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Norwegian Cruise Lines Sinks as Revenue Plummets 99%

By Rich Duprey - Aug 6, 2020 at 11:08AM

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The cruise ship operator says it's a certainty it will be reporting losses for the next quarter and the full year.

It shouldn't be a surprise Norwegian Cruise Line Holdings (NCLH 2.91%) ran aground in the second quarter. With cruises dry-docked during the coronavirus pandemic, the cruise ship operator saw its revenue all but vanish.

Earnings also came in below Wall Street's estimates because although its expenses were also dramatically reduced, they did not fall by a commensurate amount, as the cruise line still needed to pay for ships, crew, and other costs.

Ship in rough water

Image source: Getty Images.

Stuck on the shoals of the pandemic

Norwegian Cruise Line said revenue evaporated during the quarter, falling 99% to just $16.9 million compared to the $1.7 billion it recorded a year ago. Operating expenses dropped 68.5%, but interest expense rose 73% to $114.5 million as it took on more borrowings to stay afloat until its ships could get out to sea again.

That resulted in net losses of $715 million, or $2.99 per share versus the $240 million, or $1.11 per share, profit notched last year. Even adjusting for one-time expenses resulted in a loss of $2.78 per share, worse than the $2.26 per share loss analysts were expecting, and the outlook for the rest of the year is not encouraging.

The cruise ship operator says that although there is a lot of uncertainty that remains for the rest of 2020, one thing it is sure of is it will be reporting a loss in the third quarter and the full year, both under generally accepted accounting principles (GAAP) and on an adjusted basis.

Norwegian won't be resuming its cruises until at least October and it says its monthly cash burn is expected to be $160 million, at the high end of its previously issued guidance because interest expense on the money it raised in July is higher, along with maintaining its ships in layup.

 

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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