NCLH PRESTIGE INVESTOR DAY (PART 2)

Takeaway: Overall positive commentary out of NCLH. Pricing raised in last few weeks - a positive takeaway from the discussion

 NCLH PRESTIGE INVESTOR DAY (PART 2)

 

 

Jason Montague, President and COO Prestige

  • In the past, had acheived $25m total synergies off of $750m revenue base
  • Oceania yields bounced back to 2008 peak yields in 2012
  • Net revenue EBITDA margin should be metric to look at 
  • 50+ years old accounts for 80% of luxury consumers
  • Prestige:  Winter capacity -  Asia/Austrlaia/ French Polynesia/ Caribbean
  • 2015 capacity
    • Regent:
      • Caribbean: 10.9%
      • Europe: 36.0%
      • Alaska: 9.0%
      • Asia/Africa/Pacific: 29.1%
      • S America: 4.1%
      • Other: 10.9%
    • Oceania:
      • Caribbean: 15.7%
      • Europe: 34.1%
      • Asia/Africa/Pacific: 18.8%
      • Caribbean: 15.7%
      • S. America: 5.9%
      • World: 12.2%
      • Other: 8.3%
  • Prestige's visibility into future revs: 20-30% in advance of its industry peers
  • Prestige: only accounted for 1% of premium brand market in terms of passengers - huge opportunity
  • Sees continued double-digit international growth

Wendy Beck, CFO NCLH

  • 2015 guidance excludes Prestige-merger related amortizations in backlog, and customer relations: $101m in 2015, $38m in 2016, $35m in 2017 
  • Pricing raised in the past few weeks
  • Higher MGO grade fuel mix for 2015
  • On IPO call: wanted net leverage ratio below 4x. In 2014, Norwegian brand stand-alone net leverage was 3.8x
  • Longer-term goals:
    • 3-4% net yield growth
    • +30% ADJUSTED EBITDA margin
    • <4x net leverage ratio
    • Adjusted Net income growth: +30%
    • Adjusted EPS of $5.00 by 2017
      • From $2.80 FY 2015 (mid-point)
        • $1.74 from fleet growth  (including newbuilds); organic fleet should generate 2-3% growth
        • $0.13: scheduled interest expense 
        • $0.14- voluntary debt prepayments: $350m baked in 2016 and $440m in 2017
        • $0.19 - fuel hedges in 2015
    • ROIC: Double from IPO level's 7% to ~14% in 2018
    • Assume no share repurchases (if they use the cash to buyback shares rather than pay down debt, it will translate into additional 4 cents in EPS)
  • Weighted debt cost: 3.72%
  • Leverage targets (combined company)
    • 2015: 4.3x
    • 2016: 3.3x
    • 2017: 2.3x
  • ROIC targets (combined company)
    • Payback of Prestige ship: 4.5-5.5yr range
    • ~13% for 2017, 14% in 2018
  • Fuel:  Don't hedge MGO grade
  • Increased fuel hedges to 77% (68% previously) for 2015 currently and 12% for 2018 currently (8% previously)
  • 2014 FX exposure
    • 8% Euro (1 cent change in FX results in 4.3 bps in YoY change in yield)
    • 6% Pound (1 cent change in FX results in 2.0 bps in YoY change in yield)
    • 2% Aussie $ (1 cent change in FX results in 2.1 bps in YoY change in yield)

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