NCLH Q2 2021 Earnings

Call Details

• Call Title: Norwegian Cruise Line Q2 2021 Earnings Call
• Date: August 6, 2021 at 2:00 PM UTC
• Management Team:
  • Andrea DeMarco (Senior Vice President of Investor Relations, Corporate Communications, and ESG)
  • Frank Del Rio (President and Chief Executive Officer of Norwegian Cruise Line Holdings)
  • Mark Kempa (Executive Vice President and Chief Financial Officer)
  • Dr. Scott Gottlieb (Former Commissioner of the U.S. Food and Drug Administration and Chairman, Sail Safe Global Health and Wellness Council)

Call Summary

Financial Performance

• The company reported approximately $2.8B of cash and cash equivalents as of June 30, 2021.
• Average monthly cash burn in Q2 2021 was approximately $200M, which was slightly above prior guidance of $190M due to additional restart expenses.
• Q2 cash balance declined driven by approximately $600M of operating cash burn, approximately $150M of customer refunds for canceled voyages, and approximately $10M of net working capital and other outflow.
• The company reduced operating expenses by nearly 60% and reduced capital expenditures by over 75% during the pause in operations since March 2020.
• Initial voyages are reported as cash flow positive 'out of the gate' according to the company, supported by high onboard spend on early sailings.
• Depreciation and amortization, interest expense, and new-build related capital expenditure guidance were referenced on slide 22 but specific numeric detail was not disclosed on the call.

Guidance

• The company expects to have eight ships representing approximately 40% of total capacity operating by the end of Q3 2021.
• The company expects to have 17 ships representing approximately 75% of capacity in operation by year-end 2021.
• The company expects to complete phased relaunch of the full 28-ship fleet by April 1, 2022.
• The company expects operating cash flow to turn positive over the course of Q1 2022 based on the current resumption plan.
• The company expects average monthly cash burn to increase to approximately $285M in Q3 2021 as restart expenses accelerate.
• The company described a staged load factor plan starting vessels at roughly 60% to 70% capacity, increasing to 80% after initial days, and targeting pre-pandemic fill levels after approximately 60 days, subject to health environment changes.
• Specific forward guidance for certain line items was provided in slide materials but several slide-level numeric details were not read out on the call and thus are not disclosed here.