Norwegian Cruise’s stock falls after downbeat outlook offsets record revenue

Shares of Norwegian Cruise Line Holdings Ltd. slumped Wednesday after the cruise operator topped third-quarter profit estimates but cut its full-year outlook as consumers grew cautious about sailings to the Middle East region.

“We are seeing both elevated cancellation activity and lower new bookings for this region, primarily for close-in sailings, as the conflict is ongoing and still front and center in the consumer cycle,” Chief Executive Harry Sommer said regarding the escalating Israel-Hamas conflict, according to a FactSet transcript. He was speaking during the post-earnings conference call with analysts.

The stock

dropped 0.9% in morning trading but pared earlier losses of as much as 3.3%. The decline to start the month of November comes after the stock plunged 38.4% amid a three-month losing streak. The stock has never fallen for four straight months.

The company reported before the opening bell that it swung to net income of $345.9 million, or 71 cents a share, from a loss of $295.4 million, or 70 cents a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share of 76 cents beat the FactSet consensus of 68 cents.

Revenue jumped 57% to a record $2.54 billion, topping the FactSet consensus of $2.53 billion, as passenger-ticket revenue climbed 56.8% and onboard and other revenue rose 57.5%.

The company said it continues to experience “healthy consumer demand,” with cumulative bookings for the fourth quarter ahead of levels seen in prepandemic 2019.

However, in addition to the higher cancellations related to the Israel-Hamas conflict, the company has also experienced lower-than-expected close-in, or last-minute, demand for certain longer cruises to the Eastern Mediterranean and parts of Asia.

Looking ahead, the company expects an adjusted per-share loss of 15 cents for the fourth quarter, compared with the FactSet consensus for a profit of 2 cents a share.

For 2023, the adjusted EPS guidance was cut to approximately 73 cents from approximately 80 cents.

The stock has tumbled 30.6% over the past three months but has still gained 10.1% year to date, while the S&P 500
has shed 7.9% over the past three months and advanced 9.8% this year.

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