NCLH 3Q CONFERENCE CALL NOTES

Like CCL and RCL, NCLH expressed caution over the Caribbean environment.  2014 guidance was a tad short of what the Street was expecting.

CONF CALL 

  • 3Q capacity increased by 14.9%
  • 3 ships in Alaska for 1st time since 2009
  • Hawaii capacity increased slightly; Pride dry dock (24 luxury suites)
  • Breakaway:  guest satisfaction levels same levels as Epic introduction
  • Escape: Fall 2015; Bliss: Spring 2017
  • Environment has been more challenging than expected in the beginning of the year
  • 16 days of govt shutdown coincided with difficult booking environment; heightened close-in booking environment in 3Q
  • 3Q net ticket increased 5% and onboard yields increased 1.5% - helped by Breakaway
  • 3Q Weighted average cost of debt: under 4%
  • 4Q deployment:  55% Caribbean, 17% Europe, remaining spread between Hawaii, Panama Canal, Bermuda, and Other
  • 4Q:  dry dock for Norwegian Sky and promotional spending for Getaway
  • 2014 adjusted NCC guidance: 1-2%
  • Getaway:  7-day year-round to Caribbean (1st time in many years)
    • Feeling good about Getaway based on Breakaway results
  • Pearl- chartered ship so will reduce # of Caribbean itineraries for summer 2014
  • 2014 GUIDANCE : +60% EPS growth $2.20 (below consensus of $2.29) but comfortable with low-mid $2.20 range

Q & A

  • 1Q bookings a little behind; all other quarters ahead
    • Easter calendar effect (booking momentum into 2Q)
    • Mid-single digit price improvement
  • Pricing above mid-single digits for 2014 overall
  • Want to see Caribbean stronger, particularly in 1Q
  • 2014 net yields:  low/mid 4s 
    • 1Q/2Q:  healthy pricing environment in Caribbean
    • High promotional environment 
  • Caribbean promotional environment:  more competitive
    • Last month or so, it has been consistent
  • 2014 European deployment about 20%
    • Pricing has been positive; mid-single digit growth
    • Feeling pretty good
  • 2014:  64% hedged in fuel
  • New ship premium are 'in the double digits'- Getaway lost some premium lately since they priced very high in the beginning (our pricing survey confirms this)
    • Has premium widened?  Not really.
  • Lots of opportunities to drive firm efficiencies (e.g. Six Sigma); 500bps by 2017; invested capital growth of 14%
  • Getaway bookings:  consistent with mgmt expectations
  • Europe future capacity:  biggest in NCLH's history; am comfortable with current capacity
  • 3Q Onboard:  casino was strong; 4Q onboard is back to normal levels