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Mar 31, 2020
Norwegian Cruise Line Q1 2020 Earnings Report
Norwegian Cruise Line's financial position was significantly strengthened through a $2.4 billion capital raise, but it reported a net loss due to a non-cash impairment.
Key Takeaways
Norwegian Cruise Line Holdings reported a decrease in revenue and a net loss for the first quarter of 2020, primarily due to the impact of the COVID-19 pandemic and a non-cash impairment loss. The company has taken decisive action to strengthen its financial position, including a successful capital raise, to withstand the suspension of voyages.
Company significantly strengthened its liquidity with a $2.4 billion capital raise.
Company is well-positioned to withstand over 18 months of voyage suspensions.
A non-cash goodwill and tradenames impairment of $1.6 billion resulted in a net loss of $(1.9) billion.
Company experienced rapid and significant impacts related to the COVID-19 global pandemic including significant softness in near-term demand and an elevated rate of cancellations for existing bookings.
Norwegian Cruise Line
Norwegian Cruise Line
Forward Guidance
Due to the impacts from the pandemic, temporary suspension of sailings, and the uncertainty of the situation, the Company withdrew its first quarter and full year 2020 guidance. The Company expects to report a net loss on both a U.S. GAAP and adjusted basis for the second quarter and the year ending December 31, 2020.
Positive Outlook
- Company secured a new $675 million revolving credit facility on March 5, 2020.
- Company fully drew down on its new facility as well as its existing $875 million revolving credit facility beginning on March 12, 2020 for a total of $1.55 billion.
- Company reclassified $1.4 billion of debt to long-term debt.
- The transactions consisted of (i) $460 million public offering of common equity, (ii) $862.5 million 6% exchangeable senior notes offering, both of which closed on May 8, 2020, (iii) $675 million 12.25% senior secured notes offering which is expected to close on May 14, 2020 and (iv) $400 million private investment from global consumer-focused private equity firm L Catterton which is expected to close no later than May 29, 2020
- Following the recent capital markets transactions, total pro-forma liquidity is approximately $3.7 billion as of March 31, 2020.
Challenges Ahead
- COVID-19 outbreak has had a significant impact on the Company’s financial position and results of operation.
- Company anticipates estimated ongoing ship operating expenses and administrative operating costs combined to range from approximately $70 million to $110 million per month during the suspension of operations
- Company estimates its monthly cash burn to be on average in the range of, approximately $120 million to $160 million per month during the suspension of operations.
- Company expects that the effects of COVID-19 on the shipyards where its ships are under construction, or will be constructed, will result in delays in ship deliveries, which may be prolonged.
- Company reported Adjusted Net Income (Loss) of $(211.3) million or Adjusted EPS of $(0.99)