In the face of lower yields in the Caribbean, fuel cost savings and the new share repurchase program are the offsets. Street remains overwhelmingly bullish.
CONF CALL
- 23% increase in 1Q capacity
- Getaway/Breakaway in 1Q: good pricing, onboard revenue improvements
- 1Q: Driving price at the expense of occupancy
- 2014: Wave Season in normal pressure. Brutal winter/polar vortex hurt consumer spending and reason for lower yield guidance
- Most agents we contact with said the cold winter helped bookings
- 1Q: Incremental dry dock- Norweigan Spirit dry dock of 3 weeks
- 1Q: Additional $2MM in onboard cost upgrade, also increased security for Norweigan Jade due to incident
- 1Q weighted cost of debt: 3.8%; should improve at Escape and Bliss enter fleet as financing is cheap
- Income tax benefit: change in corporate structure
- Rolling over strong net yield comps from 2013
- In a promotional environment
- 2Q: 38% in Caribbean, 23% Europe, 11% Bermuda, 10% Alaska
- European market: improved pricing/occupancy
- Alaska: Norweigan Sun unique itinerary doing well; stronger pricing/bookings
- Epic: decision to move to Barcelona in April 2015
- Removing transatlantic voyage, further improving yields
Q & A
- Timing of share buyback: feel stock not reflective of company potential particularly as cash builds in 2H 2014
- Pricing comparisons: 800/900 bps different from other players
- 1Q: give up a little bit on load
- Asia: on their radar
- Genting ownership: no new news, cleared requirement with HKSE; stock right where they want it to be
- Comfortable sitting and waiting but not happy about stock price
- Caribbean trends: Wave season did not start out robust; booking trends since mid-Feb improved (some due to promotions); feel a little better about landscape
- Europe: quite confident trend going right direction but off of very low comps; could see a couple more years of nice growth
- Want to get past Q2
- Q4 too early to tell
- Net yield downward revision: driven by price, not onboard
- Getaway: $5MM fuel improvement
- 2015 deployment: Europe (21%), Caribbean (45%)
- One competitor had been holding price but NCLH would not be 'reckless' in holding price for empty cabins
- Escape decision to homeport in Miami: Epic redeployed to Europe. Caribbean 2015/2016 capacity roughly flat
- Book load factors: highly favorable (esp Europe: Baltic/Canary/Med); on par with Hawaii; heavily booked in Canada/New England; Caribbean: still has opportunity
- Pricing by region: Europe (up double digits); Alaska (low single digit); Hawaii( doing well); Canada/New England (priced well); Caribbean (lower than where they want to be)
- Net yield reduction: Caribbean is the reason
- Core fleet vs 2 new ships: contraction in overall industry but Getaway/Breakaway still maintain double digit premiums
- We saw this in our pricing survey where the core fleet pricing is dropping faster than that of Getaway/Breakaway.
- Industrywide Caribbean capacity in 2015: cautiously optimistic; will be better environment in 2015.
- Any share repurchases not included in guidance
- Fuel efficiency: seeing in organic fleet ($2.5m), Getaway $5-6m better
- Q3: solidly booked, environment looks good