A significant income tax benefit in the first three months of this year lifted net income of Norwegian Cruise Line Holdings Ltd (NCLH) well above the level of the same period last year, but operating income fell.
Net income amounted to $1181 million in January-March 2019 compared to $103.1 million in the same period last year. A tax benefit of $33.8 million compared to a tax expense of $2.5 million in the corresponding period in 2018 lifted the fresh figure.
Operating income decreased to $158.8 million from $167.0 million as cruise operating expenses increased to $826.6 million from $768.1 million. Revenues rose to 1.40 billion from $1.29 billion.
Earnings per share rose to $0.54 from $0.45, according to US GAAP, the company said in a statement.
“We were pleased to enter the year in a record booked position, which when combined with a solid WAVE season and record results for the first quarter, paved the way for an increase to our full year Adjusted EPS outlook that now exceeds the high-end of our previous guidance range, and would result in yet another year of double-digit Adjusted EPS growth," said Frank Del Rio, president and chief executive officer of NCLH.
“Our modest in-year capacity growth of less than 3%, coupled with continued robust global demand for our portfolio of brands allowed us to focus on driving pricing as evidenced by our first quarter topline beat, our record wave season pricing and higher net yield growth expectations for the remainder of the year.”
Revenue increased 8.5% to $1.4 billion compared to $1.3 billion in 2018. These increases were primarily attributed to the addition of Norwegian Bliss to the fleet, along with strong growth in organic pricing across all core markets and robust onboard spending. Gross Yield increased 2.8%. Net Yield increased 4.1% on a Constant Currency basis and 3.2% on an as reported basis.
Total cruise operating expense increased 7.6% in 2019 compared to 2018, primarily due to an increase in Capacity Days. Gross Cruise Costs per Capacity Day increased 2.4%. Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 3.6% on a Constant Currency basis and 3.0% on an as reported basis.
Fuel price per metric ton, net of hedges increased to $461 from $448 in 2018. The Company reported fuel expense of $98.3 million in the period.
Interest expense, net increased to $73.5 million in 2019 from $59.7 million in 2018. The increase in interest expense reflects additional debt in connection with the delivery of Norwegian Bliss in 2018, Project Leonardo financing, as well as higher interest rates due to an increase in LIBOR.
Also included in 2019 were losses on extinguishment of debt and debt modification costs of $6.1 million in connection with refinancing of certain of our credit facilities.
Other income (expense), net was an expense of $0.4 million in 2019 compared to an expense of $1.7 million in 2018. In both periods, the expense was primarily related to losses on foreign currency exchange.
“In the quarter we had an income tax benefit of $33.8 million compared to an income tax expense of $2.5 million in 2018. In 2018, we implemented certain tax restructuring strategies that created the ability to utilize the net operating loss carryforwards of Prestige, for which we had previously provided a full valuation allowance. As a result, we recorded a tax benefit of $35.7 million in connection with the reversal of substantially all of the valuation allowance,” NCLH said.
