Norwegian Cruise Line Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35784

NORWEGIAN CRUISE LINE HOLDINGS LTD.

(Exact name of registrant as specified in its charter)


Bermuda		98-0691007
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7665 Corporate Center Drive, Miami, Florida 33126		33126
(Address of principal executive offices)		(zip code)

(305) 436-4000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary shares, par value $0.001 per share		NCLH		The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ⌧	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 275,618,888 ordinary shares outstanding as of July 31, 2020.

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TABLE OF CONTENTS

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Revenue
Passenger ticket	$	13,835	$	1,179,404	$	854,626	$	2,152,677
Onboard and other		3,094		484,873		409,185		915,230
Total revenue		16,929		1,664,277		1,263,811		3,067,907
Cruise operating expense
Commissions, transportation and other		34,601		297,691		366,969		526,955
Onboard and other		3,188		107,063		78,161		186,476
Payroll and related		128,744		229,385		375,891		452,492
Fuel		48,992		100,531		174,016		198,784
Food		6,997		54,347		56,213		109,392
Other		79,130		169,407		244,662		310,976
Total cruise operating expense		301,652		958,424		1,295,912		1,785,075
Other operating expense
Marketing, general and administrative		131,436		240,901		402,125		489,843
Depreciation and amortization		179,252		156,271		377,449		326,012
Impairment loss		—		—		1,607,797		—
Total other operating expense		310,688		397,172		2,387,371		815,855
Operating income (loss)		(595,411)		308,681		(2,419,472)		466,977
Non-operating income (expense)
Interest expense, net		(114,537)		(65,969)		(183,444)		(139,472)
Other income (expense), net		(14,418)		3,616		(8,595)		3,182
Total non-operating income (expense)		(128,955)		(62,353)		(192,039)		(136,290)
Net income (loss) before income taxes		(724,366)		246,328		(2,611,511)		330,687
Income tax benefit (expense)		9,123		(6,138)		15,296		27,660
Net income (loss)	$	(715,243)	$	240,190	$	(2,596,215)	$	358,347
Weighted-average shares outstanding
Basic		239,342,745		215,426,441		226,486,772		216,328,943
Diluted		239,342,745		216,810,766		226,486,772		217,837,005
Earnings (loss) per share
Basic	$	(2.99)	$	1.11	$	(11.46)	$	1.66
Diluted	$	(2.99)	$	1.11	$	(11.46)	$	1.65

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net income (loss)	$	(715,243)	$	240,190	$	(2,596,215)	$	358,347
Other comprehensive income (loss):
Shipboard Retirement Plan		102		94		204		189
Cash flow hedges:
Net unrealized gain (loss)		54,478		(17,189)		(251,382)		(2,037)
Amount realized and reclassified into earnings		28,782		(9,274)		50,781		(16,274)
Total other comprehensive income (loss)		83,362		(26,369)		(200,397)		(18,122)
Total comprehensive income (loss)	$	(631,881)	$	213,821	$	(2,796,612)	$	340,225

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)


	June 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	2,259,949	$	252,876
Accounts receivable, net		74,213		75,109
Inventories		82,263		95,427
Prepaid expenses and other assets		334,243		306,733
Total current assets		2,750,668		730,145
Property and equipment, net		13,488,514		13,135,337
Goodwill		98,134		1,388,931
Tradenames		500,525		817,525
Other long-term assets		690,218		612,661
Total assets	$	17,528,059	$	16,684,599
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt	$	337,338	$	746,358
Accounts payable		484,927		100,777
Accrued expenses and other liabilities		648,216		782,275
Advance ticket sales		1,113,374		1,954,980
Total current liabilities		2,583,855		3,584,390
Long-term debt		10,011,872		6,055,335
Other long-term liabilities		595,307		529,295
Total liabilities		13,191,034		10,169,020
Commitments and contingencies (Note 11)
Shareholders’ equity:
Ordinary shares, $0.001 par value; 490,000,000 shares authorized; 280,798,331 shares issued and 256,347,472 shares outstanding at June 30, 2020 and 237,533,270 shares issued and 213,082,411 shares outstanding at December 31, 2019		281		237
Additional paid-in capital		4,851,781		4,235,690
Accumulated other comprehensive income (loss)		(495,887)		(295,490)
Retained earnings		1,234,776		3,829,068
Treasury shares (24,450,859 at June 30, 2020 and December 31, 2019, at cost)		(1,253,926)		(1,253,926)
Total shareholders’ equity		4,337,025		6,515,579
Total liabilities and shareholders’ equity	$	17,528,059	$	16,684,599

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Six Months Ended
	June 30,
	2020		2019
Cash flows from operating activities
Net income (loss)	$	(2,596,215)	$	358,347
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense		379,375		326,471
Impairment loss		1,607,797		—
Deferred income taxes, net		(14,458)		(29,793)
Loss on derivatives		8,294		—
Loss on extinguishment of debt		5,014		3,988
Provision for bad debts and inventory obsolescence		10,359		1,057
Gain on involuntary conversion of assets		(1,403)		(2,810)
Share-based compensation expense		55,147		56,650
Net foreign currency adjustments		160		(716)
Changes in operating assets and liabilities:
Accounts receivable, net		(2,108)		(15,121)
Inventories		11,996		(1,342)
Prepaid expenses and other assets		(115,066)		(57,929)
Accounts payable		369,519		(81,690)
Accrued expenses and other liabilities		(202,547)		(74,470)
Advance ticket sales		(844,244)		558,579
Net cash provided by (used in) operating activities		(1,328,380)		1,041,221
Cash flows from investing activities
Additions to property and equipment, net		(725,477)		(413,888)
Cash received on settlement of derivatives		—		289
Cash paid on settlement of derivatives		(28,606)		—
Other		2,519		4,047
Net cash used in investing activities		(751,564)		(409,552)
Cash flows from financing activities
Repayments of long-term debt		(207,863)		(2,808,615)
Proceeds from long-term debt		3,962,655		2,652,000
Common share issuance proceeds, net		441,935		—
Proceeds from employee related plans		4,100		11,368
Net share settlement of restricted share units		(15,318)		(20,830)
Purchases of treasury shares		—		(200,071)
Early redemption premium		—		(117)
Deferred financing fees		(94,559)		(9,330)
Net cash provided by (used in) financing activities		4,090,950		(375,595)
Effect of exchange rates on cash and cash equivalents		(3,933)		—
Net increase in cash and cash equivalents		2,007,073		256,074
Cash and cash equivalents at beginning of period		252,876		163,851
Cash and cash equivalents at end of period	$	2,259,949	$	419,925

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(in thousands)


	Three Months Ended June 30, 2020
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, March 31, 2020	$	239	$	4,257,571	$	(579,249)	$	1,950,019	$	(1,253,926)	$	4,374,654
Share-based compensation		—		22,389		—		—		—		22,389
Common share issuance proceeds, net		42		440,924		—		—		—		440,966
Net share settlement of restricted share units		—		(343)		—		—		—		(343)
Beneficial conversion feature		—		131,240		—		—		—		131,240
Other comprehensive income, net		—		—		83,362		—		—		83,362
Net loss		—		—		—		(715,243)		—		(715,243)
Balance, June 30, 2020	$	281	$	4,851,781	$	(495,887)	$	1,234,776	$	(1,253,926)	$	4,337,025

	Six Months Ended June 30, 2020
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, December 31, 2019	$	237	$	4,235,690	$	(295,490)	$	3,829,068	$	(1,253,926)	$	6,515,579
Share-based compensation		—		55,147		—		—		—		55,147
Issuance of shares under employee related plans		2		4,098		—		—		—		4,100
Common share issuance proceeds, net		42		440,924		—		—		—		440,966
Net share settlement of restricted share units		—		(15,318)		—		—		—		(15,318)
Beneficial conversion feature		—		131,240		—		—		—		131,240
Cumulative change in accounting policy		—		—		—		1,923		—		1,923
Other comprehensive loss, net		—		—		(200,397)		—		—		(200,397)
Net loss		—		—		—		(2,596,215)		—		(2,596,215)
Balance, June 30, 2020	$	281	$	4,851,781	$	(495,887)	$	1,234,776	$	(1,253,926)	$	4,337,025

The accompanying notes are an integral part of these consolidated financial statements.

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Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Changes in Shareholders’ Equity - Continued

(Unaudited)

(in thousands)


	Three Months Ended June 30, 2019
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, March 31, 2019	$	237	$	4,145,530	$	(153,400)	$	3,016,997	$	(1,104,062)	$	5,905,302
Share-based compensation		—		29,651		—		—		—		29,651
Issuance of shares under employee related plans		—		3,624		—		—		—		3,624
Treasury shares		—		—		—		—		(75)		(75)
Net share settlement of restricted share units		—		(1,980)		—		—		—		(1,980)
Other comprehensive loss, net		—		—		(26,369)		—		—		(26,369)
Net income		—		—		—		240,190		—		240,190
Balance, June 30, 2019	$	237	$	4,176,825	$	(179,769)	$	3,257,187	$	(1,104,137)	$	6,150,343

	Six Months Ended June 30, 2019
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, December 31, 2018	$	235	$	4,129,639	$	(161,647)	$	2,898,840	$	(904,066)	$	5,963,001
Share-based compensation		—		56,650		—		—		—		56,650
Issuance of shares under employee related plans		2		11,366		—		—		—		11,368
Treasury shares		—		—		—		—		(200,071)		(200,071)
Net share settlement of restricted share units		—		(20,830)		—		—		—		(20,830)
Other comprehensive loss, net		—		—		(18,122)		—		—		(18,122)
Net income		—		—		—

Price	51.02	EPS	4
Shares	217	P/E	11
MCap	11,074	P/FCF	7
Net Debt	6,010	EBIT	947
TEV	17,084	TEV/EBIT	18
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-10
10-Q	2020-03-31	Filed 2020-05-15
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-11-08
10-Q	2019-06-30	Filed 2019-08-08
10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-11-09
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-07
10-K	2017-12-31	Filed 2018-02-27
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-09
10-Q	2017-03-31	Filed 2017-05-10
10-K	2016-12-31	Filed 2017-02-27
10-Q	2016-09-30	Filed 2016-11-09
10-Q	2016-06-30	Filed 2016-08-09
10-Q	2016-03-31	Filed 2016-05-10
10-K	2015-12-31	Filed 2016-02-29
10-Q	2015-09-30	Filed 2015-11-04
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-02-27
10-Q	2014-09-30	Filed 2014-10-31
10-Q	2014-06-30	Filed 2014-07-31
10-Q	2014-03-31	Filed 2014-05-01
10-K	2013-12-31	Filed 2014-02-21
10-Q	2013-09-30	Filed 2013-10-31
10-Q	2013-06-30	Filed 2013-07-30
10-Q	2013-03-31	Filed 2013-05-08
10-K	2012-12-31	Filed 2013-02-20

8-K	2020-08-06	Earnings, Exhibits
8-K	2020-07-30	Sale of Shares, Other Events, Exhibits
8-K	2020-07-16	Enter Agreement, Leave Agreement, Off-BS Arrangement, Sale of Shares, Other Events, Exhibits
8-K	2020-07-16	Earnings, Regulation FD, Other Events, Exhibits
8-K	2020-07-14	Officers, Regulation FD, Exhibits
8-K	2020-07-08	Other Events
8-K	2020-07-06	Regulation FD, Exhibits
8-K	2020-06-18
8-K	2020-06-04
8-K	2020-06-03
8-K	2020-05-28
8-K	2020-05-14
8-K	2020-05-14
8-K	2020-05-05
8-K	2020-05-05
8-K	2020-05-05
8-K	2020-05-05
8-K	2020-04-28
8-K	2020-04-27
8-K	2020-04-20
8-K	2020-03-12
8-K	2020-03-05
8-K	2020-02-20
8-K	2019-12-16
8-K	2019-12-02
8-K	2019-11-29
8-K	2019-11-07
8-K	2019-10-03
8-K	2019-08-08
8-K	2019-06-13
8-K	2019-06-10
8-K	2019-06-07
8-K	2019-05-15
8-K	2019-05-09
8-K	2019-02-21
8-K	2019-01-10
8-K	2019-01-08
8-K	2019-01-02
8-K	2018-11-28
8-K	2018-11-28
8-K	2018-11-08
8-K	2018-09-11
8-K	2018-08-09
8-K	2018-07-18
8-K	2018-07-11
8-K	2018-06-20
8-K	2018-05-02
8-K	2018-04-23
8-K	2018-04-17
8-K	2018-03-20
8-K	2018-03-15
8-K	2018-03-05
8-K	2018-02-27
8-K	2018-02-27
8-K	2018-02-22
8-K	2018-01-30

EX-10.1	nclh-20200630xex10d1.htm
EX-10.2	nclh-20200630xex10d2.htm
EX-31.1	nclh-20200630xex31d1.htm
EX-31.2	nclh-20200630xex31d2.htm
EX-32.1	nclh-20200630xex32d1.htm


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56

Item 5.	Other Information	57

Item 6.	Exhibits	57

SIGNATURES		61

NCLH 10Q Quarterly Report

Norwegian Cruise Line Earnings 2020-06-30