CONF CALL
- 6.7% average increase in beverage prices
- $1 in net yields translates into $15m in bottom line
- Market-to-fill strategy: 172 days booked (154 days in Q1 2014). 39% more revenue on the books for 2016 vs 2015 at same time last year
- Freechoice style promotion resulted in record-breaking Wave demand for Norwegian
- Every quarter in 2015 higher load factor than 2014. 2016 load factor has doubled what it was in 2015 at same time (Norwegian brand only)
- German/UK sales offices joined forces in Prestige acquisition
- "Incremental Reinvestment efforts: crucial to ???? customers
- Norwegian Escape: booked better 10x than Getaway.
- Oceania Siriena: record booking days
- Lower interest expense: lower than expected interest rates and better group pricing on credit facilities due to better leverage metrics
- 1Q higher costs: receipt of technical parts and increased marketing expense
- NCC: $9.1m benefit on mark-to-mark contingency (contingent of $50m of Prestige shareholders)
- 1Q: $401 at the pump oil price (-39% YoY)
- Norwegian Star drydock in April - repairs under warranty but lost revenue from canceled 15 day Panama sailing
- 2015 NCC guidance: unchanged as $20m 'reinvestment' offset better cost synergies
- Q2 2015 capacity: 29% in Caribbean, 27% in Europe, 12% Alaska, 4% Asia/Africa/Pacific/World Cruise
- Final tally of synergies will be during Q2 conf call
Q & A
- Why was net yield FY 2015 guidance not raised? Combination of things: Star drydock, FX hit later
- Sees prices/diem going higher in 2016
- When Q2 integration efforts are done, they will do a China study group and expect to complete by end year.
- "Incremental reinvestment costs ($20m in 2015, $40m in 2016)" - sales force/marketing efforts
- No benefits baked into 2015/2016 guidance
- By 2017, EPS would hit $5 (had included $50m synergy target in 2016)
- Now additional $25m net synergies boost
- Feel stronger today $5 is achievable
- Revenue synergies: 2/3 synergies onboard yield, 1/3 ticket synergy. More opportunities were in ticket.
- 1Q 2015 synergies: 75% in ticket (more towards Norwegian). 25% in onboard synergies (skewed towards Prestige)
- Deferred revenue of $21m: $18-19m remaining for next few quarters.
- Fuel guidance: MGO fuels costs go up in Q3 but will go back down in Q4
- Market color: Pretty steady across all regions. A little weakness in exotic itineraries in Oceania (Africa/Asia). Alaska doing well. Escape doing well.
- Increase in beverage prices: have not seen a decrease in consumption
- FX sensitivities: $0.003 euro, Canadian $0.003, Australia $0.002
- Feel there is more opportunities on synergies
- $27m headcount reductions (10% of payroll) for 2016 ---pretty much done there in cutting costs
- Will not eliminate close-in discounting. Applaud RCL for taking that step
- In Q4 2015, could start to pay down some debt or share repurchase
- Weighted cost of debt: 3.7%
- Share repurchase has higher priority than issuing a dividend