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NCLH 4Q12 CONF CALL NOTES

NCLH 4Q12 CONF CALL NOTES


"We are very pleased to begin our journey as a public company by posting strong results for 2012. In addition, our fourth quarter results marked our eighteenth consecutive quarter of year-over-year Adjusted EBITDA growth" 

- Kevin Sheehan, President and Chief Executive Officer of Norwegian Cruise Line

CONF CALL NOTES

  • Despite the weaker than expected results from Europe and impact of Super Storm Sandy, Net Yields increased 2%. Full year load factor was only down 0.6%. Capacity for the year increased 1.7%. 
  • Hedging strategy of using swaps and collars.  Also look at ways of cutting fuel consumption.
  • Leverage is now below 5x and both rating agencies have upgraded their ratings as a result of the IPO and debt transactions consumated post IPO
  • Capacity for the next Q will be lower YoY but higher for the year of 2013.
  • Taking delivery of Norweign Breakaway in a few months, will bring the best of NYC to the seas

Q&A

  • Seeing a lot of momentum on booking patterns over the last 5 weeks
  • Demand during WAVE season by region?
    • This year Christmas and NYE fell on Tuesday so it impacted bookings these weeks, however, since then they have been booking in that 20%ish zone similar to RCL.  
    • Europe is booking in-line with the rest of their itineraries for now.  When they get closer in, that's when they would drop prices or raise prices on Europe depending on booking patterns towards the end of Q1. Still too early to tell.
  • Seeing a healthy booking period - which has extended from 2012.  Reason for the wide guidance is that they are being cautious since it's their first quarter as a public company. Hope to narrow guidance as the year progresses. 
  • Only have 11 ships so they have more volatility when it comes to dry docking and NCC costs ex Fuel. They bought the Genting ship and that came with a $5MM charter fee.  Now that goes away.  3 dry docks per year are the right number for them.
  • Nothing unique to the Epic vs. their other ships.  It's a double digit improvement to the other ships - people stay up later and spend more money on drinks and the casino. The design of these new ships are probably even a little better than Epic.
  • Back on Jan 23rd they issued a statement to their passengers on the Jade that they wouldn't enter the Holy Land region given what was occurring and that cost them a little yield.
  • Alaska: Had 3 ships in the region up until a few years ago when the state put a large tax on their gas. Then the taxes were rolled back and they are bringing the 3rd ship back. 
  • Putting a scrubber on the Pride of America - costs a lot but allows them to use fuel more efficiently. Will do that with their new ships.
  • Drove down their fuel consumption by 1.5% last year due to efficiency measures and feel like they can continue to do that.

HIGHLIGHTS FROM THE RELEASE

NCLH 4Q12 CONF CALL NOTES - nclh

  • "Contributing to the increase in revenue were slightly higher Capacity Days in the quarter and a Net Yield improvement of 2.5%, or 2.7% on a Constant Currency basis, from higher ticket pricing and onboard spend per Capacity Day."
  • " NCC ex Fuel decreased ... from the timing of certain repairs and maintenance expense, including dry-docks, and business improvement initiatives."
  • "The delivery of our Breakaway and Breakaway Plus class vessels, designed to improve on the already successful platform of Norwegian Epic, along with our strong product proposition that offers a consistent experience throughout our fleet, has Norwegian well positioned for 2013 and beyond."
  • [1Q13] "Adjusted EPS guidance based on net income excluding one-time charges related to the Company's initial public offering, issuance of $300 million in senior unsecured notes, redemption of the full amount of the Company's outstanding $450 million 11.75% senior secured notes due 2016 and partial redemption of our outstanding $350 million 9.5% senior unsecured notes due 2018."
  • "On January 24, 2013 the Company closed on an initial public offering ("IPO") of 27,058,824 of its ordinary shares, including shares sold as a result of the full exercise by the underwriters of their option to purchase additional shares, at a price of $19.00 per share."
  • "On February 6, 2013, the Company closed on the sale of $300 million of senior unsecured notes due February 2018 at a coupon of 5.00% per annum. The notes were issued at a price of 99.451%. The aggregate net proceeds of the IPO and the notes offering, after deducting underwriting discounts, commissions, initial purchasers' discount and estimated fees and expenses, were used to prepay certain credit facilities, repay amounts pursuant to the Norwegian Sky Agreement, redeem the full amount of the outstanding $450 million 11.75% senior secured notes due 2016, redeem a portion of the outstanding $350 million 9.5% senior notes due 2018 and for general corporate purposes."