NCLH 2Q 2013 REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance


OVERALL:  

  • IN-LINE:  Decent 2Q results are offset by lower 3Q yield guidance.  We have been seeing pricing weakness in Alaska from our surveys for the past couple of months.  NCLH is the 1st cruise operator to acknowledge the heightened discounting environment that is impacting bookings there.  Overall, NCLH's guidance range at the start of the year was wide enough to accomodate the volatility in quarterly performance.  

NCLH 2Q 2013 REPORT CARD - nclh2

2Q GUIDANCE

  • BETTER:  2Q EPS of $0.29 came in above its guidance of $0.24-0.28.  Adjusted for the dry docks and other supplemental costs (e.g. Breakaway advertising), NCC ex fuel of 4.8% also was better than its guidance (5.0%-6.0%).

PRIDE OF AMERICA DRY DOCK

  • WORSE:  Dry dock will be completed by the end of the year, later than previously estimated
  • PREVIOUSLY:  "During her two-week dry dock, we commenced a project which converted the space previously housing an under-utilized conference center into 32 staterooms, including 24 luxury suites and 4 studio staterooms, allowing more families and, now, solo travelers to experience this unique product. Completion of this project is expected to be in early September, if not sooner. 

ALASKA

  • WORSE:  Mgmt blamed the additional capacity in the market for the underperformance in 3Q
  • PREVIOUSLY:  "The Alaska market is very, very strong. And you're right, it's absorbing a lot of new capacities for the industry. But we understood what was happening when we went into it, so it's pretty much operating the way we had expected it in our budget."

EUROPE

  • SAME:  Believes ticket yield has bottomed in this region.  
  • PREVIOUSLY:  
    • "We're starting to see some real momentum going with our booking activity in Europe through the season, so we're pretty happy about that. The pricing has come back to be more moderate to where we were hoping it would be, so check the box on that one. So I would say we're confident with the itineraries that we have around the globe and I guess confirmation of that is seeing our guidance for the rest of the year being right in the same sweet spot."
    • "The Europe market is interesting because the booking volume has really accelerated in the last number of weeks. So we're very encouraged about where we are with Europe vis-a-vis our budget anyway for the rest of the season."

CARIBBEAN

  • WORSE:  Mgmt commentary was much more subdued this time saying bookings are 'ok' and there were several weeks of disappointing results
  • PREVIOUSLY:  "On the margin, the Caribbean, there was just a short period there that it wasn't as strong as we would have liked it. It's back, being booking well. I would say that over the last 10 weeks as an example, we've had very strong bookings other than one week where it was still almost double-digit booking levels. I probably said too much there. But as well, the booking period has extended as well."  

BREAKAWAY

  • SAME:  After a strong start, it looks like Breakaway bookings are now trending below that of Epic in its inaugural year
  • PREVIOUSLY:  
    • "The Breakaway is booking very well. I would say, for the most part, the ships have booked a little bit different according to the time of the year, but right now we're right in the zone of where we were hoping to be, again, which is why we have the confidence with our guidance for the rest of the year.
    • "We're expecting to exceed the onboard experience." 

2014 OUTLOOK

  • SAME:  2014 continues to track ahead on pricing and load factor  
  • PREVIOUSLY:  "We have a higher booked position and at a higher price...we actually have some pretty decent visibility on 2014 and we're feeling pretty confident."