Much has been written about the fact that consumers are paying more for travel and experiences these days than they are for apparel and accessories. Norwegian Cruise Line Holdings (NCLH 59.20, +2.55, +4.5%) offered another data point supporting that shift when it reported its second quarter results this morning.
Briefly, total revenue increased 13% to $1.3 billion for the second quarter, aided by a reduction in the amount of dry-docks during the period and an 8.1% increase in its adjusted net yield which was a byproduct of strength in ticket pricing and higher onboard and other revenue.
The strong revenue growth and good expense control contributed to a 140 basis points increase in its operating margin rate of 20.5%. On an adjusted basis, Norwegian's diluted earnings per share were $1.02, up from $0.85 in the same period a year ago and ahead of analysts' average expectation.
The company's CEO, Frank Del Rio, said Norwegian benefited in the second quarter from positive consumer sentiment in North American and key international markets, which led to a "...robust booking environment that continues to be one of the strongest in recent history."
Norwegian CFO, Wendy Beck, said, Norwegian is seeing "...strong booking trends across all markets for the back half of 2017 where pricing and occupancy are now up mid-single digits over prior year," and that the strong volumes and firm pricing have benefited its booked business for the next four quarters. Consequently, Norwegian is increasing its 2017 full-year outlook.
The cruise line now sees adjusted EPS in the range of $3.93-$4.03 versus its prior guidance of $3.79-$3.89. Its full-year adjusted net yield growth guidance was also raised 150 basis points to 4.25%.
For the third quarter, Norwegian is projecting adjusted EPS of approximately $1.83. That is slightly below analysts' average expectation, but given the increased guidance for the full year, investors can infer that the fourth quarter is shaping up to be a good one for Norwegian.
Thus far, 2017 has been a very good year for Norwegian's shareholders. Shares of NCLH were up 33.2% through Monday's close and they are cruising higher this morning on the encouraging earnings report.