adding a greater than usual variety of onboard entertainment. Her success paved the way for a new era of giant cruise ships.

Norwegian cruise line holdings limited

Norwegian has expanded to other parts of the world, including Alaska, Europe, Bermuda, and Hawaii. Between 1997 and 2001 the company also operated cruises out of Australia under the name Norwegian Capricorn Line. Its subsidiary Orient Lines, founded in 1991 to run the Marco Polo, was acquired in 1998. Norwegian itself was acquired by the Star Cruises, subsidiary of Malaysia-based Genting Group, in 2000. Norwegian acquired the rights to move two ships built entirely outside the U.S. to the U.S. flag, making it possible to start a U.S.-flagged operation under the brand name NCL America. In August 2007, Star Cruises sold 50 percent of Norwegian for $1 billion to U.S.-based Apollo Management (owners of Oceania Cruises). In January 2013, Norwegian Cruise Lines filed for an IPO and got listed on the NASDAQ. The company sold 27.1 million shares for a net proceed of approximately $477.64 million. In September 2014, Norwegian Cruise Line purchased Prestige Cruise Holdings, the parent company of both Oceania Cruises and Regent Seven Seas Cruises in a cash and stock transaction of $3.025 billion, including the assumption of debt.

References

  1. ^ https://www.nclhltd.com/news-media/press-releases/detail/528/oceania-cruises-welcomes-allura-to-its-acclaimed-fleet
  2. ^ https://www.nclhltd.com/news-media/press-releases/detail/535/norwegian-cruise-line-holdings-ltd-announces-ceo
  3. ^ https://www.maritime-executive.com/article/norwegian-cruise-line-celebrates-fifty-years
Tags: US:NCLH USA
Created by Md. Touhidul Islam on 2023/04/29 00:24
     
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