The Company generated GAAP net income of $61.9 million or EPS of $0.27 compared to $73.2 million or $0.32 in the prior year. Adjusted Net Income was $91.2 million or Adjusted EPS of $0.40 compared to $86.7 million or $0.38 in the prior year.
Total revenue increased 6.8% to $1.2 billion. Gross Yield increased 5.7%. Adjusted Net Yield increased 5.5% on a Constant Currency basis.
2017 full year Adjusted Net Yield growth guidance on a Constant Currency basis increased 100 basis points to 2.75%.
The Company expects to generate record earnings for full year 2017 and has increased its outlook, with Adjusted EPS now expected to be in the range of $3.79 to $3.89.
“2017 is off to a solid start with strong first quarter results which include record revenue of $1.2 billion for the quarter,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “The operating environment has remained favourable with strong close-in demand for Caribbean sailings and strength in onboard revenue driving topline growth above expectations,” continued Del Rio.
First Quarter 2017 Results
GAAP net income was $61.9 million or EPS of $0.27 compared to $73.2 million or $0.32 in the prior year. The Company generated Adjusted Net Income of $91.2 million or Adjusted EPS of $0.40 compared to $86.7 million or $0.38 in the prior year.
Revenue increased 6.8% to $1.2 billion compared to $1.1 billion in 2016. This increase was primarily attributed to the addition of Oceania Cruises’ Sirena and Regent’s Seven Seas Explorer to the fleet, partially offset by five Dry-docks during the period along with an increase in Net Yield due to strength in ticket pricing and higher onboard and other revenue. Gross Yield increased 5.7% while Adjusted Net Yield improved 5.5% on a Constant Currency basis and 4.9% on an as reported basis.
Gross Cruise Cost increased 7.9% compared to 2016 due to an increase in total cruise operating expense and marketing, general and administrative expenses. Gross Cruise Costs per Capacity Day increased 6.8%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 5.8% on both a Constant Currency and as reported basis primarily due to an increase in maintenance and repairs including Dry-dock and crew payroll and related costs.
Fuel price per metric ton, net of hedges increased 3.4% to $453 from $438 in 2016. The Company reported fuel expense of $88.9 million in the period. In addition, a loss of $0.4 million was recorded in other expense in 2017 related to the ineffective portion of the Company’s fuel hedge portfolio due to market volatility.
Interest expense, net decreased to $53.0 million in 2017 from $59.8 million in 2016 reflecting a decrease in average debt outstanding partially offset by an increase in LIBOR rates.
Other income (expense), net was an expense of $2.8 million in 2017 compared to income of $2.8 million in 2016. In 2017, the expense was primarily related to losses on foreign currency exchange and unrealized and realized losses on derivatives. In 2016, the income was primarily related to unrealized gains on derivatives partially offset by realized losses on derivatives and losses on foreign currency exchange.
“A strong end to the most successful Wave season in recent history resulted in a meaningful improvement in our full year booked position, with both occupancy and pricing now well ahead of prior year,” said Wendy Beck, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. “I am pleased to report that the strong performance witnessed in our core markets and reflected in first quarter results also extended to our booked business in future quarters, allowing us to increase our full year Adjusted EPS and Adjusted Net Yield growth guidance. This positive momentum has been partially offset by recent uncertainties in Norwegian Joy’s Chinese source market caused by the South Korea travel restriction. Taking all factors into account, we are on track to deliver another year of solid financial performance and double-digit Adjusted EPS growth.”
2017 Guidance and Sensitivities
In addition to announcing the results for the first quarter, the Company also provided guidance for the second quarter and full year 2017, along with accompanying sensitivities. The Company does not provide guidance on a GAAP basis because the Company is unable to predict, with reasonable certainty, the future movement of foreign exchange rates or the future impact of certain gains and charges. These items are uncertain and will depend on several factors, including industry conditions, and could be material to the Company’s results computed in accordance with GAAP. The Company has not provided reconciliations between the Company’s 2017 guidance and the most directly comparable GAAP measures because it would be too difficult to prepare a reliable U.S. GAAP quantitative reconciliation without unreasonable effort.