Norwegian Cruise Line Holdings Ltd. (NCLH) Slides on Outlook Cut Due to Brexit

Shares of Miami, Florida, based Norwegian Cruise Line Holdings Ltd. (NCLH) rose on Tuesday, against the backdrop of a slightly higher day in stocks overall. Norwegian Cruise Line's stock was down 11.76%, losing $5.05 per share, to close at $37.91, on volume of 10,883,142 shares. On Tuesday, the company released its operating results for the second quarter, and revised its forward guidance downward due to weaker demand for cruise bookings as well as from the fallout of Brexit.

Norwegian Cruise Line Holdings Ltd. was founded in 2010, but it has been operating since 1966.
The company is a holding company for its global cruise line that offers cruises in North America, the Mediterranean and Baltic Seas, Central America, Bermuda and the Caribbean Sea. It also offers an entirely inter-island itinerary in Hawaii and also a wide variety of cruises ranging from one day to three weeks. The company's stock trades on the NASDAQ.

On Tuesday, Norwegian Cruise Line reported its second quarter, 2016, results, for the quarter ended June 30. The company posted net income of $145.2 million, or $0.64 per share, compared with $158.5 million, or $0.69 per share for the second quarter of 2015. On an Adjusted Net Income basis, the company reported $192.6 million, or $0.85 per share, compared to $171.6 million, or $0.75 per share in the prior year.

Revenues came in at $1.2 billion, representing a 9.3% increase over the $1.1 billion for the second quarter of 2015. Meanwhile, adjusted net revenue was reported at $917.8 million, an increase of 10.3% over the $832.4 million in 2015.

Also helping the bottom line was the decrease in fuel prices. The company paid $469 per metric ton of fuel, representing a decline of 15.9% compared to the $558 per metric ton fuel in 2015.

But what hurt the stock on Tuesday was the lowering of the company's forward guidance, for both the third quarter and for the full year of 2016. For the full year, the company expects adjusted earnings per share to be in the range of between $3.35 to $3.45. This is below previous guidance of $3.65 to $3.85 per share for the full year, and well short of the stated target of $5.00 adjusted earnings per share for 2017, which the company also no longer expects to achieve.

The company cited weakness in their North American and European bookings, as well as the weaker British pound as a result of the Brexit vote.

Said Norwegian Cruise Line Holdings president and chief executive officer, Frank Del Rio, "As we enter the second half of the year, we are revising our earnings expectations primarily as a result of four factors: continued weak demand from our core North American consumer for European sailings at a time when half of our fleet is deployed in the region, including eight of our highest yielding ships; the effect of a weaker British pound post the Brexit vote; an adjustment to earlier pricing expectations for Miami-based Caribbean itineraries, which continue to outperform prior year despite a doubling of capacity in the low season months; and the impact from maintaining pricing discipline to minimize discounting...With this revision to expectations, we are confident we will deliver strong earnings growth for full year 2016 and grow 2017 Adjusted EPS in the range of 15% to 25%."

Other NCLH News

Foreign currency fears weigh over cruise line sector
One of the critical factors cited by Norwegian Cruise Line for lowered outlook.

Stifel Cuts Target On Norwegian Cruise From $69 To $55 Ahead Of Q2 Earnings
Target price lowered due to increasingly difficult operating environment for cruise lines.

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Published on Aug 10, 2016
By Kevin Mercadante

Copyrighted 2016. Content published with author's permission.

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