TLDR
- Norwegian Cruise Line Holdings (NCLH) stock dropped 12.87% to $19.64 after reporting third-quarter results that missed revenue expectations
- The company posted adjusted earnings of $1.20 per share, beating analyst estimates of $1.16 per share by 4 cents
- Revenue reached a record $2.94 billion but fell short of the $3.02-$3.03 billion analysts expected
- The company raised full-year 2025 adjusted EPS guidance to $2.10 from $2.05, above the consensus estimate of $2.08
- Norwegian completed capital transactions reducing shares outstanding by 7.5% while maintaining net leverage at 5.4x
Norwegian Cruise Line Holdings reported a mixed third quarter that sent shares tumbling more than 12% in Tuesday trading. The stock fell to $19.64 despite beating earnings expectations.
The cruise operator posted adjusted earnings per share of $1.20 for the third quarter. This beat analyst estimates of $1.16 per share. It also marked a 17% increase from the same period last year.
However, revenue came in at $2.94 billion. While this was a record for the company, it missed analyst expectations. Wall Street was looking for revenue between $3.02 and $3.03 billion.
Norwegian Cruise Line Holdings Ltd., NCLH
The revenue miss overshadowed the earnings beat. Investors sent shares down sharply at the market open.
The company grew revenue 5% year-over-year. But the market had expected more.
Norwegian attributed part of the revenue dynamic to lower air program participation. This also reduced air-related costs. The company said changes in itinerary mix played a role.
CEO Harry Sommer highlighted the quarter’s performance across all brands. He noted the strength of the company’s multi-brand portfolio. The company achieved third-quarter occupancy of 106.4%, exceeding its guidance of approximately 105.5%.
Guidance Raised But Concerns Remain
Norwegian raised its full-year 2025 adjusted EPS guidance. The new target is $2.10, up from $2.05 previously. This tops the analyst consensus of $2.08.
The company maintained its full-year adjusted EBITDA guidance of approximately $2.72 billion. Net yield increased 1.6% on an as-reported basis. On a constant currency basis, it rose 1.5%.
For the fourth quarter, Norwegian expects adjusted EPS of approximately $0.27. The company projects net yield growth of 3.8% to 4.3% on an as-reported basis.
The company highlighted strong demand for Caribbean sailings. It said it remains well-positioned within its optimal range for forward bookings.
Market Reaction and Industry Concerns
Stifel analyst Steven Wieczynski wrote that investors were already nervous following Royal Caribbean’s earnings last week. He said Norwegian’s results won’t change the current negative narrative hovering over the cruise industry.
Wieczynski expressed concern about fourth-quarter net cruise cost guidance coming in above expectations. “This story for the last couple of quarters has been all about cost controls,” he wrote. He predicted a very volatile trading session for NCLH.
The softer revenue numbers feed into investor fears that cruise demand is softening. Would-be travelers may be cutting back on spending following the post-pandemic travel boom.
During the quarter, Norwegian completed strategic capital market transactions. These reduced shares outstanding on a fully diluted basis by approximately 38.1 million. That represents about 7.5% of shares.
The company kept net leverage essentially neutral at 5.4x. Even before Tuesday’s selloff, Norwegian stock was down 14% for the year. The S&P 500 was down 1.2% in Tuesday trading.
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