Norwegian Cruise Line(NCLH) - 2024 Q4 - Annual Results

Executive Summary & Highlights CEO Statement & Strategic Milestones Norwegian Cruise Line Holdings achieved strategic and transformative milestones in 2024, including launching the Charting the Course strategy, announcing a newbuild program, and constructing the Great Stirrup Cay pier - Launched 'Charting the Course' strategy and announced an ambitious newbuild program, including eight state-of-the-art vessels and a multi-ship pier at Great Stirrup Cay[3][12] - Achieved record revenue, Net Yield growth, and Adjusted EBITDA, enabling balance sheet strengthening and a two-turn reduction in Net Leverage[3][5] Full Year 2024 Performance Summary For the full year 2024, the Company reported record total revenue and Adjusted EBITDA, significantly improving GAAP net income and EPS Full Year 2024 Key Financial Metrics | Metric | 2024 Value | Change vs. 2023 | Source Chunk | | :-------------------------------- | :----------- | :---------------- | :----------- | | Total Revenue | $9.5 billion | +11% | 5, 6 | | GAAP Net Income | $910.3 million | +448% | 5, 6 | | EPS | $1.89 | +386% | 5, 6 | | Adjusted EBITDA | $2.45 billion | +32% | 5, 6 | | Adjusted EPS | $1.82 | - | 5, 6 | | Total Debt (as of Dec 31, 2024) | $13.1 billion | - | 5, 12 | | Net Leverage (as of Dec 31, 2024) | 5.3x | 2-turn reduction | 5, 12 | | Net Yield Growth (as reported & Constant Currency) | ~9.9% | - | 6 | | Adjusted ROIC | 10.9% | +320 bps | 12 | | Occupancy | 104.9% | - | 15 | - Performance was bolstered by a $162 million tax valuation allowance release and a $53 million foreign exchange benefit[6] Fourth Quarter 2024 Performance Summary The fourth quarter of 2024 saw record total revenue and Adjusted EBITDA, with significant increases in GAAP net income and EPS, despite a slight capacity decline Fourth Quarter 2024 Key Financial Metrics | Metric | 2024 Q4 Value | Change vs. 2023 Q4 | Source Chunk | | :-------------------------------- | :------------ | :------------------- | :----------- | | Total Revenue | $2.1 billion | +6% | 13 | | GAAP Net Income | $254.5 million | +$361.0 million | 13 | | EPS | $0.52 | +$0.77 | 13 | | Adjusted EBITDA | $468.2 million | +30% | 13 | | Adjusted EPS | $0.26 | - | 13 | | Capacity | 1% decline | - | 13 | | Net Yield Growth (as reported & Constant Currency) | ~9.0% | - | 13 | | Occupancy | 100.8% | - | 15 | - The quarter included a $162 million tax valuation allowance release and a $70 million foreign exchange benefit[13] Recent Strategic Achievements Norwegian Cruise Line Holdings made significant progress towards its 'Charting the Course 2026' targets, announced a transformative newbuild program, and secured credit rating upgrades from S&P and Moody's - On track to achieve 'Charting the Course 2026' targets announced at May 2024 Investor Day[12] - Announced a newbuild program of eight state-of-the-art vessels, adding approximately 25,000 berths, and construction of a multi-ship pier at Great Stirrup Cay[12] - S&P upgraded unsecured notes to B+ with a positive outlook; Moody's upgraded corporate rating to B1 with a positive outlook[13] Booking Environment Update The Company continues to experience robust consumer demand for its cruise offerings through 2025 and into 2026, maintaining an optimal booked position - Strong consumer demand across itineraries and brands for 2025 and 2026[15] - Maintained optimal booked position on a 12-month forward basis[15] Booking Metrics | Metric | Value | Source Chunk | | :-------------------------- | :------ | :----------- | | Q4 2024 Occupancy | 100.8% | 15 | | Full Year 2024 Occupancy | 104.9% | 15 | | Advance Ticket Sales (Q4 2024) | $3.2 billion | 15 | Financial Position & Liquidity Debt and Leverage The Company significantly improved its financial position in 2024 by reducing Net Leverage by two full turns to 5.3x, demonstrating a commitment to optimizing its balance sheet Debt and Leverage Metrics (as of Dec 31, 2024) | Metric | Value | Change vs. Dec 31, 2023 | Source Chunk | | :---------------- | :------------ | :------------------------ | :----------- | | Total Debt | $13.1 billion | - | 16 | | Net Debt | $12.9 billion | - | 16 | | Net Leverage | 5.3x | 2-turn reduction | 16 | | Liquidity | $2.0 billion | - | 17 | - Net Leverage is expected to improve to approximately 5x or better by the end of 2025[18][21] Credit Ratings and Refinancing Activities Recent credit rating upgrades from S&P and Moody's reflect the Company's strengthened financial position - S&P upgraded unsecured notes to B+ with a positive outlook; Moody's upgraded corporate rating to B1 with a positive outlook[13][18] - Successfully issued $1.8 billion of 6.750% Senior Unsecured Notes due 2032, using proceeds to redeem $1.2 billion of 5.875% Senior Notes due 2026 and $600 million of 8.375% Senior Secured Notes due 2028[13][18] - Upsized revolving credit facility from $1.2 billion to $1.7 billion, extending tenor to 5 years with improved pricing[13][18] Outlook and Guidance Full Year 2025 Guidance For the full year 2025, Norwegian Cruise Line Holdings anticipates continued growth in Net Yield and Adjusted EBITDA, with an expected increase in Adjusted Operational EBITDA Margin Full Year 2025 Guidance | Metric | Guidance | Change vs. 2024 | Source Chunk | | :------------------------------------------ | :------------- | :---------------- | :----------- | | Net Yield (Constant Currency) | ~3.0% increase | - | 13, 22 | | Adjusted EBITDA | ~$2.72 billion | +11.0% | 13, 22 | | Adjusted Operational EBITDA Margin | ~37% | - | 13 | | Adjusted Net Cruise Cost excluding Fuel per Capacity Day (Constant Currency) | +1.25% | - | 13, 22 | | Adjusted Net Income | ~$1,065 million | - | 13, 22 | | Adjusted EPS | ~$2.05 | +13% | 13, 22 | | Capacity Days | ~24.55 million | - | 22 | | Occupancy | ~103.4% | - | 22 | | Diluted Weighted-Average Shares Outstanding | ~520 million | - | 22 | | Net Leverage (year-end) | ~5x or better | - | 21 | - Guidance includes approximately $70 million of headwinds from foreign exchange and fuel since the third quarter earnings report[13] First Quarter 2025 Guidance For the first quarter of 2025, the Company expects a modest increase in Net Yield on a Constant Currency basis, building on strong prior-year growth First Quarter 2025 Guidance | Metric | Guidance | Source Chunk | | :------------------------------------------ | :------------- | :----------- | | Net Yield (Constant Currency) | ~0.5% increase | 21, 22 | | Adjusted Net Cruise Cost excluding Fuel per Capacity Day (Constant Currency) | +3.9% | 21, 22 | | Adjusted EBITDA | ~$435 million | 22 | | Adjusted Net Income | ~$37 million | 22 | | Adjusted EPS | ~$0.08 | 22 | | Capacity Days | ~5.71 million | 22 | | Occupancy | ~101.5% | 22 | | Diluted Weighted-Average Shares Outstanding | ~441 million | 22 | | Net Leverage | ~5.7x | 21 | - Adjusted Net Cruise Cost excluding Fuel per Capacity Day growth includes a 180 basis points impact from increased Dry-dock days and related costs[21][22] - Net Leverage is expected to slightly increase to ~5.7x versus year-end 2024 due to the delivery of Norwegian Aqua in March[21] Fuel Outlook The Company provides its fuel consumption and pricing expectations for 2025, with a significant portion of projected consumption hedged to mitigate price volatility Fuel Expectations and Hedging | Metric | Q1 2025 | Full Year 2025 | Source Chunk | | :------------------------------------------ | :-------- | :------------- | :----------- | | Fuel Consumption (metric tons) | 255,000 | 990,000 | 28 | | Fuel Price per Metric Ton (net of hedges) | $690 | $722 | 28 | | Effect on Adjusted EPS of 10% change in fuel prices | $0.01 | $0.06 | 28 | | % of 2025 Consumption Hedged | - | 56% | 29, 30 | | % of 2026 Consumption Hedged | - | 21% | 29, 30 | | Blended HFO and MGO Hedge Price / Metric Ton (2025) | - | $597 | 30 | | Blended HFO and MGO Hedge Price / Metric Ton (2026) | - | $526 | 30 | Capital Expenditures Outlook The Company outlines its planned capital expenditures for newbuilds, growth initiatives, and other investments through 2027, with a significant portion of newbuild-and-growth expenditures offset by export credit financing Newbuild-and-Growth Capital Expenditures (Gross) | Period | Amount (billions) | Source Chunk | | :------------- | :---------------- | :----------- | | Q1 2025 | ~$1.295 | 31 | | Full Year 2025 | ~$2.5 | 31 | | Full Year 2026 | ~$2.4 | 31 | | Full Year 2027 | ~$2.5 | 31 | Newbuild-and-Growth Capital Expenditures (Net of Financing) | Period | Amount (millions) | Source Chunk | | :------------- | :---------------- | :----------- | | Q1 2025 | ~$445 | 33 | | Full Year 2025 | ~$1.0 billion | 33 | | Full Year 2026 | ~$1.0 billion | 33 | | Full Year 2027 | ~$0.7 billion | 33 | Other Capital Expenditures | Period | Amount (millions) | Source Chunk | | :------------- | :---------------- | :----------- | | Q1 2025 | ~$130 | 34 | | Full Year 2025 | ~$590 | 34 | Company & Brand Updates Leadership Appointments Norwegian Cruise Line Holdings appointed Jason Montague as Chief Luxury Officer, overseeing Regent Seven Seas Cruises and Oceania Cruises and their fleet expansion - Jason Montague appointed Chief Luxury Officer for NCLH, leading Regent Seven Seas Cruises and Oceania Cruises and their multibillion-dollar fleet expansion[35] Fleet and Brand Enhancements The Company announced new brand ambassadors, completed Starlink installation across its fleet, and unveiled expanded guest experiences on Norwegian Bliss and Breakaway, enhancing its offerings and guest connectivity - Eric Stonestreet named Norwegian Cruise Line's new brand ambassador and godfather of the new vessel, Norwegian Aqua[39] - Starlink installation completed across the entire fleet of Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises[39] - Norwegian Bliss and Norwegian Breakaway to undergo significant updates, including a new cinema and dining experience (Silver Screen Bistro), an outdoor recreational concept (Horizon Park), extended dining venues, and expanded accommodations[39] Consolidated Financial Statements Consolidated Statements of Operations The Consolidated Statements of Operations show a significant increase in total revenue and net income for both the fourth quarter and full year 2024 compared to 2023, driven by higher passenger ticket and onboard revenue, alongside improved operating income Consolidated Statements of Operations (Selected Data, in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | Source Chunk | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | :----------- | | Total Revenue | $2,109,366 | $1,986,456 | $9,479,651 | $8,549,924 | 58 | | Total Cruise Operating Expense | $1,307,579 | $1,321,813 | $5,688,696 | $5,468,587 | 58 | | Operating Income | $214,741 | $124,330 | $1,465,906 | $930,911 | 58 | | Net Income (Loss) | $254,536 | $(106,485) | $910,257 | $166,178 | 58 | | Diluted EPS | $0.52 | $(0.25) | $1.89 | $0.39 | 59 | Consolidated Statements of Comprehensive Income The Consolidated Statements of Comprehensive Income reflect the net income (loss) adjusted for other comprehensive income (loss) items, such as changes in the Shipboard Retirement Plan and cash flow hedges, resulting in positive total comprehensive income for 2024 Consolidated Statements of Comprehensive Income (Selected Data, in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | Source Chunk | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | :----------- | | Net Income (Loss) | $254,536 | $(106,485) | $910,257 | $166,178 | 60 | | Total Other Comprehensive Income (Loss) | $12,637 | $(52,493) | $1,399 | $(31,359) | 60 | | Total Comprehensive Income (Loss) | $267,173 | $(158,978) | $911,656 | $134,819 | 60 | Consolidated Balance Sheets The Consolidated Balance Sheets show an increase in total assets and a significant improvement in total shareholders' equity from December 31, 2023, to December 31, 2024, while total liabilities decreased Consolidated Balance Sheets (Selected Data, in thousands) | Metric | Dec 31, 2024 | Dec 31, 2023 | Source Chunk | | :-------------------------- | :----------- | :----------- | :----------- | | Total Assets | $19,969,811 | $19,492,990 | 62 | | Total Liabilities | $18,544,372 | $19,192,183 | 63 | | Total Shareholders' Equity | $1,425,439 | $300,807 | 63 | | Cash and Cash Equivalents | $190,765 | $402,415 | 62 | | Advance Ticket Sales | $3,105,964 | $3,060,666 | 63 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows indicate strong net cash provided by operating activities in 2024, which helped offset significant cash used in investing activities (primarily property and equipment additions) and financing activities (debt repayments) Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | FY 2024 | FY 2023 | Source Chunk | | :------------------------------------ | :-------- | :-------- | :----------- | | Net Cash Provided by Operating Activities | $2,049,823 | $2,005,714 | 65 | | Net Cash Used in Investing Activities | $(1,229,388) | $(2,897,143) | 66 | | Net Cash Provided by (Used in) Financing Activities | $(1,032,085) | $346,857 | 66 | | Net Decrease in Cash and Cash Equivalents | $(211,650) | $(544,572) | 66 | | Cash and Cash Equivalents at End of Period | $190,765 | $402,415 | 66 | Non-GAAP Financial Measures & Reconciliations Terminology This section provides definitions for key financial and operational terms used throughout the report, including various GAAP and non-GAAP measures, to ensure clarity and consistent understanding - Definitions are provided for terms such as Adjusted EBITDA, Adjusted EPS, Net Yield, Capacity Days, Occupancy Percentage, and Net Leverage[40][41][42][43][44][45][46][47] Explanation of Non-GAAP Financial Measures The Company utilizes various non-GAAP financial measures to analyze performance, manage the business, and assess operating efficiency, believing they provide a more comprehensive view of trends by excluding certain non-recurring or non-cash items and foreign currency fluctuations - Non-GAAP measures like Adjusted Gross Margin, Net Yield, Adjusted EBITDA, and Adjusted EPS are used to assess operating performance, control costs, and evaluate capital use[48][50][51] - Constant Currency calculations are used to eliminate the effects of foreign exchange fluctuations, providing a clearer view of business trends[49] - Adjusted Net Income (Loss) and Adjusted EPS exclude certain amounts to supplement GAAP measures, facilitating internal comparisons and future period analysis[51] Non-GAAP Reconciling Information This section provides detailed reconciliations of various non-GAAP financial measures to their most comparable GAAP measures, along with selected statistical information, offering transparency into the adjustments made for performance analysis Adjusted Gross Margin, Net Per Diem, and Net Yield Selected Statistical Information | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | Source Chunk | | :------------------ | :------ | :------ | :------ | :------ | :----------- | | Passengers Carried | 665,788 | 648,893 | 2,926,794 | 2,716,546 | 68 | | Passenger Cruise Days | 5,881,777 | 5,856,413 | 24,593,331 | 23,311,672 | 68 | | Capacity Days | 5,834,290 | 5,903,305 | 23,445,397 | 22,652,588 | 68 | | Occupancy Percentage | 100.8% | 99.2% | 104.9% | 102.9% | 68 | Adjusted Gross Margin and Net Yield (in thousands, except per Capacity Day data) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | Source Chunk | | :-------------------------------- | :-------- | :-------- | :-------- | :-------- | :----------- | | Adjusted Gross Margin | $1,547,729 | $1,436,109 | $6,900,655 | $6,066,741 | 69 | | Net Yield | $265.28 | $243.27 | $294.33 | $267.82 | 69 | Gross Cruise Cost, Net Cruise Cost, and Adjusted Net Cruise Cost Excluding Fuel Cruise Costs (in thousands, except per Capacity Day data) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | Source Chunk | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------- | :----------- | | Gross Cruise Cost | $1,668,145 | $1,650,071 | $7,123,503 | $6,810,445 | 71 | | Net Cruise Cost | $1,106,508 | $1,099,724 | $4,544,507 | $4,327,262 | 71 | | Net Cruise Cost Excluding Fuel | $946,090 | $912,894 | $3,846,457 | $3,610,429 | 72 | | Adjusted Net Cruise Cost Excluding Fuel | $919,160 | $889,630 | $3,751,801 | $3,489,177 | 72 | | Gross Cruise Cost per Capacity Day | $285.92 | $279.52 | $303.83 | $300.65 | 72 | | Adjusted Net Cruise Cost Excluding Fuel per Capacity Day | $157.54 | $150.70 | $160.02 | $154.03 | 72 | Adjusted Net Income and Adjusted EPS Adjusted Net Income and Adjusted EPS (in thousands, except per share data) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | Source Chunk | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | :----------- | | Net Income (Loss) | $254,536 | $(106,485) | $910,257 | $166,178 | 76 | | Adjusted Net Income (Loss) | $124,729 | $(77,120) | $937,525 | $297,979 | 76 | | Diluted EPS | $0.52 | $(0.25) | $1.89 | $0.39 | 76 | | Adjusted EPS | $0.26 | $(0.18) | $1.82 | $0.70 | 76 | - Adjustments include non-cash deferred compensation, share-based compensation, extinguishment/modification of debt, and reversal of U.S. deferred tax asset valuation allowance[76][77][78] EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA (in thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | Source Chunk | | :-------------- | :-------- | :-------- | :-------- | :-------- | :----------- | | Net Income (Loss) | $254,536 | $(106,485) | $910,257 | $166,178 | 80 | | EBITDA | $509,558 | $301,119 | $2,410,372 | $1,699,275 | 82 | | Adjusted EBITDA | $468,151 | $359,649 | $2,450,804 | $1,860,731 | 82 | Net Debt and Net Leverage Net Debt and Net Leverage (in thousands) | Metric | Dec 31, 2024 | Dec 31, 2023 | Source Chunk | | :------------------------------------ | :----------- | :----------- | :----------- | | Total Debt | $13,100,490 | $14,058,925 | 83 | | Net Debt | $12,909,725 | $13,656,510 | 83 | | Adjusted EBITDA for the twelve months ended | $2,450,804 | $1,860,731 | 83 | | Net Leverage | 5.27x | 7.34x | 83 | Adjusted ROIC and Capital Expenditures Adjusted Return on Invested Capital (in thousands) | Metric | Dec 31, 2024 | Dec 31, 2023 | Source Chunk | | :-------------------------- | :----------- | :----------- | :----------- | | Adjusted EBITDA | $2,450,804 | $1,860,731 | 85 | | Less: Depreciation and Amortization | $890,242 | $808,568 | 85 | | Total | $1,560,562 | $1,052,163 | 85 | | Plus: Total long-term debt plus shareholders equity | $14,333,899 | $13,705,994 | 85 | | Adjusted Return on Invested Capital | 10.9% | 7.7% | 85 | Capital Expenditures (in millions) | Category | Q4 2024 | FY 2024 | Source Chunk | | :------------------------------------------ | :------ | :------ | :----------- | | Newbuild-Related Capital Expenditures, Pre-Financing | $79 | $619 | 87 | | Export Credit Financing for Newbuild-Related Capital Expenditures | $43 | $355 | 87 | | Newbuild-Related Capital Expenditures, Net of Financing | $36 | $264 | 87 | | Non-Newbuild Capital Expenditures | $149 | $583 | 87 | Additional Information Cautionary Statement Concerning Forward-Looking Statements This section advises readers that the report contains forward-looking statements subject to various risks, uncertainties, and factors that could cause actual results to differ materially from projections - Statements regarding future results, financial position, capital expenditures, liquidity, debt, fleet additions, macroeconomic conditions, and sustainability efforts are forward-looking[55] - Risks include adverse economic factors, indebtedness, availability of financing, fuel price volatility, regulatory changes, security of travel, and public health crises[55] - The Company disclaims any obligation to update or revise forward-looking statements, except as required by law[56] Investor Relations & Media Contacts Contact information is provided for investor relations and media inquiries - Contact Sarah Inmon for Investor Relations at (786) 812-3233 or InvestorRelations@nclcorp.com[57]