NCLH Q2 2022 Earnings

Call Details

• Call Title: Norwegian Cruise Line Q2 2022 Earnings Call
• Date: August 9, 2022 at 2:00 PM UTC
• Management Team:
  • Frank Del Rio (President and Chief Executive Officer)
  • Mark Kempa (Executive Vice President and Chief Financial Officer)
  • Jessica John (Vice President of Investor Relations, ESG, and Corporate Communications)

Call Summary

Financial Performance

• The company generated approximately $260 million of operating cash flow for the second quarter, marking the first full-quarter positive operating cash flow since the pandemic start.
• Total revenue per passenger cruise day in Q2 was up approximately 20% versus 2019 levels, reflecting strength in ticket pricing and onboard revenue.
• Load factor for Q2 was approximately 65%, which management stated was in line with prior guidance and materially improved from the prior quarter's 48% load factor.
• Advanced ticket sales (ATS) balance stood at $2.5 billion at quarter end, representing an increase of over $300 million versus the prior quarter.
• Advance ticket sales growth in the quarter was reported as over 40%, with $1.5 billion in ATS recognized as the quarter's growth metric and the highest quarterly level in three years.
• The company reiterated targets for slightly positive adjusted EBITDA in the second half of 2022 and positive adjusted free cash flow in Q4 2022 (non-GAAP metrics).
• Approximately $1.5 billion of the total ATS balance at quarter end was associated with bookings already within the final payment window and subject to cancellation penalties.

Guidance

• Load factors are expected to increase to the low 80% range in the third quarter, with July already reported at 85%.
• Management expects load factors to reach historical 100%+ levels beginning in the second quarter of 2023.
• Net per diem growth for the first half of 2022 versus the first half of 2019 was reported at 18%.
• Total revenue per passenger cruise day is expected to increase by high single digits versus 2019 levels in the third quarter.
• Pricing for 2023 was described as running in excess of 20% above 2019 across all three brands.
• Adjusted net cruise costs excluding fuel per capacity day are expected to decrease by approximately 10% in the second half of 2022 compared to the first half.
• The company expects net cruise cost excluding fuel per capacity day in 2023 to exceed 2019 levels due to inflationary impacts and fleet composition changes.
• The next financial milestones cited were slightly positive adjusted EBITDA in H2 2022 and positive adjusted free cash flow in Q4 2022 (both non-GAAP).