Sign in
NC

Norwegian Cruise Line Holdings Ltd. (NCLH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $2.13B and GAAP diluted EPS was ($0.09); Adjusted EBITDA ($453M) came in above company guidance, while Adjusted EPS ($0.07) was slightly below guidance due to a $0.05 FX headwind .
  • Relative to Wall Street consensus, NCLH modestly missed on EPS ($0.07 vs $0.09) and revenue ($2.13B vs $2.15B); guidance for Q2 Adjusted EPS ($0.51) is broadly in line with consensus ($0.516) *.
  • Full-year guidance was maintained for Adjusted EBITDA ($2.72B), Adjusted EPS ($2.05), and margin (~37%), but management lowered Net Yield growth to 2–3% and improved Adjusted Net Cruise Cost ex-fuel growth to 0–1.25% to reflect booking mix and cost programs .
  • Booking commentary flagged short-lived April “choppiness” concentrated in Q3 Europe; management is prioritizing price over load factor and accelerating cost efficiencies, while highlighting tailwinds from fleet optimization (vessel charters), Norwegian Aqua delivery, and Great Stirrup Cay enhancements .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted EBITDA of $453M beat guidance ($435M) on stronger Net Yield (+1.2% cc) and unit cost control; “net yield increased 1.2% above our expectations... drove adjusted EBITDA to $453 million, also above guidance” .
    • Fleet and product upgrades advancing: delivery of Norwegian Aqua (Prima Plus), dry-docks on Bliss and Breakaway, and announced Great Stirrup Cay pier and amenity expansion; “we welcomed Norwegian Aqua… and completed impactful refurbishments” .
    • Balance sheet actions: majority of 2025 exchangeable notes refinanced into 2030 notes, reducing diluted share count by ~15.5M without raising net leverage .

  • What Went Wrong

    • EPS below company guidance due to FX losses ($23M, $0.05/share) and reduced Capacity Days; “Adjusted EPS declined to $0.07, slightly below guidance due to foreign exchange losses of $0.05” .
    • Softness in Q3 Europe bookings created occupancy headwinds; “choppiness… mostly related to our European Q3 itineraries… prioritizing price over load factor” .
    • Net leverage increased to 5.7x at quarter-end from ship delivery timing (debt added, EBITDA benefit lag); “Net leverage temporarily increased to 5.7x… reflecting the delivery of Norwegian Aqua” .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$2,806.6 $2,109.4 $2,127.6
GAAP Diluted EPS ($)$0.95 $0.52 ($0.09)
Adjusted EPS ($)$0.99 $0.26 $0.07
Operating Income ($USD Millions)$691.2 $214.7 $200.9
EBITDA ($USD Millions)$875.5 $509.6 $407.7
Adjusted EBITDA ($USD Millions)$931.0 $468.2 $453.1
KPIsQ3 2024Q4 2024Q1 2025
Capacity Days6,033,707 5,834,290 5,700,563
Occupancy (%)108.1% 100.8% 101.5%
Passengers Carried812,529 665,788 669,099
Net Yield ($ per Capacity Day)$336.48 $265.28 $279.51
Net Per Diem ($)$311.31 $280.59 $275.32
Adj. Net Cruise Cost ex Fuel ($ per Capacity Day)$154.84 $157.54 $169.33
Estimates Comparison (S&P Global)Q1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 Company Guidance
EPS ($)0.0908*0.07 0.5156*~0.51
Revenue ($USD Millions)2,146.8*2,127.6 2,557.5*N/A

Values retrieved from S&P Global.
Note: Company focuses on Adjusted EBITDA; consensus EBITDA not shown to avoid basis mismatch with company-reported Adjusted EBITDA.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Yield (cc)FY 2025~3.0% 2.0%–3.0% Lowered
Adjusted Net Cruise Cost ex Fuel / Capacity Day (cc)FY 2025~1.25% 0%–1.25% Improved (lower growth)
Adjusted EBITDAFY 2025~$2.72B ~$2.72B Maintained
Adjusted Operational EBITDA MarginFY 2025~37% ~37% Maintained
Adjusted Net IncomeFY 2025~$1,065M ~$1,045M Lowered
Adjusted EPSFY 2025~$2.05 ~$2.05 Maintained
OccupancyFY 2025~103.4% ~102.5% Lowered
Diluted Wtd Avg SharesFY 2025~520M ~511M Lowered (refi impact)
Adjusted EPSQ2 2025N/A~$0.51 New
Adjusted EBITDAQ2 2025N/A~$670M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Pricing vs OccupancyRecord Net Yield, tight revenue mgmt; occupancy >106% in Q3 Prioritize price over load factor amid Q3 Europe choppiness Shift to price discipline; occupancy moderated
Cost Efficiency/TransformationUnit cost beats; cost optimization ongoing Accelerating $300M+ cost efficiencies; sub‑inflationary NCC ex fuel growth Strengthening cost muscle
Digital/TechnologyFleet-wide Starlink completed Revamped NCL app (800K users; drives pre-cruise spend, reduces lines) Building digital revenue and CX
Product/FleetStrong product; Luna opened for sale; upgrades Norwegian Aqua delivery; dry-docks; Great Stirrup Cay expansion New capacity and amenity tailwinds
Tariffs/MacroFX benefits in Q4; macro stable Tariffs not meaningful to costs; macro uncertainty affects Europe booking rounding Macro creates regional demand noise
Balance Sheet/LeverageNet leverage down to 5.58x; refinancings Exchangeables refinanced, diluted share count -15.5M; leverage to ~5x by YE25 Continued de‑risking

Management Commentary

  • “Our first quarter met or exceeded all key expectations… net yield increased 1.2% above our expectations and… adjusted EBITDA to $453 million, also above guidance… adjusted EPS ended… $0.07, slightly below guidance driven by a $0.05 FX headwind.” — CEO Harry Sommer .
  • “We… saw some choppiness in bookings on the remaining Q3 inventory… prioritizing price over load factor… leaves us potential for upside if conditions improve.” — CEO Harry Sommer .
  • “Growth in adjusted net cruise costs, excluding fuel, came in lower than expected… excluding the $8 impact from dry docks, unit cost growth would have been 1.2%, well below inflation.” — CFO Mark Kempa .
  • “Net leverage temporarily increased to 5.7x… reflecting the delivery of Norwegian Aqua… we expect leverage… ending the year at approximately 5x.” — CFO Mark Kempa .
  • “We absolutely are going to market Great Stirrup Cay more… near 100% success rate of visiting with the new pier… visits to exceed one million by 2026.” — CEO Harry Sommer .

Q&A Highlights

  • Bookings/Europe Q3: Multiple questions focused on April “choppiness” and Q3 Europe; management reiterated quick normalization and firm commitment to protect price over load, with deployment adjustments in 2026 (shorter itineraries) to improve booking curve and margins .
  • Onboard spend: Trends remain strong; once onboard, guests spend at solid levels, supporting Net Per Diem .
  • Cost flexibility: Management accelerating transformation, commercial negotiations, and technology while protecting/increasing product quality, keeping NCC ex fuel growth low .
  • Marketing: Contrary to cost cuts, marketing spend is increasing to support demand and pricing integrity; included within NCC ex-fuel guidance .
  • Fleet optimization: Charter agreements for four vessels across brands allow simplification, younger fleet average, and continued cash flow from assets .

Estimates Context

  • Q1 2025: EPS came in at $0.07 vs consensus $0.0908 (miss); revenue $2,127.6M vs $2,146.8M (miss). Primary drivers: reduced Capacity Days, FX losses ($23M, $0.05/share), and dry-dock/repositioning impacts .
  • Q2 2025: Company guides Adjusted EPS ~$0.51 and Adjusted EBITDA ~$670M; EPS guidance aligns closely with consensus $0.5156; occupancy guided ~103.2% and Net Yield +~2.5% (cc) .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term: Expect disciplined pricing to constrain occupancy gains, but cost programs and product enhancements support margins; shares outstanding reduced via exchangeable refi is EPS‑accretive .
  • Mid-term: FY25 margin expansion (~37%) and deleveraging to ~5x net leverage maintained despite lower Net Yield guidance; cost efficiency program provides flexibility to offset top-line variability .
  • Demand mix: Q3 Europe remains the focal risk; Q4 Caribbean and “close-to-home” mix, plus Great Stirrup Cay upgrades, provide yield and cost tailwinds entering late 2025/2026 .
  • Product differentiation: Norwegian Aqua and island investments enhance guest experience and support pricing power and onboard spend, bolstering Net Per Diem and Net Yield trajectories .
  • Watch catalysts: Booking stabilization trends, Q2 price realization vs occupancy, execution on cost acceleration, and incremental fleet optimization/charter monetization .
  • Risk flags: FX sensitivity (notable in Q1), macro volatility affecting long-haul demand, and fuel price variability despite hedging .
  • Bottom line: Maintained FY guidance with tactical adjustments indicates robust cost control and pricing discipline; monitor Europe rounding and Q2 delivery vs guidance for narrative momentum.