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Norwegian Cruise Line (NCLH) Down 6.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Norwegian Cruise Line (NCLH - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Norwegian Cruise Line due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Norwegian Cruise Q4 Earnings Lag
Norwegian Cruise reported fourth-quarter 2020 results, wherein the bottom and top lines missed the respective Zacks Consensus Estimate. Nonetheless, the company has been witnessing strong 2022 bookings, as people look forward to post-vaccination vacations.
Earnings & Revenue Discussion
Norwegian Cruise reported adjusted loss per share of $2.33, wider than the Zacks Consensus Estimate of a loss of $2.31. Notably, the company reported earnings per share of 73 cents in the prior-year quarter.
Revenues of $9.6 million missed the consensus mark by 2.5%. Furthermore, the figure declined 99.4% year over year. The downside can be attributed to a decline of 99.2% and 99.6% in passenger ticket revenues, and onboard and other revenues, respectively.
Expenses & Operating Results
Total cruise operating expenses plunged 76.7% for the quarter under review from the year-ago period. The company’s expenses for the quarter primarily stemmed from crew costs, which include salaries, food and other repatriation costs, fuel, and other ongoing expenses such as insurance and ship maintenance.
Gross cruise costs per capacity day declined 64.8% from the prior-year quarter. Adjusted net cruise costs (excluding fuel) per capacity day were down 51.9% year over year at constant currency. Fuel price per metric ton (net of hedges) was up 13% from the year-ago quarter to $574 for the quarter under review.
Net interest expenses were $159.2 million for the fourth quarter, up from $73.2 million in the year-ago period.
2020 Highlights
Total revenues decreased 80.2% from the prior-year figure to $1,279.9 million, thanks to cancellation of the vast majority of sailings in 2020 due to the COVID-19 pandemic, which in turn resulted in a 78.6% decrease in capacity days.
Norwegian Cruise reported adjusted net loss of $8.64 per share for 2020. Adjusted earnings of $5.09 per share were recorded in 2019.
Balance Sheet
Cash and cash equivalents as of Dec 31, 2020 were $3.3 billion, up from $252.9 million in the corresponding period of 2019. Long-term debt at 2020-end totaled $11.7 billion, higher than $6.1 billion at the end of 2019.
The company's monthly average cash burn for fourth-quarter 2020 was approximately $190 million, which included $15 million per month of additional relaunch-related expenses. For first-quarter 2021, it expects the average cash burn rate to temporarily remain elevated at approximately $190 million per month, or $170 million — excluding non-recurring debt modification costs — as it ramps down relaunch-related expenses and repatriates crew.
Outlook
Norwegian Cruise expects to report net loss, both on GAAP and adjusted basis, for first-quarter 2021. The company expects to report net loss until it resumes voyages. While overall booking volumes remain below historical levels, it has been registering solid demand for future cruise vacations. Despite reduced sales and marketing investments, bookings have been strong, resulting in an elongated booking window, with guests booking further into the future. Although the company’s overall cumulative booked position for second-half 2021 remains below historical levels, its pricing for the said period is in line with the pre-pandemic level (even after including the dilutive impact of future cruise credits).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Norwegian Cruise Line has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Norwegian Cruise Line has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Norwegian Cruise Line (NCLH) Down 6.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Norwegian Cruise Line (NCLH - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Norwegian Cruise Line due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Norwegian Cruise Q4 Earnings Lag
Norwegian Cruise reported fourth-quarter 2020 results, wherein the bottom and top lines missed the respective Zacks Consensus Estimate. Nonetheless, the company has been witnessing strong 2022 bookings, as people look forward to post-vaccination vacations.
Earnings & Revenue Discussion
Norwegian Cruise reported adjusted loss per share of $2.33, wider than the Zacks Consensus Estimate of a loss of $2.31. Notably, the company reported earnings per share of 73 cents in the prior-year quarter.
Revenues of $9.6 million missed the consensus mark by 2.5%. Furthermore, the figure declined 99.4% year over year. The downside can be attributed to a decline of 99.2% and 99.6% in passenger ticket revenues, and onboard and other revenues, respectively.
Expenses & Operating Results
Total cruise operating expenses plunged 76.7% for the quarter under review from the year-ago period. The company’s expenses for the quarter primarily stemmed from crew costs, which include salaries, food and other repatriation costs, fuel, and other ongoing expenses such as insurance and ship maintenance.
Gross cruise costs per capacity day declined 64.8% from the prior-year quarter. Adjusted net cruise costs (excluding fuel) per capacity day were down 51.9% year over year at constant currency. Fuel price per metric ton (net of hedges) was up 13% from the year-ago quarter to $574 for the quarter under review.
Net interest expenses were $159.2 million for the fourth quarter, up from $73.2 million in the year-ago period.
2020 Highlights
Total revenues decreased 80.2% from the prior-year figure to $1,279.9 million, thanks to cancellation of the vast majority of sailings in 2020 due to the COVID-19 pandemic, which in turn resulted in a 78.6% decrease in capacity days.
Norwegian Cruise reported adjusted net loss of $8.64 per share for 2020. Adjusted earnings of $5.09 per share were recorded in 2019.
Balance Sheet
Cash and cash equivalents as of Dec 31, 2020 were $3.3 billion, up from $252.9 million in the corresponding period of 2019. Long-term debt at 2020-end totaled $11.7 billion, higher than $6.1 billion at the end of 2019.
The company's monthly average cash burn for fourth-quarter 2020 was approximately $190 million, which included $15 million per month of additional relaunch-related expenses. For first-quarter 2021, it expects the average cash burn rate to temporarily remain elevated at approximately $190 million per month, or $170 million — excluding non-recurring debt modification costs — as it ramps down relaunch-related expenses and repatriates crew.
Outlook
Norwegian Cruise expects to report net loss, both on GAAP and adjusted basis, for first-quarter 2021. The company expects to report net loss until it resumes voyages. While overall booking volumes remain below historical levels, it has been registering solid demand for future cruise vacations. Despite reduced sales and marketing investments, bookings have been strong, resulting in an elongated booking window, with guests booking further into the future. Although the company’s overall cumulative booked position for second-half 2021 remains below historical levels, its pricing for the said period is in line with the pre-pandemic level (even after including the dilutive impact of future cruise credits).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Norwegian Cruise Line has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Norwegian Cruise Line has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.