Norwegian triples its earnings over 2013 results - due to new ships
Norwegian Cruise Line just reported its financial results for first calendar quarter of 2014, provided guidance for the next quarter and full year, 2014 and also announced a three-year, $500 million share repurchase program.
First Quarter Results
"Our strong results in the quarter include an almost four-fold increase in earnings…" said Kevin Sheehan, President and Chief Executive Officer of Norwegian Cruise Line. "With both Breakaway class ships now in our fleet, it is easy to appreciate the impact of their impressive earnings power, which includes commanding double-digit premiums over other Norwegian ships in the same itinerary."
For the first quarter of 2014, the Company reported an increase in Adjusted EPS to $0.23 on Adjusted Net Income of $49.6 million compared to $0.06 and $12.9 million, respectively for the same period in 2013. On a GAAP basis, diluted earnings per share and net income were $0.24 and $51.3 million, respectively.
Net Revenue in the period increased 27.8% to $499.3 million, driven by a 23.2% increase in Capacity Days and a 3.8% improvement in Net Yield. The increase in Capacity Days was primarily from the addition of Norwegian Breakaway and Norwegian Getaway to the fleet in May 2013 and January 2014, respectively. The Net Yield improvement of 3.8%, or 3.9% on a Constant Currency basis, was a result of higher passenger ticket and onboard and other revenue. Revenue for the period increased to $664.0 million from $527.6 million in 2013.
The Company recorded an income tax benefit of $9.4 million compared to an expense of $2.2 million in the prior year. The income tax benefit in 2014 is primarily related to the election of an alternative, acceptable tax methodology in connection with the change in the Company's corporate entity structure completed in 2013. This election resulted in a $6.7 million non-recurring benefit which has been excluded from Adjusted Net Income and Adjusted EPS.
2014 Guidance and Sensitivities
In addition to the results for the first quarter, the Company also provided the following guidance for the second quarter and the full year 2014, along with accompanying sensitivities.
"Our young modern fleet, including our earnings-rich newbuilds, coupled with our strategy of consistent deployment, particularly our commitment to the European market, allow us to reiterate our full year adjusted EPS guidance, which translates into 60% earnings growth," said Sheehan.
Here are the highlights of this quarter:
- An adjusted Earnings Per Share improvement to $0.23 from $0.06 last year
- Net Yield increase of 3.8% (3.9% on a Constant Currency basis)
- Revenue increase of 25.9% to $664.0 million
- Adjusted EBITDA increase of 39.6% to $139.3 million; 200 basis point margin improvement
- Successful introduction of Norwegian Getaway to the fleet
$500 Million Share Repurchase Program
The Company announced its Board of Directors has authorized a three-year, $500 million share repurchase program where the Company may repurchase its ordinary shares at such times as it deems appropriate, subject to market conditions and other considerations -in the open market, in privately negotiated transactions, in accelerated repurchase programs or in structured share repurchase programs, and any repurchases may be made pursuant to Rule 10b5-1 plans.
"Our focus at Norwegian is to drive shareholder value by strengthening our product proposition, honing our strategy of driving demand and increasing returns through our disciplined newbuild and fleet enhancement programs. This share repurchase program complements these initiatives by allowing us to be flexible and opportunistic to repurchase shares at attractive levels," said Sheehan.
As of March 31, 2014 the Company had approximately 205 million ordinary shares outstanding. The program does not obligate Norwegian to acquire any particular amount of ordinary shares and the program may be modified or suspended at any time at Norwegian's discretion.