Norwegian Cruise Line Holdings Ltd. · NYSE:NCLH
Norwegian Cruise Line — Q3 2022 Earnings Presentation
35 slides from Norwegian Cruise Line's earnings presentation, Nov 8, 2022
Slide 1: Third Quarter 2022 Earnings Conference Call
THIRD QUARTER 2022 EARNINGS CONFERENCE CALL November 8, 2022
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 INCL Vly FA venti D SB iJ Z J Co “rn 1966, 29 60,000+ Year Founded Ships in Fleet Berths OCEANIA Bey CRUISES* 8 ~20,000 ~500 Ships on Berths on Global Order Order Destinations Visited Regent ao 5 ay SEVEN SEAS CRUISES Ag | mid ' ' ~35,000 =2.7 2 Team Million Guests Luxurious Private Me
Slide 4: Key Events Since Q2 2022 Earnings Call
KEY EVENTS SINCE Q2 2022 EARNINGS CALL NTW to update Company announces significant relaxation of SailSAFE protocols effective Sept 3. Vaccinated guests will no longer have pre- Aug 8 cruise COVID-19 protocols and unvaccinated guests are welcome with proof of a negative COVID-19 test, where local reg
Slide 5: Positive Catalysts Heading into 2023
POSITIVE CATALYSTS HEADING INTO 2023 1 2 3 Improvement in Public Consumer Desire for Attractive Newbuild Health & Regulatory Travel & Experiences Pipeline Environments Intact ▪ All COVID-19 related guest ▪ Healthy consumer trends ▪ Addition of Norwegian Prima in protocols lifted for NCL continue inc
Slide 6: Favorable Product & Guest Mix
FAVORABLE PRODUCT & GUEST MIX Upscale Berths NCLH Bookings by Region4 10% ~9,190 6% U.S. 6% Canada ~6,500 78% UK & Continental Europe Rest of World ~3,350 % of Guests Booked with Net Worth of $250K+5 ~2,850 ~94% ~95% ~63% 1 2 3 NCL OCI RSSC Upscale brands and target higher-end consumer position us w
Slide 7: Meaningful Growth Potential to Top and Bottom-Line Results
MEANINGFUL GROWTH POTENTIAL TO TOP AND BOTTOM-LINE RESULTS Capacity Days (M) Capacity Growth: ~50% 28.8 27.1 FY 2023 Growth: 17% 25.1 YE 2023 Annualized2: 23% 23.8 22.5 19.2 17.8 2019 2022E 2023E 2024E 2025E 2026E 2027E # Ships 27 29 32 32 34 36 37 Organic growth + Norwegian Encore Norwegian Norwegi
Slide 8: Next Class of Cutting-Edge Norwegian Ships
NEXT CLASS OF CUTTING-EDGE NORWEGIAN SHIPS Capacity: ~3,100 Gross Tons: ~140,000 More open spaces to bring guests closer to the sea Smaller footprint allows for deployment flexibility, including unserved and underserved markets Godmother of Norwegian Prima, Katy Perry, joins Norwegian Cruise Line ex
Slide 9: Cruise Is Vastly Underpenetrated Globally
CRUISE IS VASTLY UNDERPENETRATED GLOBALLY Percentage of Target Population Global Cruise Hotel Rooms that Cruised in 20191 Staterooms in Top 3 U.S. Cities 10% 9% 9% 7% 5% 1% • Total cruise staterooms are less than hotel rooms in the top 3 Germany Australia UK US Canada World U.S. cities2 • NCLH’s tot
Slide 10: Phased & Disciplined Voyage Resumption
PHASED & DISCIPLINED VOYAGE RESUMPTION Sequential Increase in Occupancy Occupancy Gap Narrowing vs. 2019 Expect return to historical Q1 2022 Q2 2022 Q3 2022 Q4 2022E Mid-to- occupancy High 80% ~82% range ~65% ~(20)% ~48% ~(30)% ~(44)% Q1 2022 Q2 2022 Q3 2022 Q4 2022E Q2 2023E ~(57)% Continued steady
Slide 11: Pricing & Pricing Growth Continues to Lead Industry
PRICING & PRICING GROWTH CONTINUES TO LEAD INDUSTRY 3Q 2022 Pricing Growth vs 2019 YTD 2022 Pricing Growth vs 2019 5% 14% +10% +14% (5)% 0% NCLH Peers Publicly Traded NCLH Peers Publicly Traded Peers Peers Pricing growth continues to outperform Note: Percentages presented above are based on growth i
Slide 12: Unique Go-to-Market Strategy
UNIQUE GO-TO-MARKET STRATEGY Market-to-Fill Value-Add Bundling • Focus on marketing and not price 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 future price actions / increases t
Slide 13: Booking Trends Update
BOOKING TRENDS UPDATE ◼ Significant relaxation of COVID-19 protocols in recent months has removed barriers and expanded our ability to reach a wider cruising population. ◼ High visibility into our booked position with our Q3 2022 booking window expanding to 245 days in the quarter, nearly 10% higher
Slide 14: 3Q 2022 Results Overview
3Q 2022 RESULTS OVERVIEW 3Q 2022 Actuals Guidance Occupancy Low 80% range ~82% ✓ Total Revenue $1.5-$1.6 billion $1.6 billion ✓ Total Revenue per Passenger Cruise Day ↑ High single digits vs 2019 + ~14% vs 3Q19 ✓ Adjusted Net Cruise Cost ex. Fuel per Capacity Day ↓ ~10% in 2H22 vs 1H22 On track ✓ Ad
Slide 15: Cash Generation Engine Fueled by Advance Ticket Sales
CASH GENERATION ENGINE FUELED BY ADVANCE TICKET SALES Total Advance Ticket Sales ($B) Quarterly Gross Advance Ticket Sales Build ($M) Q3 flat vs. 3.0 typical $1,800 seasonal decline $1,600 2.5 $1,400 2.0 $1,200 $1,000 1.5 $800 1.0 $600 $400 0.5 $200 - $- 3Q21 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 4Q21 1Q22
Slide 16: Fuel Hedge Program
FUEL HEDGE PROGRAM NCLH Fuel Hedge Program as of 9/30/22 2022 2023 % of HFO Consumption Hedged1 37% 29% Average USGC Price / Barrel $48.36 N/A Average Brent Price / Barrel $77.82 $76.68 % of MGO Consumption 51% 48% Hedged Average Gasoil Price / Barrel $70.00 $84.42 Total % of Consumption Hedged 44%
Slide 17: Outlook
OUTLOOK $ Millions unless otherwise noted Q4 2022 FY 2022 Depreciation & Amortization $195M $740M Run-Rate Interest Expense, net1 $170M $610M Non-Newbuild Capital Expenditures $155M $470M Fuel Consumption (metric tons) 240,000 870,000 Fuel Price Per Metric Ton (net of hedges) $725 $780 $ Billions un
Slide 18: Key Financial Recovery Milestones
KEY FINANCIAL RECOVERY MILESTONES 2021 2022 2023 Q1 Q2 Q3 Q4 1 3 6 7 Positive Positive ship Expect positive contribution 2 contribution 4 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 Positive
Slide 19: Liquidity Position
LIQUIDITY POSITION ◼ Liquidity of ~$2.2B as of September 30, 2022, consisting of $1.2B of cash and cash equivalents and a $1B undrawn commitment ◼ Currently have ~$500M of incremental unsecured debt capacity available ◼ Expected to complete an amendment and extension of our operating credit facility
Slide 20: Manageable Debt Maturity Profile
MANAGEABLE DEBT MATURITY PROFILE ($ billions) Revolving Credit Facility & Term Loan A (totaling ~$2.3B) expected to be extended prior $3.1 to YE22 $2.0 $1.6 $1.1 $1.0 $0.3 2022 2023 2024 2025 2026 2027 ECA Loans, Capital Leases & Other Senior Unsecured Notes Senior Secured Notes Exchangeable Notes T
Slide 21: Attractive Fixed Rate 12-Year Financing for Newbuild Program
ATTRACTIVE FIXED RATE 12-YEAR FINANCING FOR NEWBUILD PROGRAM Norwegian Prima 2.7% Oceania Cruises’ 3.6% Seven Seas 3.6% Vista GrandeurTM Norwegian Viva 2.8% 2nd Allura Class Ship 1.4% (EUR) 3rd Prima Class Ship 1.2% (EUR) 4th Prima Class Ship 1.3% (EUR) 5th Prima Class Ship 3.6% 6th Prima Class Ship
Slide 22: Medium and Long-Term Financial Strategy
MEDIUM AND LONG-TERM FINANCIAL STRATEGY 1 2 3 Rebuild and Improve Maximize Cash Flow Optimize Margins Generation Balance Sheet ▪ Gradual return to pre-COVID ▪ Introduce robust growth profile ▪ Maintain sufficient liquidity margin levels of ROIC and cash flow to weather extended accretive vessels in
Slide 23: 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 24: Key Takeaways
KEY TAKEAWAYS •NCLH has a differentiated investment thesis and unique drivers to unlock value for our stakeholders •We have been clear and consistent in our strategy and have reached the key operational and financial milestones we have targeted to lay the foundation for a strong 2023 and beyond •We
Slide 25: Appendix
APPENDIX NORWEGIAN CRUISE LINE BES HoLpinGs LTD.
Slide 26: 4Q 2022 Guidance Overview
4Q 2022 GUIDANCE OVERVIEW 4Q 2022 Guidance Occupancy Mid-to-high 80% range Total Revenue $1.4-$1.5 billion Total Revenue per ↑ ~20% vs 2019 Passenger Cruise Day Adjusted Net Cruise Cost ex. Fuel per Capacity ↓ ~10% in 2H22 Day vs 1H22 Adjusted EBITDA Slightly positive in 2H22 26
Slide 27: NCLH 2023 Deployment Mix
NCLH 2023 DEPLOYMENT MIX 2023 Variance Q1 Q2 Q3 Q4 FY vs. FY 2019 Alaska 0% 17% 24% 5% 12% 3% Asia/Africa/Pacific 8% 2% 1% 11% 5% 1% Bermuda 2% 11% 7% 5% 6% - Caribbean 54% 19% 6% 27% 26% (9%) Europe 5% 32% 51% 27% 29% 6% Hawaii 4% 4% 3% 3% 4% - Other 27% 14% 8% 23% 18% - Total 100% 100% 100% 100% 1
Slide 28: Illustrative Share Count Scenario
ILLUSTRATIVE SHARE COUNT SCENARIO Illustrative Diluted Share Count Shares Outstanding (as of 9/30/22) 421,393,338 RSUs and Options Outstanding (as of 15,033,509 9/30/22) 6% Exchangeable Notes due 2024 10,661,894 Must be settled in shares 5.375% Exchangeable Notes due 2025 23,999,985 1.125% Exchangea
Slide 29: 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 30: Definitions and Non-GAAP Information and Reconciliations
DEFINITIONS AND NON-GAAP INFORMATION AND RECONCILIATIONS
Slide 31: 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 32: 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 33: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Adjusted EBITDA 1 is Three Months Ended Calculated as Follows (in thousands): Sept. 30, 2022 Net loss ($295,394) Interest expense, net 152,330 Income tax (benefit) expense (10,705) Depreciation and amortization expense 186,551 EBITDA 32,782 Other (income)
Slide 34: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Net Per Diem is Calculated as Follows Three Months Ended Three Months Ended (in thousands, except Passenger Cruise Days and Net Per Diem Data): Sept. 30, 2022 Sept. 30, 2019 Total revenue $1,615,510 $1,913,851 Less: Total cruise operating expense 1,238,89
Slide 35: Non-GAAP Reconciling Information
NON-GAAP RECONCILING INFORMATION (UNAUDITED) Net Per Diem is Calculated as Follows Nine Months Ended Nine Months Ended (in thousands, except Passenger Cruise Days and Net Per Diem Data): Sept. 30, 2022 Sept. 30, 2019 Total revenue $3,324,631 $4,981,758 Less: Total cruise operating expense 3,047,627
Norwegian Cruise Line Holdings — Q3 2022 Earnings Presentation on 6ix