Casinos & Hotels

Extended Suspension of Sailings Sinks Norwegian Cruise Line 

Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) reported second-quarter 2020 results before markets opened Thursday. The cruise line operator reported an adjusted diluted loss per share of $2.78 on revenue of $16.9 million. In the same period a year ago, Norwegian reported earnings per share (EPS) of $1.30 on revenue of $1.77 billion. Second-quarter results also compare to consensus estimates for a loss per share of $2.26 and $25.5 million in revenue.

On Wednesday, cruise industry group Cruise Lines International Association announced that its members, including Norwegian, Carnival Corp. & PLC (NYSE: CCL) and Royal Caribbean Cruises Ltd. (NYSE: RCL), would extend their suspension of new sailings to October 31. The group previously set a resumption date of September 15.

The extended deadline was sinking Norwegian’s shares early Thursday. The stock traded down by 5.7% at $13.24 in the premarket. Royal Caribbean’s stock was down about 1.3% at $48.89 and Carnival shares were down about 2.3%.

In its second-quarter report, Norwegian said the company’s total debt was $10.3 billion and that cash and equivalents totaled $2.3 billion. Following a series of transactions to raise capital, total pro-forma liquidity was approximately $2.9 billion. Chief Financial Officer Mark Kempa said that the fresh capital has allowed the company to extend its debt maturities and secure additional liquidity to help it “withstand the impact of COVID-19.”

The company provided no guidance other than to say if sailings continue to be suspended, things will get worse. Norwegian did say it was targeting an average cash burn of $160 million a month while its operations are suspended.

Analysts are estimating a third-quarter loss of $2.07 per share on revenue of $114.85 million. Those estimates probably do not include the effects of suspending sailings until the end of October. For the year, the consensus estimate calls for a loss per share of $6.90 and revenue of $1.77 billion.

After the opening bell, Norwegian’s shares traded down fractionally, at $13.64 in a 52-week range of $7.03 to $59.78. The consensus 12-month price target is $16.85.