Norwegian Cruise Line Holdings Ltd. · NYSE:NCLH
Norwegian Cruise Line — Q2 2022 Earnings Presentation
31 slides from Norwegian Cruise Line's earnings presentation, Aug 9, 2022
Slide 1: Second Quarter 2022 Earnings Conference Call
SECOND QUARTER 2022 EARNINGS CONFERENCE CALL August 9, 2022
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT 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 Re
Slide 3: Key Events Since Q1 2022 Earnings Call
KEY EVENTS SINCE Q1 2022 EARNINGS CALL Oceania Cruises reported that the opening day for its 2024 Collection of voyages on May 4, 2022, ranked among the best May 10 single-day booking periods in the line's history. Company announced expanded animal welfare commitments including new standards and goa
Slide 4: Key Catalysts
KEY CATALYSTS 1 2 3 Improvement in Public Consumer Desire for Attractive Newbuild Health & Regulatory Travel & Experiences Pipeline Environments Intact ▪ Significant relaxation of ▪ Healthy consumer trends ▪ Addition of Norwegian Prima in vaccination and testing continue including strong July brings
Slide 5: Disciplined and Attractive Newbuild Program
DISCIPLINED AND ATTRACTIVE NEWBUILD PROGRAM NORWEGIAN CRUISE LINE OCEANIA CRUISES REGENT SEVEN SEAS CRUISES Ships / Berths at YE 2021 17 ships / 50,520 berths 6 ships / 5,240 berths 5 ships / 3,390 berths Ships Ordered from 2022- 6 2 1 2027 2022 1) Norwegian Prima: ~3,100 Berths (3rd quarter)1 2023
Slide 6: Next Class of Cutting-Edge Norwegian Ships
NEXT CLASS OF CUTTING-EDGE NORWEGIAN SHIPS ◼ In July, the Company took delivery of Norwegian Prima, the first of six innovative ships in the ground-breaking Prima Class ◼ Norwegian Viva, the second Prima Class vessel, floated out from her dry dock on August 2nd, marking a major construction mileston
Slide 7: Historic Financial Outperformance
HISTORIC FINANCIAL OUTPERFORMANCE Capacity Days (M) Gross Revenue ($B) CAGR: 7% CAGR: 10.7% $6.1 $6.5 18.8 19.2 $4.9 $5.4 14.7 16.4 17.4 $4.3 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Adjusted EBITDA ($B) Net Cash Provided by Operating Activities ($B) CAGR: 12.7% CAGR: 15% $1.9 $1.9 $2.1 $1.
Slide 8: Booking Trends Update
BOOKING TRENDS UPDATE ◼ Sequentially, net booking volumes continue to increase as the Company’s brands ramp up to sail at historical load factor levels. ◼ Booking trends for FY 2023 are positive with cumulative booked position in line with a record 2019 inclusive of a 20% increase in capacity. Prici
Slide 9: Robust Pricing Growth Continues
ROBUST PRICING GROWTH CONTINUES 1H 2022 Pricing growth compared to 2019 +17% +18% 1% Publicly Traded Peers Strong pricing outperformance year-to-date continued in Q2 driven by go-to-market strategy Note: Percentages presented above are based on growth in Net Per Diems, a non-GAAP financial measure,
Slide 10: Go-to-Market Strategy: Value-Add Bundling & Market-to-Fill
GO-TO-MARKET STRATEGY: VALUE-ADD BUNDLING & MARKET-TO-FILL Value-Add Bundling Market-to-Fill ◼ Minimizes the lowering of pricing as the main lever to drive demand ◼ Book early for best price contributes to elongated booking curve which improves visibility and accelerates cash inflows ◼ Telegraph fut
Slide 11: Cash Generation Engine Fueled by Advance Ticket Sales
CASH GENERATION ENGINE FUELED BY ADVANCE TICKET SALES Total Advance Ticket Sales ($B) Quarterly Gross Advance Ticket Sales Build ($M) 3.0 Record $1,600 high 2.5 $1,400 ~40% $1,200 2.0 $1,000 1.5 $800 1.0 $600 $400 0.5 $200 - $- 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q
Slide 12: Fuel Hedge Program
FUEL HEDGE PROGRAM NCLH Fuel Hedge Program as of 6/30/22 2022 2023 2024 % of HFO Consumption 31% 26% - Hedged1 Average USGC Price / $48.36 N/A - Barrel Average Brent Price / $66.50 $74.50 - Barrel % of MGO Consumption 49% 35% - Hedged Average Gasoil Price / $70.00 $69.91 - Barrel Total % of Consumpt
Slide 13: Outlook
OUTLOOK $ Millions 2022 Depreciation & Amortization $745M Run-Rate Interest Expense, net1 $615M Non-Newbuild Capital Expenditures $500M Fuel Consumption (metric tons) 885,000 Fuel Price Per Metric Ton (net of hedges) $795 Remainder $ Billions of 2022 2023 2024 Newbuild-Related Capital Expenditures,
Slide 14: Key Financial Recovery Milestones
KEY FINANCIAL RECOVERY MILESTONES 2021 2022 2023 Q1 Q2 Q3 Q4 1 3 5 6 Positive Positive ship Expect positive contribution 2 contribution Adjusted Free Expect return to historical from fleet in fleetwide and Cash Flow1 load factors in 2023 operation in Q3 Positive Operating Cash for quarter Operating
Slide 15: Manageable Debt Maturity Profile
MANAGEABLE DEBT MATURITY PROFILE As of June 30, 2022 ($ billions) Revolving Credit Facility & Term Loan A (totaling ~$2.4B) expected to be refinanced prior to maturity $3.0 $2.2 $2.0 $1.5 $1.1 $0.9 $0.5 2022 2023 2024 2025 2026 2027 Thereafter ECA Loans, Capital Leases & Other 3.625% Senior Unsecure
Slide 16: Meaningful Growth Potential for Top and Bottom-Line Results
MEANINGFUL GROWTH POTENTIAL FOR TOP AND BOTTOM-LINE RESULTS Number of Ships Capacity Days (M)1 Premium Cabin Mix2 37 ~65% 28.8 6 ~60% 28 8 5 19.2 6 23 17 YE21 2027E 2019 2027E YE21 2027E NCL OCI RSSC Growth pipeline presents additional opportunities for diversification into unserved and underserved
Slide 17: Illustrative Newbuild Timeline
ILLUSTRATIVE NEWBUILD TIMELINE Contract Signing Installment Cash Inflows from Ship Delivery Post Delivery Payments Bookings Begin • ~2-5% of ship cost due • 3 installment payments • Cash Deposits begin at • 80% of ship cost due • Financing is amortized due at agreed upon open for sale upon delivery
Slide 18: Sail & Sustain global sustainability program
▪ Global sustainability program, Sail & Sustain, is a core focus in everyday operations, centered around 5 key pillars ▪ Strategy led by ESG1 department with oversight by executive team and TESS2 Board Committee ▪ Released second annual ESG report in June 2022 including SASB Index to provide additio
Slide 19: Key Takeaways
KEY TAKEAWAYS ▪ Achieved target Q2 occupancy levels and ramping up occupancy in a disciplined manner, focusing on building on Company’s industry leading pricing, with goal of reaching Reaching Key historical levels for Q2 2023 Operational and ▪ Key milestone reached in the quarter with positive Oper
Slide 20: Appendix
APPENDIX fF] NORWEGIAN CRUISE LINE 20 HOLDINGS LTD.
Slide 21: 2022 Deployment by Market
2022 DEPLOYMENT BY MARKET 2022 Q1 Q2 Q3 Q4 FY Alaska 0% 17% 26% 4% 13% Asia/Africa/Pacific 1% 0% 0% 6% 2% Bermuda 0% 11% 10% 5% 7% Caribbean 79% 17% 12% 29% 30% Europe 0% 37% 42% 22% 28% Baltic 0% 10% 15% 1% 7% Mediterranean 0% 28% 27% 19% 20% Hawaii 0% 3% 2% 5% 3% Other 20% 14% 8% 29% 18% Total 100
Slide 22: 2019-2027E Disciplined Growth
2019-2027E DISCIPLINED GROWTH (M) Capacity Growth: ~50% 28.8 27.5 25.7 Capacity 24.0 Growth: ~20% 22.9 19.2 17.8 2019 2022E 2023E 2024E 2025E 2026E 2027E # Ships 27 29 32 33 35 36 37 Norwegian Norwegian Norwegian Norwegian Norwegian Norwegian Norwegian Encore (Nov ’19) Prima Viva Prima Plus Class Pr
Slide 23: Industry Leader in Yield and EBITDA per Capacity Day
INDUSTRY LEADER IN YIELD AND EBITDA PER CAPACITY DAY 1 2019 Net Yield 2 2019 EBITDA Per Capacity Day 2 $257 +23% +44% $95 +12% +53% $209 $85 $179 $62 PEER 1 PEER 2 PEER 1 PEER 2 Source: Company and peer company SEC filings. Peer filings may not be calculated on the same basis. 1 Compared to major pu
Slide 24: Medium and Long-Term Financial Recovery Plan
MEDIUM AND LONG-TERM FINANCIAL RECOVERY PLAN 1 2 3 Rebuild and Improve Maximize Cash Flow Optimize Balance Margins Generation Sheet ▪ Gradual return to pre-COVID ▪ Introduce robust growth profile ▪ Maintain sufficient liquidity to margin levels of ROIC and cash flow weather extended post-crisis accr
Slide 25: Definitions and Non-GAAP Information and Reconciliations
DEFINITIONS AND NON-GAAP INFORMATION AND RECONCILIATIONS 25
Slide 26: Non-GAAP financial measures notice
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 27: Definitions
DEFINITIONS Adjusted EBITDA. EBITDA adjusted for other income (expense), net and other supplemental adjustments. Adjusted Free Cash Flow. Free Cash Flow adjusted for proceeds from ship construction financing facilities and other supplemental adjustments. Adjusted Gross Margin. Gross margin adjusted
Slide 28: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Year Ended December 31 Adjusted EBITDA1 is Calculated as Follows (in thousands): 2015 2016 2017 2018 2019 Net income attributable to Norwegian Cruise Line Holdings Ltd. $427,137 $633,085 $759,872 $954,843 $930,228 Interest expense, net 221,909 276,859 267
Slide 29: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Net Yield is Calculated as Follows (in thousands, except Capacity Days and Yield Data): Year Ended Dec. 31, 2019 Total revenue $6,462,376 Less: Total cruise operating expense 3,663,261 Less: Ship depreciation 587,677 Gross Margin $2,211,438 Payroll and re
Slide 30: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) EBITDA per Capacity Day was Calculated as Follows (in thousands, except Capacity Days and EBITDA per Capacity Day Data): Year Ended December 31, 2019 Net Income Attributable to Norwegian Cruise Line Holdings Ltd. $930,228 Interest Expense, Net 272,867 Inc
Slide 31: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Net Per Diem is Calculated as Follows Six Months Ended Six Months Ended (in thousands, except Passenger Cruise Days and Net Per Diem Data): Jun. 30, 2022 Jun. 30, 2019 Total revenue $1,709,121 $3,067,907 Less: Total cruise operating expense $1,808,729 $1,
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