Norwegian Cruise Line Holdings Reports Financial Results for the Second Quarter 2016
Second Quarter Revenue increased 9.3% to
Seven Seas Explorer Joins the
Highlights
- The Company generated GAAP net income of
$145.2 million or EPS of$0.64 compared to GAAP net income of$158.5 million or EPS of$0.69 in the second quarter of 2015. Adjusted Net Income was$192.6 million or Adjusted EPS of$0.85 compared to Adjusted Net Income of$171.6 million or Adjusted EPS of$0.75 in the second quarter of 2015.
- Total revenue was
$1.2 billion , up 9.3% from prior year. Adjusted Net Yield increased 1.2% on a Constant Currency basis or 0.8% on an as reported basis on Adjusted Net Revenue of$917.8 million .
- Full Year 2016 Adjusted EPS expected to be in the range of
$3.35 to$3.45 .
Regent Seven Seas Cruises welcomed Seven Seas Explorer to its fleet, the first newbuild for the brand in 13 years.
"While successive geopolitical events dampened North American consumer demand primarily for our Mediterranean itineraries, our management team worked diligently to identify cost saving opportunities to partially mitigate these impacts and generate solid Adjusted EPS growth of 13%," said
Second Quarter 2016 Results
Net income was
Revenue increased 9.3% to
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 4.1% on a Constant Currency basis or 4.0% on an as reported basis. The increase was primarily due to four scheduled Dry-docks in the quarter compared to one in the prior year.
Fuel price per metric ton, net of hedges
decreased 15.9% to
Interest expense, net increased to
Other expense was
Sale of Hawaii Land-based Operations
In the first quarter of 2016, the Company executed an agreement to
divest its interest in a certain land-based operation in
- Adjusted Net Yield growth would have been 1.3% on a Constant Currency basis or 0.9% on an as reported basis (excluding the results of the aforementioned operation).
- Adjusted Net Cruise Costs Excluding Fuel per Capacity Day growth would have been 4.2% on a Constant Currency basis or 4.1% on an as reported basis (excluding the results of the aforementioned operation).
Company Outlook
"Although we experienced significant booking headwinds we delivered earnings consistent with expectations, generating Adjusted EPS growth of 20% for the first half of the year. As we enter the second half of the year, we are revising our earnings expectations primarily as a result of four factors: continued weak demand from our core North American consumer for European sailings at a time when half of our fleet is deployed in the region, including eight of our highest yielding ships; the effect of a weaker British pound post the Brexit
vote; an adjustment to earlier pricing expectations for
As a result of its revised expectations, the Company no longer expects to achieve its previously stated target of
2016 Guidance and Sensitivities
In addition to announcing the results for the second quarter, the Company also provided guidance for the third quarter and full year 2016, along with accompanying sensitivities, which both exclude the results of the aforementioned land-based operation in
Third Quarter 2016 (1) | Full Year 2016 (1) | ||||||||||||||
As Reported | Constant Currency | As Reported | Constant Currency | ||||||||||||
Adjusted Net Yield | Approx. 1.75% | Approx. 2.5% | Approx. 1.0% | Approx. 1.75% | |||||||||||
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day | Approx. 1.5% | Approx. 1.75% | Approx. 1.0% | Approx. 1.25% | |||||||||||
Adjusted EPS | |||||||||||||||
Adjusted Depreciation and Amortization (2) | $105 to | ||||||||||||||
Interest Expense, net | Approx. | ||||||||||||||
Effect on Adjusted EPS of a 1% change in Adjusted Net Yield (3) | $ | 0.05 | $ | 0.09 | |||||||||||
(1) Excludes results from the Company's interest in a certain land-based
operation in | |||||||||||||||
(2) Excludes | |||||||||||||||
(3) Based on midpoint of guidance. | |||||||||||||||
The following reflects the Company's expectations regarding fuel consumption and pricing, along with accompanying sensitivities.
Third Quarter 2016 | Full Year 2016 | ||||||
Fuel consumption in metric tons | 170,000 | 710,000 | |||||
Fuel price per metric ton, net of hedges | $ | 510 | $ | 480 | |||
Effect on Adjusted EPS of a 10% change in fuel prices, net of hedges | $ | 0.01 | $ | 0.02 | |||
As of
2H 2016 | 2017 | 2018 | 2019 | ||||||||||||
% of HFO Consumption Hedged | 95 | % | 81 | % | 63 | % | 57 | % | |||||||
Average USGC Price / Barrel | $ | 68.73 | $ | 59.69 | $ | 56.41 | $ | 47.82 | |||||||
% of MGO Consumption Hedged | 76 | % | 85 | % | 25 | % | 25 | % | |||||||
Average | $ | 34.99 | $ | 41.11 | $ | 46.50 | $ | 49.25 | |||||||
The following reflects the foreign currency rates the Company used in its guidance.
Euro | $ | 1.11 | ||
British pound | $ | 1.30 | ||
Australian Dollar | $ | 0.75 | ||
Canadian Dollar | $ | 0.77 | ||
Future capital commitments consist of contracted commitments, including ship construction contracts, and future expected capital expenditures necessary for operations. As of
Company Updates and Other Business Highlights
Introduction of Seven Seas Explorer
Seven Seas Explorer, the first newbuild for
The ship features extravagantly designed theaters and lounges, an unparalleled collection of opulent and spacious suites, five lavish
gourmet restaurants and an unprecedented level of personalized service. At 55,254 gross tons and carrying only 750 guests, the all-suite, all-balcony ship boasts one of the highest space ratios and lowest guest to crew ratios in the cruise industry, the largest private verandas in the cruise industry and a new category of luxury suite, the nearly 4,500-square foot
Itinerary Announcements
In June, the Company announced several itineraries for the Norwegian brand for fall 2017/winter 2018, featuring a wide array of itineraries from convenient
Refinancing of Senior Secured Credit Facility
The Company amended its existing senior secured credit facility in June by extending the maturity of its
Conference Call
The Company has scheduled a conference call for
About
With a combined fleet of 24 ships with approximately 46,500 berths, these brands offer itineraries to more than 510 destinations worldwide. The Company will introduce four additional ships through 2020.
Terminology
Acquisition of Prestige. In
Adjusted Depreciation and Amortization. Depreciation and amortization adjusted to exclude amortization of intangible assets related to the Acquisition of Prestige.
Adjusted EBITDA. EBITDA adjusted for other income (expense) and other supplemental adjustments.
Adjusted EPS. Adjusted Net Income divided by the number of diluted weighted-average shares outstanding.
Adjusted Net Cruise Cost Excluding Fuel.
Adjusted Net Income. Net income adjusted for supplemental adjustments.
Adjusted Net Revenue. Net Revenue adjusted for supplemental adjustments.
Adjusted Net Yield. Net Yield adjusted for supplemental adjustments.
Berths. Double occupancy capacity per cabin (single occupancy per studio cabin) even though many cabins can accommodate three or more passengers.
Breakaway Class Ships. Norwegian Breakaway and Norwegian Getaway.
Breakaway Plus Class Ships. The next generation of ships which are similar in design and innovation to Breakaway Class Ships.
Capacity Days. Available Berths multiplied by the number of cruise days for the period.
Constant Currency. A calculation whereby foreign currency-denominated revenues and expenses in a period are converted at the
Dry-dock. A process whereby a ship is positioned in a large basin where all of the fresh/sea water is pumped out in order to carry out cleaning and repairs of those parts of a ship which are below the water line.
EBITDA. Earnings before interest, taxes, and depreciation and amortization.
EPS. Diluted earnings per share.
Free Cash Flow. Net cash provided by operating activities less capital expenditures for ship construction, business enhancements and other.
GAAP. Generally accepted accounting principles in the
Gross Cruise Cost. The sum of total cruise operating expense and marketing, general and administrative expense.
Gross Tons. A unit of enclosed passenger space on a cruise ship, such that one gross ton = 100 cubic feet or 2.831 cubic meters.
Gross Yield. Total revenue per Capacity Day.
Management NCL Corporation Units.
Merger Agreement. Agreement and Plan of Merger, dated as of
Net Cruise Cost Excluding Fuel.
Net Revenue. Total revenue less commissions, transportation and other expense and onboard and other expense.
Net Yield. Net Revenue per Capacity Day.
Occupancy Percentage or Load Factor. The ratio of Passenger Cruise Days to Capacity Days. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.
Passenger Cruise Days. The number of passengers carried for the period, multiplied by the number of days in their respective cruises.
Secondary Equity Offering(s). Secondary public offering(s) of NCLH's ordinary shares in
Shipboard Retirement Plan. An unfunded defined benefit pension plan for certain crew members which computes benefits based on years of service, subject to certain requirements.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, such as Net Revenue, Adjusted Net Revenue, Net Yield, Adjusted Net Yield,
As our business includes the sourcing of passengers and deployment of vessels outside of the
We believe that Adjusted EBITDA is appropriate as a supplemental financial measure as it is used by management to assess operating performance. We believe that Adjusted EBITDA is a useful measure in determining our performance as it reflects certain operating drivers of our business, such as sales growth, operating costs, marketing, general and administrative expense and other operating income and expense. Adjusted EBITDA is not a defined term under GAAP. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements such as capital expenditures and related depreciation, principal and interest payments and tax payments and it includes other supplemental adjustments.
In addition, Adjusted Net Revenue and Adjusted Net Yield, which excludes certain business combination accounting entries, are non-GAAP financial
measures that we believe are useful as supplemental measures in evaluating the performance of our operating business and provide greater transparency into our results of operations. Adjusted Net Income and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income and EPS. We use Adjusted Net Income and Adjusted EPS as key performance measures of our earnings performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparison to our historical performance. In addition, management uses Adjusted EPS as a performance measure for our incentive compensation. The amounts excluded in the presentation of these non-GAAP
financial measures may vary from period to period; accordingly, our presentation of Adjusted Net Revenue, Adjusted Net Yield, Adjusted Net Income, and Adjusted EPS may not be indicative of future adjustments or results. For example, for the three and six months ended
Management believes Free Cash Flow provides investors with a useful financial metric to assess our ability to service and repay our debt and to pursue opportunities to enhance our growth after making the capital investments required to support ongoing business operations and long term value creation. Free Cash Flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses Free Cash Flow as a measure to assess both business performance and overall liquidity.
You are encouraged to evaluate each adjustment used in calculating our non-GAAP financial measures and the reasons we consider our non-GAAP financial measures appropriate for supplemental analysis. In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur expenses similar to the adjustments in our presentation. Our non-GAAP financial measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of our non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our non-GAAP financial measures may not be comparable to other companies. Please see a historical reconciliation of these measures to the most comparable GAAP measure presented in our consolidated financial statements below.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this release constitute forward-looking statements within the meaning of the
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
(in thousands, except share and per share data) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Revenue | ||||||||||||||||||||||
Passenger ticket | $ | 818,478 | $ | 787,991 | $ | 1,558,590 | $ | 1,458,474 | ||||||||||||||
Onboard and other | 368,357 | 297,442 | 705,877 | 565,141 | ||||||||||||||||||
Total revenue | 1,186,835 | 1,085,433 | 2,264,467 | 2,023,615 | ||||||||||||||||||
Cruise operating expense | ||||||||||||||||||||||
Commissions, transportation and other | 193,536 | 192,438 | 368,973 | 364,265 | ||||||||||||||||||
Onboard and other | 75,790 | 67,885 | 139,755 | 126,530 | ||||||||||||||||||
Payroll and related | 184,476 | 161,930 | 361,619 | 319,559 | ||||||||||||||||||
Fuel | 80,607 | 91,581 | 162,279 | 178,955 | ||||||||||||||||||
Food | 49,769 | 43,699 | 100,772 | 85,550 | ||||||||||||||||||
Other | 121,722 | 98,746 | 236,983 | 205,120 | ||||||||||||||||||
Total cruise operating expense | 705,900 | 656,279 | 1,370,381 | 1,279,979 | ||||||||||||||||||
Other operating expense | ||||||||||||||||||||||
Marketing, general and administrative | 149,307 | 107,164 | 329,881 | 261,321 | ||||||||||||||||||
Depreciation and amortization | 104,610 | 104,607 | 205,905 | 204,583 | ||||||||||||||||||
Total other operating expense | 253,917 | 211,771 | 535,786 | 465,904 | ||||||||||||||||||
Operating income | 227,018 | 217,383 | 358,300 | 277,732 | ||||||||||||||||||
Non-operating income (expense) | ||||||||||||||||||||||
Interest expense, net | (68,420 | ) | (52,446 | ) | (128,174 | ) | (103,435 | ) | ||||||||||||||
Other expense | (10,753 | ) | (3,717 | ) | (7,948 | ) | (33,856 | ) | ||||||||||||||
Total non-operating income (expense) | (79,173 | ) | (56,163 | ) | (136,122 | ) | (137,291 | ) | ||||||||||||||
Net income before income taxes | 147,845 | 161,220 | 222,178 | 140,441 | ||||||||||||||||||
Income tax expense | (2,599 | ) | (2,726 | ) | (3,703 | ) | (3,403 | ) | ||||||||||||||
Net income | $ | 145,246 | $ | 158,494 | $ | 218,475 | $ | 137,038 | ||||||||||||||
Weighted-average shares outstanding | ||||||||||||||||||||||
Basic | 226,972,076 | 225,698,078 | 227,105,804 | 225,003,460 | ||||||||||||||||||
Diluted | 227,884,704 | 230,228,144 | 227,997,970 | 229,664,210 | ||||||||||||||||||
Earnings per share | ||||||||||||||||||||||
Basic | $ | 0.64 | $ | 0.70 | $ | 0.96 | $ | 0.61 | ||||||||||||||
Diluted | $ | 0.64 | $ | 0.69 | $ | 0.96 | $ | 0.60 | ||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Net income | $ | 145,246 | $ | 158,494 | $ | 218,475 | $ | 137,038 | ||||||||||||
Other comprehensive income: | ||||||||||||||||||||
Shipboard Retirement Plan | 108 | 120 | 216 | 239 | ||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Net unrealized gain (loss) | 5,007 | 70,491 | 75,457 | (33,274 | ) | |||||||||||||||
Amount realized and reclassified into earnings | 23,781 | 26,564 | 58,331 | 48,450 | ||||||||||||||||
Total other comprehensive income | 28,896 | 97,175 | 134,004 | 15,415 | ||||||||||||||||
Total comprehensive income | $ | 174,142 | $ | 255,669 | $ | 352,479 | $ | 152,453 | ||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||
(Unaudited) | |||||||||||
(in thousands, except share data) | |||||||||||
2016 | 2015 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 145,964 | $ | 115,937 | |||||||
Accounts receivable, net | 60,366 | 44,996 | |||||||||
Inventories | 67,697 | 58,173 | |||||||||
Prepaid expenses and other assets | 166,003 | 121,305 | |||||||||
Total current assets | 440,030 | 340,411 | |||||||||
Property and equipment, net | 10,068,499 | 9,458,805 | |||||||||
1,388,931 | 1,388,931 | ||||||||||
Tradenames | 817,525 | 817,525 | |||||||||
Other long-term assets | 242,764 | 259,085 | |||||||||
Total assets | $ | 12,957,749 | $ | 12,264,757 | |||||||
Liabilities and shareholders' equity | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt | $ | 581,804 | $ | 629,840 | |||||||
Accounts payable | 46,511 | 51,369 | |||||||||
Accrued expenses and other liabilities | 573,812 | 640,568 | |||||||||
Due to affiliate | - | 20,769 | |||||||||
Advance ticket sales | 1,390,137 | 1,023,973 | |||||||||
Total current liabilities | 2,592,264 | 2,366,519 | |||||||||
Long-term debt | 5,971,143 | 5,767,697 | |||||||||
Other long-term liabilities | 275,981 | 349,661 | |||||||||
Total liabilities | 8,839,388 | 8,483,877 | |||||||||
Commitments and contingencies | |||||||||||
Shareholders' equity: | |||||||||||
Ordinary shares, | |||||||||||
and 227,054,025 shares outstanding at | |||||||||||
227,815,301 shares outstanding at | 232 | 232 | |||||||||
Additional paid-in capital | 3,849,537 | 3,814,536 | |||||||||
Accumulated other comprehensive income (loss) | (278,646 | ) | (412,650 | ) | |||||||
Retained earnings | 786,493 | 568,018 | |||||||||
respectively, at cost) | (239,255 | ) | (189,256 | ) | |||||||
Total shareholders' equity | 4,118,361 | 3,780,880 | |||||||||
Total liabilities and shareholders' equity | $ | 12,957,749 | $ | 12,264,757 | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
Six Months Ended | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||
Net income | $ | 218,475 | $ | 137,038 | |||||||||||||||
Adjustments to reconcile net income to | |||||||||||||||||||
net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization expense | 212,268 | 214,717 | |||||||||||||||||
Loss on derivatives | 2,866 | 27,475 | |||||||||||||||||
Deferred income taxes, net | 388 | 424 | |||||||||||||||||
Gain on contingent consideration | - | (43,400 | ) | ||||||||||||||||
Write-off of deferred financing fees | 11,427 | 195 | |||||||||||||||||
Provision for bad debts and inventory | 1,115 | - | |||||||||||||||||
Share-based compensation expense | 31,449 | 14,166 | |||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable, net | (16,335 | ) | (4,369 | ) | |||||||||||||||
Inventories | (9,674 | ) | (3,246 | ) | |||||||||||||||
Prepaid expenses and other assets | (25,903 | ) | (9,932 | ) | |||||||||||||||
Accounts payable | (10,865 | ) | (47,038 | ) | |||||||||||||||
Accrued expenses and other liabilities | (25,798 | ) | 13,063 | ||||||||||||||||
Advance ticket sales | 358,625 | 412,602 | |||||||||||||||||
Net cash provided by operating activities | 748,038 | 711,695 | |||||||||||||||||
Cash flows from investing activities | |||||||||||||||||||
Additions to property and equipment, net | (764,899 | ) | (205,056 | ) | |||||||||||||||
Settlement of derivatives | (34,129 | ) | - | ||||||||||||||||
Net cash used in investing activities | (799,028 | ) | (205,056 | ) | |||||||||||||||
Cash flows from financing activities | |||||||||||||||||||
Repayments of long-term debt | (2,386,427 | ) | (791,403 | ) | |||||||||||||||
Repayments to Affiliate | (18,522 | ) | (18,522 | ) | |||||||||||||||
Proceeds from long-term debt | 2,564,116 | 340,060 | |||||||||||||||||
Proceeds from the exercise of share options | 3,007 | 55,023 | |||||||||||||||||
Proceeds from employee share purchase plan | 1,172 | - | |||||||||||||||||
Purchases of treasury shares | (49,999 | ) | - | ||||||||||||||||
Deferred financing fees and other | (32,330 | ) | (3,663 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | 81,017 | (418,505 | ) | ||||||||||||||||
Net increase in cash and cash equivalents | 30,027 | 88,134 | |||||||||||||||||
Cash and cash equivalents at beginning of the period | 115,937 | 84,824 | |||||||||||||||||
Cash and cash equivalents at end of the period | $ | 145,964 | $ | 172,958 | |||||||||||||||
NON-GAAP RECONCILING INFORMATION | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
The following table sets forth selected statistical information: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
Passengers carried | 574,838 | 527,676 | 1,126,313 | 1,041,202 | |||||||||||||||||||||
Passenger Cruise Days | 4,237,020 | 3,948,773 | 8,522,314 | 7,716,888 | |||||||||||||||||||||
Capacity Days | 3,974,508 | 3,634,143 | 7,965,450 | 7,190,611 | |||||||||||||||||||||
Occupancy Percentage | 106.6 | % | 108.7 | % | 107.0 | % | 107.3 | % | |||||||||||||||||
Net Revenue, Adjusted Net Revenue, Gross Yield, Net Yield and Adjusted Net Yield were calculated as follows (in thousands, except Capacity Days and Yield data): | |||||||||||||||||||||||||
2016 | 2016 | ||||||||||||||||||||||||
Constant | Constant | ||||||||||||||||||||||||
2016 | Currency | 2015 | 2016 | Currency | 2015 | ||||||||||||||||||||
Passenger ticket revenue | $ | 818,478 | $ | 822,398 | $ | 787,991 | $ | 1,558,590 | $ | 1,575,030 | $ | 1,458,474 | |||||||||||||
Onboard and other revenue | 368,357 | 368,358 | 297,442 | 705,877 | 705,877 | 565,141 | |||||||||||||||||||
Total revenue | 1,186,835 | 1,190,756 | 1,085,433 | 2,264,467 | 2,280,907 | 2,023,615 | |||||||||||||||||||
Less: | |||||||||||||||||||||||||
Commissions, transportation | |||||||||||||||||||||||||
and other expense | 193,536 | 194,383 | 192,438 | 368,973 | 373,288 | 364,265 | |||||||||||||||||||
Onboard and other expense | 75,790 | 75,790 | 67,885 | 139,755 | 139,755 | 126,530 | |||||||||||||||||||
Net Revenue | 917,509 | 920,583 | 825,110 | 1,755,739 | 1,767,864 | 1,532,820 | |||||||||||||||||||
Non-GAAP Adjustment: | |||||||||||||||||||||||||
Deferred revenue (1) | 297 | 297 | 7,294 | 757 | 757 | 28,488 | |||||||||||||||||||
Adjusted Net Revenue | $ | 917,806 | $ | 920,880 | $ | 832,404 | $ | 1,756,496 | $ | 1,768,621 | $ | 1,561,308 | |||||||||||||
Capacity Days | 3,974,508 | 3,974,508 | 3,634,143 | 7,965,450 | 7,965,450 | 7,190,611 | |||||||||||||||||||
Gross Yield | $ | 298.61 | $ | 299.60 | $ | 298.68 | $ | 284.29 | $ | 286.35 | $ | 281.42 | |||||||||||||
Net Yield | $ | 230.85 | $ | 231.62 | $ | 227.04 | $ | 220.42 | $ | 221.94 | $ | 213.17 | |||||||||||||
Adjusted Net Yield | $ | 230.92 | $ | 231.70 | $ | 229.05 | $ | 220.51 | $ | 222.04 | $ | 217.13 | |||||||||||||
(1) Reflects deferred revenue fair value adjustments related to the Acquisition of Prestige that were made pursuant to business combination accounting rules. | |||||||||||||||||||||||||
NON-GAAP RECONCILING INFORMATION | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Gross Cruise Cost, | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
2016 | 2016 | ||||||||||||||||||||||||
Constant | Constant | ||||||||||||||||||||||||
2016 | Currency | 2015 | 2016 | Currency | 2015 | ||||||||||||||||||||
Total cruise operating expense | $ | 705,900 | $ | 707,178 | $ | 656,279 | $ | 1,370,381 | $ | 1,376,337 | $ | 1,279,979 | |||||||||||||
Marketing, general and | |||||||||||||||||||||||||
administrative expense | 149,307 | 149,288 | 107,164 | 329,881 | 330,604 | 261,321 | |||||||||||||||||||
Gross Cruise Cost | 855,207 | 856,466 | 763,443 | 1,700,262 | 1,706,941 | 1,541,300 | |||||||||||||||||||
Less: | |||||||||||||||||||||||||
Commissions, transportation | |||||||||||||||||||||||||
and other expense | 193,536 | 194,383 | 192,438 | 368,973 | 373,288 | 364,265 | |||||||||||||||||||
Onboard and other expense | 75,790 | 75,790 | 67,885 | 139,755 | 139,755 | 126,530 | |||||||||||||||||||
585,881 | 586,293 | 503,120 | 1,191,534 | 1,193,898 | 1,050,505 | ||||||||||||||||||||
Less: Fuel expense | 80,607 | 80,607 | 91,581 | 162,279 | 162,279 | 178,955 | |||||||||||||||||||
Net Cruise Cost Excluding Fuel | 505,274 | 505,686 | 411,539 | 1,029,255 | 1,031,619 | 871,550 | |||||||||||||||||||
Less Non-GAAP Adjustments: | |||||||||||||||||||||||||
Non-cash deferred compensation (1) | 792 | 792 | 1,029 | 1,583 | 1,583 | 2,482 | |||||||||||||||||||
Non-cash share-based compensation (2) | 16,204 | 16,204 | 2,161 | 31,449 | 31,449 | 14,166 | |||||||||||||||||||
Secondary Equity Offering expenses (3) | - | - | 1,022 | - | - | 1,022 | |||||||||||||||||||
Severance payments and other fees (4) | 869 | 869 | 3,289 | 2,899 | 2,899 | 13,676 | |||||||||||||||||||
Management NCL Corporation Units exchange expenses (5) | - | - | - | - | - | 624 | |||||||||||||||||||
Acquisition of Prestige expenses (6) | 1,273 | 1,273 | 10,891 | 3,014 | 3,014 | 11,291 | |||||||||||||||||||
Contingent consideration adjustment (7) | - | - | (34,300 | ) | - | - | (43,400 | ) | |||||||||||||||||
Adjusted Net Cruise Cost Excluding Fuel | $ | 486,136 | $ | 486,548 | $ | 427,447 | $ | 990,310 | $ | 992,674 | $ | 871,689 | |||||||||||||
Capacity Days | 3,974,508 | 3,974,508 | 3,634,143 | 7,965,450 | 7,965,450 | 7,190,611 | |||||||||||||||||||
Gross Cruise Cost per Capacity Day | $ | 215.17 | $ | 215.49 | $ | 210.08 | $ | 213.45 | $ | 214.29 | $ | 214.35 | |||||||||||||
$ | 147.41 | $ | 147.51 | $ | 138.44 | $ | 149.59 | $ | 149.88 | $ | 146.09 | ||||||||||||||
Net Cruise Cost Excluding Fuel per Capacity Day | $ | 127.13 | $ | 127.23 | $ | 113.24 | $ | 129.21 | $ | 129.51 | $ | 121.21 | |||||||||||||
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day | $ | 122.31 | $ | 122.42 | $ | 117.62 | $ | 124.33 | $ | 124.62 | $ | 121.23 | |||||||||||||
(1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses, which are included in payroll and related expense. | |||||||||||||||||||||||||
(2) Non-cash share-based compensation expenses related to equity awards, which are included in marketing, general and administrative expense and payroll and related expense. | |||||||||||||||||||||||||
(3) Expenses related to the Secondary Equity Offerings, which are included in marketing, general and administrative expense. | |||||||||||||||||||||||||
(4) Severance payments and other expenses related to restructuring costs and other severance arrangements, which are included in marketing, general and administrative expense. | |||||||||||||||||||||||||
(5) Expenses related to the exchange of Management NCL Corporation Units for ordinary shares, which are included in marketing, general and administrative expense. | |||||||||||||||||||||||||
(6) Expenses related to the Acquisition of Prestige, which are included in marketing, general and administrative expense. | |||||||||||||||||||||||||
(7) Contingent consideration fair value adjustment related to the Acquisition of Prestige, which is included in marketing, general and administrative expense. |
NON-GAAP RECONCILING INFORMATION | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Adjusted Net Income and Adjusted EPS were calculated as follows (in thousands, except share and per share data): | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net income | $ | 145,246 | $ | 158,494 | $ | 218,475 | $ | 137,038 | |||||||||
Non-GAAP Adjustments: | |||||||||||||||||
Non-cash deferred compensation (1) | 792 | 1,029 | 1,583 | 2,482 | |||||||||||||
Non-cash share-based compensation (2) | 16,204 | 2,334 | 31,449 | 14,339 | |||||||||||||
Secondary Equity Offering Expenses (3) | - | 1,022 | - | 1,022 | |||||||||||||
Severance payments and other fees (4) | 869 | 3,289 | 2,899 | 13,676 | |||||||||||||
Management NCL Corporation Units exchange expenses (5) | - | - | - | 624 | |||||||||||||
Acquisition of Prestige expenses (6) | 1,273 | 10,891 | 3,014 | 11,291 | |||||||||||||
Deferred revenue (7) | 297 | 7,294 | 757 | 28,488 | |||||||||||||
Amortization of intangible assets (8) | 5,267 | 20,913 | 10,535 | 39,059 | |||||||||||||
Contingent consideration adjustment (9) | - | (34,300 | ) | - | (43,400 | ) | |||||||||||
Derivative adjustment (10) | 10,911 | 650 | (1,185 | ) | 29,603 | ||||||||||||
Deferred financing fees and other (11) | 11,714 | - | 11,714 | - | |||||||||||||
Adjusted Net Income | $ | 192,573 | $ | 171,616 | $ | 279,241 | $ | 234,222 | |||||||||
Diluted weighted-average shares outstanding | 227,884,704 | 230,228,144 | 227,997,970 | 229,664,210 | |||||||||||||
Diluted earnings per share | $ | 0.64 | $ | 0.69 | $ | 0.96 | $ | 0.60 | |||||||||
Adjusted EPS | $ | 0.85 | $ | 0.75 | $ | 1.22 | $ | 1.02 | |||||||||
(1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses, which are included in payroll and related expense. | |||||||||||||||||
(2) Non-cash share-based compensation expenses related to equity awards, which are included in marketing, general and administrative expense and payroll and related expense. | |||||||||||||||||
(3) Expenses related to the Secondary Equity Offerings, which are included in marketing, general and administrative expense. | |||||||||||||||||
(4) Severance payments and other expenses related to restructuring costs and other severance arrangements, which are included in marketing, general and administrative expense. | |||||||||||||||||
(5) Expenses related to the exchange of Management NCL Corporation Units for ordinary shares, which are included in marketing, general and administrative expense. | |||||||||||||||||
(6) Expenses related to the Acquisition of Prestige, which are primarily included in marketing, general and administrative expense. | |||||||||||||||||
(7) Deferred revenue fair value adjustments related to the Acquisition of Prestige that were made pursuant to business combination accounting rules, which are primarily included in Net Revenue. | |||||||||||||||||
(8) Amortization of intangible assets related to the Acquisition of Prestige, which are included in depreciation and amortization expense. | |||||||||||||||||
(9) Contingent consideration fair value adjustment related to the Acquisition of Prestige, which is included in marketing, general and administrative expense. | |||||||||||||||||
(10) Losses and net gains for the fair value adjustment of a foreign exchange collar which does not receive hedge accounting and losses due to the dedesignation of certain fuels swaps. These adjustments are included in other expense. | |||||||||||||||||
(11) Primarily related to the write-off of deferred financing fees related to the refinancing of certain credit facilities, which is included in interest expense, net. | |||||||||||||||||
NON-GAAP RECONCILING INFORMATION | |||||||||||||||||
(Unaudited) | |||||||||||||||||
EBITDA and Adjusted EBITDA were calculated as follows (in thousands): | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net income | $ | 145,246 | $ | 158,494 | $ | 218,475 | $ | 137,038 | |||||||||
Interest expense, net | 68,420 | 52,446 | 128,174 | 103,435 | |||||||||||||
Income tax expense | 2,599 | 2,726 | 3,703 | 3,403 | |||||||||||||
Depreciation and amortization expense | 104,610 | 104,607 | 205,905 | 204,583 | |||||||||||||
EBITDA | 320,875 | 318,273 | 556,257 | 448,459 | |||||||||||||
Other expense (1) | 10,753 | 3,717 | 7,948 | 33,856 | |||||||||||||
Non-GAAP Adjustments: | |||||||||||||||||
Non-cash deferred compensation (2) | 792 | 1,029 | 1,583 | 2,482 | |||||||||||||
Non-cash share-based compensation (3) | 16,204 | 2,161 | 31,449 | 14,166 | |||||||||||||
Secondary Equity Offering expenses (4) | - | 1,022 | - | 1,022 | |||||||||||||
Severance payments and other fees (5) | 869 | 3,289 | 2,899 | 13,676 | |||||||||||||
Management NCL Corporation Units exchange expenses (6) | - | - | - | 624 | |||||||||||||
Acquisition of Prestige expenses (7) | 1,273 | 10,891 | 3,014 | 11,291 | |||||||||||||
Deferred revenue (8) | 297 | 7,294 | 757 | 28,488 | |||||||||||||
Contingent consideration adjustment (9) | - | (34,300 | ) | - | (43,400 | ) | |||||||||||
Adjusted EBITDA | $ | 351,063 | $ | 313,376 | $ | 603,907 | $ | 510,664 | |||||||||
(1) Primarily consists of gains and losses, net for derivative contracts and forward currency exchanges. | |||||||||||||||||
(2) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses, which are included in payroll and related expense. | |||||||||||||||||
(3) Non-cash share-based compensation expenses related to equity awards, which are included in marketing, general and administrative expense and payroll and related expense. | |||||||||||||||||
(4) Expenses related to the Secondary Equity Offerings, which are included in marketing, general and administrative expense. | |||||||||||||||||
(5) Severance payments and other expenses related to restructuring costs and other severance arrangements, which are included in marketing, general and administrative expense. | |||||||||||||||||
(6) Expenses related to the exchange of Management NCL Corporation Units for ordinary shares, which are included in marketing, general and administrative expense. | |||||||||||||||||
(7) Expenses related to the Acquisition of Prestige, which are included in marketing, general and administrative expense. | |||||||||||||||||
(8) Deferred revenue fair value adjustments related to the Acquisition of Prestige that were made pursuant to business combination accounting rules, which are primarily included in Net Revenue. | |||||||||||||||||
(9) Contingent consideration fair value adjustment related to the Acquisition of Prestige, which is included in marketing general and administrative expense. | |||||||||||||||||
| |||||||
NON-GAAP RECONCILING INFORMATION | |||||||
(Unaudited) | |||||||
Free Cash Flow was calculated as follows (in thousands): | |||||||
Six Months Ended | |||||||
2016 | 2015 | ||||||
Net cash provided by operating activities | $ | 748,038 | $ | 711,695 | |||
Less: Capital expenditures for ship construction | (561,484 | ) | (105,204 | ) | |||
Less: Capital expenditures for business enhancements and other | (203,415 | ) | (99,852 | ) | |||
Free Cash Flow | (16,861 | ) | 506,639 | ||||
Proceeds from ship construction financing facilities | 439,438 | 36,021 | |||||
Adjusted free cash flow | $ | 422,577 | $ | 542,660 | |||
Investor Relations ContactSource:Andrea DeMarco (305) 468-2463 InvestorRelations@ncl.com
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