Norwegian Cruise Line Earnings 2020-09-30

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

Table of Contents

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 September 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 275,636,032 ordinary shares outstanding as of October 31, 2020.

Table of Contents

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

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 6.	Exhibits	57

SIGNATURES		59

Table of Contents

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				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenue
Passenger ticket	$	4,667	$	1,373,779	$	859,293	$	3,526,456
Onboard and other		1,851		540,072		411,036		1,455,302
Total revenue		6,518		1,913,851		1,270,329		4,981,758
Cruise operating expense
Commissions, transportation and other		4,038		330,893		371,007		857,848
Onboard and other		4,728		122,971		82,889		309,447
Payroll and related		65,571		235,833		441,462		688,325
Fuel		48,224		98,943		222,240		297,727
Food		3,426		56,913		59,639		166,305
Other		64,170		145,211		308,832		456,187
Total cruise operating expense		190,157		990,764		1,486,069		2,775,839
Other operating expense
Marketing, general and administrative		156,656		255,148		558,781		744,991
Depreciation and amortization		177,488		156,215		554,937		482,227
Impairment loss		—		—		1,607,797		—
Total other operating expense		334,144		411,363		2,721,515		1,227,218
Operating income (loss)		(517,783)		511,724		(2,937,255)		978,701
Non-operating income (expense)
Interest expense, net		(139,664)		(60,188)		(323,108)		(199,660)
Other income (expense), net		(23,680)		10,251		(32,275)		13,433
Total non-operating income (expense)		(163,344)		(49,937)		(355,383)		(186,227)
Net income (loss) before income taxes		(681,127)		461,787		(3,292,638)		792,474
Income tax benefit (expense)		3,761		(11,203)		19,057		16,457
Net income (loss)	$	(677,366)	$	450,584	$	(3,273,581)	$	808,931
Weighted-average shares outstanding
Basic		271,435,350		214,207,716		241,578,995		215,614,098
Diluted		271,435,350		215,499,462		241,578,995		217,050,055
Earnings (loss) per share
Basic	$	(2.50)	$	2.10	$	(13.55)	$	3.75
Diluted	$	(2.50)	$	2.09	$	(13.55)	$	3.73

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

Table of Contents

Norwegian Cruise Line Holdings Ltd.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income (loss)	$	(677,366)	$	450,584	$	(3,273,581)	$	808,931
Other comprehensive income (loss):
Shipboard Retirement Plan		101		95		305		284
Cash flow hedges:
Net unrealized gain (loss)		87,710		(209,511)		(163,672)		(211,548)
Amount realized and reclassified into earnings		36,072		(448)		86,853		(16,722)
Total other comprehensive income (loss)		123,883		(209,864)		(76,514)		(227,986)
Total comprehensive income (loss)	$	(553,483)	$	240,720	$	(3,350,095)	$	580,945

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)


	September 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	2,356,211	$	252,876
Accounts receivable, net		78,496		75,109
Inventories		81,259		95,427
Prepaid expenses and other assets		136,533		306,733
Total current assets		2,652,499		730,145
Property and equipment, net		13,453,433		13,135,337
Goodwill		98,134		1,388,931
Trade names		500,525		817,525
Other long-term assets		697,446		612,661
Total assets	$	17,402,037	$	16,684,599
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt	$	472,359	$	746,358
Accounts payable		116,464		100,777
Accrued expenses and other liabilities		629,811		782,275
Advance ticket sales		1,115,632		1,954,980
Total current liabilities		2,334,266		3,584,390
Long-term debt		10,465,095		6,055,335
Other long-term liabilities		514,910		529,295
Total liabilities		13,314,271		10,169,020
Commitments and contingencies (Note 11)
Shareholders’ equity:
Ordinary shares, $0.001 par value; 490,000,000 shares authorized; 300,070,311 shares issued and 275,619,452 shares outstanding at September 30, 2020 and 237,533,270 shares issued and 213,082,411 shares outstanding at December 31, 2019		300		237
Additional paid-in capital		5,155,986		4,235,690
Accumulated other comprehensive income (loss)		(372,004)		(295,490)
Retained earnings		557,410		3,829,068
Treasury shares (24,450,859 at September 30, 2020 and December 31, 2019, at cost)		(1,253,926)		(1,253,926)
Total shareholders’ equity		4,087,766		6,515,579
Total liabilities and shareholders’ equity	$	17,402,037	$	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)


	Nine Months Ended
	September 30,
	2020		2019
Cash flows from operating activities
Net income (loss)	$	(3,273,581)	$	808,931
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense		565,208		482,497
Impairment loss		1,607,797		—
Deferred income taxes, net		(17,852)		(25,731)
Loss on derivatives		12,195		—
Loss on extinguishment of debt		10,480		3,988
Provision for bad debts and inventory obsolescence		16,293		2,852
Gain on involuntary conversion of assets		(1,340)		(2,800)
Share-based compensation expense		81,009		82,070
Net foreign currency adjustments		3,746		(4,326)
Changes in operating assets and liabilities:
Accounts receivable, net		(12,103)		(12,741)
Inventories		12,757		(4,681)
Prepaid expenses and other assets		79,915		(31,926)
Accounts payable		11,536		(86,525)
Accrued expenses and other liabilities		(180,126)		(27,504)
Advance ticket sales		(834,560)		262,938
Net cash provided by (used in) operating activities		(1,918,626)		1,447,042
Cash flows from investing activities
Additions to property and equipment, net		(873,142)		(615,985)
Cash received on settlement of derivatives		—		289
Cash paid on settlement of derivatives		(31,520)		(556)
Other		3,047		5,039
Net cash used in investing activities		(901,615)		(611,213)
Cash flows from financing activities
Repayments of long-term debt		(888,800)		(2,882,354)
Proceeds from long-term debt		5,225,090		2,652,000
Common share issuance proceeds, net		719,094		—
Proceeds from employee related plans		5,557		18,203
Net share settlement of restricted share units		(15,334)		(20,935)
Purchases of treasury shares		—		(349,860)
Early redemption premium		(1,376)		(117)
Deferred financing fees		(117,388)		(9,359)
Net cash provided by (used in) financing activities		4,926,843		(592,422)
Effect of exchange rates on cash and cash equivalents		(3,267)		—
Net increase in cash and cash equivalents		2,103,335		243,407
Cash and cash equivalents at beginning of period		252,876		163,851
Cash and cash equivalents at end of period	$	2,356,211	$	407,258

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 September 30, 2020
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, June 30, 2020	$	281	$	4,851,781	$	(495,887)	$	1,234,776	$	(1,253,926)	$	4,337,025
Share-based compensation		—		25,862		—		—		—		25,862
Issuance of shares under employee related plans		—		1,457		—		—		—		1,457
Common share issuance proceeds, net		19		276,902		—		—		—		276,921
Net share settlement of restricted share units		—		(16)		—		—		—		(16)
Other comprehensive income, net		—		—		123,883		—		—		123,883
Net loss		—		—		—		(677,366)		—		(677,366)
Balance, September 30, 2020	$	300	$	5,155,986	$	(372,004)	$	557,410	$	(1,253,926)	$	4,087,766

	Nine Months Ended September 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		—		81,009		—		—		—		81,009
Issuance of shares under employee related plans		2		5,555		—		—		—		5,557
Common share issuance proceeds, net		61		717,826		—		—		—		717,887
Net share settlement of restricted share units		—		(15,334)		—		—		—		(15,334)
Beneficial conversion feature		—		131,240		—		—		—		131,240
Cumulative change in accounting policy		—		—		—		1,923		—		1,923
Other comprehensive loss, net		—		—		(76,514)		—		—		(76,514)
Net loss		—		—		—		(3,273,581)		—		(3,273,581)
Balance, September 30, 2020	$	300	$	5,155,986	$	(372,004)	$	557,410	$	(1,253,926)	$	4,087,766

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 September 30, 2019
					Accumulated
			Additional		Other						Total
	Ordinary		Paid-in		Comprehensive		Retained		Treasury		Shareholders’
	Shares		Capital		Income (Loss)		Earnings		Shares		Equity
Balance, June 30, 2019	$	237	$	4,176,825	$	(179,769)	$	3,257,187	$	(1,104,137)	$	6,150,343
Share-based compensation		—		25,420		—		—		—		25,420
Issuance of shares under employee related plans		—		6,835		—		—		—		6,835
Treasury shares		—		—		—		—		(149,789)		(149,789)
Net share settlement of restricted share units		—		(105)		—		—		—		(105)
Other comprehensive loss, net		—		—		(209,864)		—		—		(209,864)
Net income		—		—		—		450,584		—		450,584
Balance, September 30, 2019	$	237	$	4,208,975	$	(389,633)	$	3,707,771	$	(1,253,926)	$	6,273,424

	Nine Months Ended September 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		—		82,070		—		—		—		82,070
Issuance of shares under employee related plans		2		18,201		—		—		—		18,203
Treasury shares		—		—		—		—		(349,860)		(349,860)
Net share settlement of restricted share units		—		(20,935)		—		—		—		(20,935)
Other comprehensive loss, net		—		—		(227,986)		—		—		(227,986)
Net income		—		—		—		808,931		—		808,931
Balance, September 30, 2019	$	237	$

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	2020-09-30	Filed 2020-11-09
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	2020-11-17
8-K	2020-11-12
8-K	2020-11-09
8-K	2020-11-02
8-K	2020-10-26
8-K	2020-10-01
8-K	2020-09-24
8-K	2020-09-21
8-K	2020-09-19
8-K	2020-08-06
8-K	2020-07-30
8-K	2020-07-16
8-K	2020-07-16
8-K	2020-07-14
8-K	2020-07-08
8-K	2020-07-06
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-10.5	nclh-20200930xex10d5.htm
EX-31.1	nclh-20200930xex31d1.htm
EX-31.2	nclh-20200930xex31d2.htm
EX-32.1	nclh-20200930xex32d1.htm

NCLH 10Q Quarterly Report

Norwegian Cruise Line Earnings 2020-09-30