Norwegian Cruise Line Holdings Ltd. · NYSE:NCLH
Norwegian Cruise Line — Q2 2023 Earnings Presentation
36 slides from Norwegian Cruise Line's earnings presentation, Aug 1, 2023
Slide 1: Q2 2023 Earnings Conference Call
Q2 2023 EARNINGS CONFERENCE CALL August 1, 2023 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Some of the statements, estimates or projections contained in this presentation are “forward-looking statements” within the meaning of the U.S. federal securities laws intended to qualify for the safe harbor from liability established by the Private Securities Litigation R
Slide 3: NCLH Overview
NCLH OVERVIEW 1966 30 60,000+ Year Founded Ships in Fleet Berths 7 19,000+ ~700 Ships on Berths on Global Order Order Destinations Visited ~40,000 ~2.7M 2 Team Expected Guests Luxurious Private Members Carried in 2023 Island Destinations 3
Slide 4: Key Events Since Q1 2023 Earnings Call
KEY EVENTS SINCE Q1 2023 EARNINGS CALL Oceania Cruises christened its new ship Vista, in Valletta, Malta on May 8th, with a celebration headlined by her godmother, celebrated Italian- May 8 American chef, author, restaurateur and Emmy award-winning food personality Giada De Laurentiis, and an exclus
Slide 5: Highly Experienced Management Team
HIGHLY EXPERIENCED MANAGEMENT TEAM >20 years average cruise industry experience HARRY SOMMER President & CEO, NCLH 31 years in industry Brand Presidents Shared Service Leaders DAVID HERRERA ANDREA DEMARCO FRANK A. DEL RIO MARK KEMPA DAN FARKAS LYNN WHITE President, NCL President, RSSC President, Oce
Slide 6: Near Term Priorities
NEAR TERM PRIORITIES Successfully absorb 18% capacity growth while remaining within optimal CAPITALIZE ON HEALTHY DEMAND 12-month forward booked position of ~60-65% and while increasing ENVIRONMENT pricing.1 Maximize onboard revenue generation through bundling and capturing more of a guests’ wallet
Slide 7: Two New Ships Joining World Class Fleet in 2H 2023
TWO NEW SHIPS JOINING WORLD CLASS FLEET IN 2H 2023 NORWEGIAN VIVA The highly anticipated Norwegian Viva, the second of the ground-breaking Prima Class, will be delivered on August 3, 2023, and christened in Miami, Florida by her Godfather GRAMMY® nominated, and five-time Latin GRAMMY® winning singer
Slide 8: Meaningful Growth to Top and Bottom-Line Results Expected
MEANINGFUL GROWTH TO TOP AND BOTTOM-LINE RESULTS EXPECTED Capacity Growth (M) Capacity Growth: ~50% CAGR ~5% 28.9 FY 2023 Growth: 18% 27.6 YE 2023 Annualized2: 24% 26.5 24.7 23.7 22.7 19.2 17.6 2019 2022 2023E 2024E 2025E 2026E 2027E 2028E # Ships 27 29 32 32 34 35 36 37 Next Generation Next Generat
Slide 9: Focused on De-Risking and Reducing Leverage
FOCUSED ON DE-RISKING AND REDUCING LEVERAGE Historical Net Leverage Reduction1,2 Expect significant organic 6.8x reduction in Net Leverage from current levels driven by 5.1x 4.3x ongoing cash generation & 3.7x 3.3x 3.4x normal course debt installment payments 3.0x 2014 2015 2016 2017 2018 2019 Refin
Slide 10: Phased & Disciplined Voyage Resumption
PHASED & DISCIPLINED VOYAGE RESUMPTION Sequential Increase in Occupancy 106% ~105 to 106% 102% 105% 87% 81% 65% 48% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23E Expected Annual Run-Rate Occupancy ramp up now complete and at normalized levels 10
Slide 11: Strategic Deployment Shift
STRATEGIC DEPLOYMENT SHIFT Longer, More Immersive Itineraries1 Shift to Premium Destinations2 NCL Voyage 2019 2023 chg 2019 2023 Length (days) -9% 1-5 25% 7% (18%) +6% 6-8 51% 47% (4%) 9-12 14% 37% +23% 13+ 10% 9% (1%) +3% Differentiated deployment mix versus peers which results in longer booking wi
Slide 12: Booking Trends Update
BOOKING TRENDS UPDATE The Company continues to experience strong and resilient consumer demand. Q2 revenue increased 33% vs 2019. Cumulative booked position for 2H23 is ahead of 2019 levels, at continued higher pricing.1 On a 12-month forward basis, the Company continues to be within its optimal boo
Slide 13: Cash Generation Engine Fueled by Advance Ticket Sales
CASH GENERATION ENGINE FUELED BY ADVANCE TICKET SALES Total Advance Ticket Sales ($B) Record level of $3.5 billion $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 1Q18 1Q20 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Advance ticket sales balance i
Slide 14: Sail & Sustain Highlights
SAIL & SUSTAIN HIGHLIGHTS Net zero by 2050 ~60% of fleet to 47% of non- 90% of water pursuit supported be shore power hazardous waste was produced with short- and capable by was diverted from on-board1 near-term targets year-end 2023 landfills1 +10 years average 100% successful on all 97.75 is the f
Slide 15: 2Q 2023 Results Overview
2Q 2023 RESULTS OVERVIEW 2Q 2023 Actuals Guidance Occupancy Approx. 105% ~105% ✓ Net Per Diem Growth vs. 2019 5.50% to 6.25% 6.4% ✓ Net Yield Growth vs. 2019 2.50% to 3.25% 2.9% ✓ Adjusted Net Cruise Cost ex. Fuel per Capacity Day ~$159 ~$156 ✓ Adjusted EBITDA ~$485 million ~$515 million ✓ Adjusted
Slide 16: 2023 Guidance Overview
2023 GUIDANCE OVERVIEW 3Q 2023 Implied FY 2023 Guidance Q4 2023 Guidance Occupancy Approx. 106% Approx. 103.5% Net Per Diem 7.00% to 8.00% ~18% 9.00% to 10.50% Growth vs. 2019 Net Yield 2.25% to 3.25% ~14% 5.00% to 6.50% Growth vs. 2019 Adjusted Net Cruise Cost ~$152 ($155 core1) ~$155 ($154 core1)
Slide 17: Ongoing Margin Enhancement Initiative
ONGOING MARGIN ENHANCEMENT INITIATIVE Targeted Cost Savings1 Ongoing margin enhancement initiative remains a top priority. Focus is on both maximizing revenue opportunities and rightsizing cost base $187 Already reflecting in financial results including with $159 Adjusted Net Cruise Costs ex Fuel pe
Slide 18: Full Year 2023 Earnings Guidance Increased
FULL YEAR 2023 EARNINGS GUIDANCE INCREASED 2023 Adjusted EPS guidance would have increased ~34% excluding impact from $0.70 $0.80 expected fuel, interest & FX headwinds Increased 2023 Adjusted EPS guidance by $0.10 (+14%) FY 2023 FY 2023 Adjusted EPS Adjusted EPS (Initial Feb Guidance) (Updated Aug
Slide 19: Cost-Savings Initiatives Are Broad-Based
COST-SAVINGS INITIATIVES ARE BROAD-BASED CREW PAYROLL • Example: Optimization of crew movements and ship transfers (multi- million-dollar savings) FOOD & CONSUMABLES • Example: Menu re-engineering and optimization to minimize food waste and focus on most popular guest preferences ($15-20M) FUEL • Ex
Slide 20: Manageable Debt Maturity Profile
MANAGEABLE DEBT MATURITY PROFILE As of 6/30/20231 ($ billions) Expected to be $3.2 refinanced prior to Expected to be maturity Expected to be settled in shares settled in shares $2.1 $0.5 $0.9 $0.7 3 3 2023 2024 2025 2026 2027 ECA Loans, Capital Leases & Other Senior Secured Notes Exchangeable Notes
Slide 21: Liquidity Position
LIQUIDITY POSITION Quarter end liquidity position was ~$2.4 billion, including As of 6/30/2023 Does not include ~$900 million of cash and cash equivalents, $875 million of ($ millions) $300 million backstop facility1 availability under the Revolving Loan Facility, and a $650 million undrawn commitme
Slide 22: Key Takeaways
KEY TAKEAWAYS •Focused on execution of near-term priorities today, while also fine-tuning vision for the future. Recent leadership team changes bring fresh & diverse perspectives. •Continue to experience strong and resilient demand from our target upscale demographic. Aim to remain within sweet spot
Slide 23: Appendix
NORWEGIAN CRUISE LINE pS) HOLDINGS LTD APPENDIX 23
Slide 24: Diluted Share Count Calculation
DILUTED SHARE COUNT CALCULATION Fully Dilutive 2Q23A 3Q23E 4Q23E FY23E Share Count Basic Shares Outstanding 424,178,7751 ~425 million ~425 million ~425 million Most Dilutive Effect of RSUs and Options Varies 2,758,7152 Dilutive Anti-Dilutive Dilutive Dilutive 1.125% Exchangeable Notes due 2027 34,13
Slide 25: NCLH 2023 Deployment Mix
NCLH 2023 DEPLOYMENT MIX 2023 Variance vs 2019 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Alaska 0% 17% 24% 5% 11% Alaska 0% 4% 3% 4% 3% Asia/Africa/Pacific 8% 2% 1% 11% 6% Asia/Africa/Pacific (1%) (1%) 1% 5% 1% Bermuda 2% 11% 7% 5% 6% Bermuda 2% (2%) (2%) 1% (0%) Caribbean 54% 20% 6% 26% 26% Caribbean (6%) (6%)
Slide 26: Outlook
OUTLOOK $ Millions unless otherwise noted Q3 2023 FY 2023 Depreciation & Amortization $205M $815M Run-Rate Interest Expense, net1 $185M $720M Non-Newbuild Capital Expenditures $90M $425M Fuel Consumption (metric tons) 240,000 980,000 Fuel Price Per Metric Ton (net of hedges) $725 $735 $ Billions unl
Slide 27: Fuel Hedge Program
FUEL HEDGE PROGRAM NCLH Fuel Hedge Program as of 06/30/23 2023 2024 % of HFO Consumption Hedged1 28% 13% Blended HFO Hedge Price / Metric Ton ~$571 ~$371 % of MGO Consumption Hedged 73% 37% Blended MGO Hedge Price / Metric Ton ~$703 ~$718 Total % of Consumption Hedged 51% 26% Hedge program in place
Slide 28: Definitions and Non-GAAP Information and Reconciliation
DEFINITIONS AND NON-GAAP INFORMATION AND RECONCILIATION 28
Slide 29: Non-GAAP financial measures should not be used as a substitute
Non-GAAP financial measures should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing operating performance, financial position or cash flows. The Company does not provide certain estimated future results on a GAAP basis because the Comp
Slide 30: Definitions
DEFINITIONS Adjusted EBITDA. EBITDA adjusted for other income (expense), net and other supplemental adjustments. Adjusted EPS. Adjusted Net Income divided by the number of diluted weighted-average shares outstanding. Adjusted Gross Margin. Gross margin adjusted for payroll and related, fuel, food, o
Slide 31: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Adjusted EPS was calculated as follows Three Months Ended (in thousands, except share and per share data): Jun. 30, 2023 Net income $86,116 Effect of dilutive securities - exchangeable notes $4,603 Non-cash deferred compensation 1,010 Non-cash share-based
Slide 32: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Adjusted Gross Margin, Net Per Diem, and Net Yield were calculated as follows Three Months Ended Jun. Constant Currency Three Months Ended Jun. (in thousands, except Passenger Cruise Days and Net Per Diem Data): 30, 2023 compared to 2019 30, 2019 Total re
Slide 33: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Three Months Ended Constant Currency Three Months Ended Cost Excluding Fuel were calculated as follows Jun. 30, 2023 compared to 2019 Jun. 30, 2019 (in thousands, e
Slide 34: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Cost Excluding Three Months Ended Fuel were calculated as follows Mar. 31, 2023 (in thousands, except Capacity Days and per Capacity Day data): Total cruise operati
Slide 35: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Cost Excluding Six Months Ended Fuel were calculated as follows Dec. 31, 2022 (in thousands, except Capacity Days and per Capacity Day data): Total cruise operating
Slide 36: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Year Ended December 31 Net Debt and Net Leverage were calculated as 1 2014 2015 2016 2017 2018 2019 follows Long-term debt $5,503,076 $5,767,697 $5,838,494 $5,688,392 $5,810,873 $6,055,335 Current portion of long-term debt 576,947 629,840 560,193 619,373
Norwegian Cruise Line Holdings — Q2 2023 Earnings Presentation on 6ix