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NCL reported results for its third quarter ended September 30, 2009. EBITDA in the period improved by 7.1% to $151.6 million versus $141.5 million for the same period in 2008. The improvement in EBITDA was achieved despite a decline in Net Revenue in the third quarter of 15.3%. This decline resulted from a 10.1% decrease in Net Yield and a 5.7% decrease in Capacity Days. The decrease in Net Yield was primarily due to weakness experienced in passenger ticket pricing versus 2008 and was partially offset by an increase in Net Yield from onboard and other revenue. The decrease in Capacity Days resulted from the departure of Norwegian Dream from the Company’s fleet in November 2008. Occupancy Percentage for the third quarter of 2009 increased to 114.8% compared to 111.3% in the prior year. Net income in 2009 was $85.6 million on revenue of $550.7 million compared to net income of $171.2 million on revenue of $639.0 million in 2008. The decline in net income reflects foreign currency exchange translation gains in 2008 of $117.6 million.
Net Cruise Cost per Capacity Day decreased 20.1% in the third quarter of 2009 compared to the same period in 2008. The decrease in our Capacity Day cost was primarily attributable to lower fuel costs together with a decrease in crew payroll and other ship operating expenses. Additionally, the Company’s results benefited from rigorous shoreside cost saving initiatives.
Operating income in the third quarter of 2009 increased to $113.4 million from $100.6 million in 2008 with Operating Income Margin increasing 690 basis points to 27.9% from 21.0%.
Interest expense, net of capitalized interest, decreased to $25.8 million in the third quarter of 2009 from $35.1 million in 2008, primarily due to lower average interest rates in the 2009 period. Other income (expense) decreased to an expense of $(2.1) million in 2009 from income of $104.6 million in 2008, mainly due to a loss on foreign exchange translation of $(3.8) million in 2009 versus a gain of $117.6 million in 2008.
“I am pleased to see that the strategies and initiatives we have been putting in place, both on the revenue and operating sides of the business, continue to result in improved year-over-year EBITDA, even in this soft economic climate,” said Kevin Sheehan, chief executive officer of NCL. “With the departure of Norwegian Majesty on November 02, our entire fleet is now comprised exclusively of modern vessels purpose-built for our signature Freestyle Cruising. With these great assets, and the addition of the highly anticipated Norwegian Epic in 2010, I am extremely confident about NCL’s prospects for the future.”
Outlook
Fourth quarter of 2009 is substantially booked and bookings for the first quarter of 2010 are pacing ahead of last year. Recent booking activity indicates that the pricing environment continues to stabilize and that the consumer recognizes the value of cruising as a vacation option.
Construction on Norwegian Epic continues on track for her debut in the summer of 2010. “We recently announced the addition of celebrity tribute artists Legends in Concert as well as Howl at the Moon, the duelling pianos, which join Blue Man Group, Cirque Dreams and Dinner, and The Second City comedy troupe bringing our guests the best entertainment lineup at sea,” said Sheehan. “We recently introduced her first captains, hotel directors, and our first-ever entertainment director – all seasoned veterans who are more than capable of leading the most innovative ship at sea.”
On November 12 the Company closed on a financing package comprised of a $750 million secured revolving credit facility along with $450 million in senior secured notes. Proceeds were used to retire certain indebtedness and for transaction fees and expenses.
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