Shares of Norwegian Cruise Line Holdings (NYSE:NCLH) tumbled 7.8% through 1:45 p.m. EDT this afternoon after the cruise operator reported its first-quarter 2021 earnings (read "losses") in the morning.
With U.S. cruise lines still mostly confined to port, no one was expecting much in the way of earnings out of Norwegian today. And yet, management managed to disappoint investors with a report of slightly better-than-expected losses for the quarter ($2.03 per share pro forma versus a $2.05 per-share expected loss) but revenue of only $3.1 million -- even less than the $10.5 million feared.
Of course, bad as that sounds, in the long run it's probably irrelevant. Norwegian -- like Royal Caribbean (NYSE:RCL) and Carnival Corporation (NYSE:CCL) -- is caught in a perfect storm of high fixed costs and a revenue stream that rounds to zero and will remain that way until cruising resumes in the U.S. What investors really want to know is...when will cruising resume in the U.S.?
And that's the other bad news. In comments accompanying today's earnings release, Norwegian CEO Frank Del Rio admitted that with the Centers for Disease Control and Prevention (CDC) still indecisive on a cruising resumption date, a "July U.S. launch, at least for our company, is just not possible." That ship, to coin a phrase, has sailed.
Cruise industry experts have previously opined that it will take about 90 days from the CDC giving the green light to the day cruising can resume. That means that at this point, it's probably unlikely that any cruise line will be able to restart U.S. operations before early August at the earliest. The longer the CDC sits on its hands, the further that start date must be pushed back.
In the meantime, Norwegian is husbanding its cash. As of the end of Q1, the company says it has $3.5 billion in cash against $12.2 billion in debt on its books. At its current and projected cash-burn rate of $190 million, Norwegian has enough cash to survive another 18 months. Here's hoping the CDC will let it get back to cruising before then.
But just in case that doesn't happen, Norwegian still hopes to begin a "phased cruise resumption for voyages embarking outside of the U.S.," with some cruises departing Greece for the Mediterranean beginning July 25, others sailing out of Jamaica and the Dominican Republic in early August, and the resumption of cruising in Denmark and the U.K. in late August/early September.