Norwegian Cruise Line Holdings reports second quarter 2021 financial results

Norwegian Cruise Line Holdings Ltd. [NCLH] (together with NCL Corporation Ltd., “Norwegian Cruise Line Holdings”, “Norwegian” or the “Company”) today reported financial results for the second quarter ended June 30, 2021 and provided a business update.

“Last week we reached a historic milestone in our Great Cruise Comeback with the successful commencement of our relaunch with the first ship in our fleet, Norwegian Jade, sailing the Greek Isles. Tomorrow will mark our first cruise in the United States in over 500 days as Norwegian Encore sets sail from Seattle to Alaska,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “As we recommence operations, we are putting health and safety at the forefront with our robust, science-backed SailSAFETM health and safety program, including our 100% vaccination policy which applies across all voyages on our three brands. We are ready and eager to welcome guests back onboard and continue to see incredible strength in our booking trends for future cruises. Our team is working tirelessly to execute on our plan to return our full fleet to operation by April 2022 to capitalize on this unparalleled pent-up demand.”

Second Quarter 2021 Results:

GAAP net loss was $(717.8) million or EPS of $(1.94) compared to net loss of $(715.2) million or EPS of $(2.99) in the prior year. The Company reported Adjusted Net Loss of $(714.7) million or Adjusted EPS of $(1.93) in 2021 which included $3.1 million of net adjustments. This compares to Adjusted Net Loss and Adjusted EPS of $(666.4) million and $(2.78), respectively, in 2020.

Revenue decreased to $4.4 million compared to $16.9 million in 2020 as voyages were once again suspended for the entire quarter.

Total cruise operating expense decreased 17.2% in 2021 compared to 2020. In 2021, cruise operating expenses were primarily related to crew costs, including salaries, food and other travel costs, fuel, and other ongoing costs such as insurance and ship maintenance.

Fuel price per metric ton, net of hedges increased to $673 from $594 in 2020. The Company reported fuel expense of $54.1 million in the period.

Interest expense, net was $137.3 million in 2021 compared to $114.5 million in 2020. The increase in interest expense reflects additional debt outstanding at higher interest rates, partially offset by lower LIBOR. Included in 2020 were losses on extinguishment of debt and debt modification costs of $21.2 million.

Other income (expense), net was income of $25.5 million in 2021 compared to expense of $(14.4) million in 2020. In 2021, the income primarily related to gains on fuel swaps not designated as hedges.

2021 Outlook:

As a result of the COVID-19 pandemic, while the Company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with certainty, it will report a net loss for the third quarter ending September 30, 2021 and expects to report a net loss until the Company is able to resume regular voyages.

As of June 30, 2021, the Company had hedged approximately 43%, 37% and 14% of its total projected metric tons of fuel consumption for the remainder of 2021, 2022 and 2023, respectively. The following table provides amounts hedged and price per barrel of heavy fuel oil (“HFO”) which is hedged utilizing U.S. Gulf Coast 3% (“USGC”) and marine gas oil (“MGO”) which is hedged utilizing Gasoil.