Norwegian Cruise Line Holdings Ltd 10-Q for FY2022 Q3

Norwegian Cruise Line Holdings Ltd. (NCLH)

10-Q 2022-11-08 For: 2022-09-30

Added on April 07, 2026

About this 10-Q

Norwegian Cruise Line Holdings Ltd filed this 10-Q on November 8, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.62B; up 955.3% from $153.08M a year earlier
Net loss: $295.39M; compared with a net loss of $845.89M a year earlier
Diluted EPS: -$0.70; compared with -$2.29 a year earlier

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Bermuda		98-0691007
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7665 Corporate Center Drive, Miami, Florida 33126		33126
(Address of principal executive offices)		(zip code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary shares, par value $0.001 per share		NCLH		The New York Stock Exchange


Large accelerated filer ⌧	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company ☐
Emerging growth company ☐


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	44

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 6.	Exhibits	46

SIGNATURES		47


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue
Passenger ticket	$	1,105,908	$	86,127	$	2,242,255	$	87,877
Onboard and other		509,602		66,954		1,082,376		72,672
Total revenue		1,615,510		153,081		3,324,631		160,549
Cruise operating expense
Commissions, transportation and other		352,798		32,338		696,946		47,935
Onboard and other		126,740		19,306		255,445		21,841
Payroll and related		287,390		154,440		790,697		323,225
Fuel		186,984		79,238		503,682		175,931
Food		76,810		16,672		177,483		27,314
Other		208,176		137,762		623,374		294,092
Total cruise operating expense		1,238,898		439,756		3,047,627		890,338
Other operating expense
Marketing, general and administrative		375,291		229,142		1,000,578		617,820
Depreciation and amortization		186,551		173,289		547,214		517,867
Total other operating expense		561,842		402,431		1,547,792		1,135,687
Operating loss		(185,230)		(689,106)		(1,270,788)		(1,865,476)
Non-operating income (expense)
Interest expense, net		(152,330)		(161,205)		(624,392)		(1,122,905)
Other income (expense), net		31,461		4,720		100,572		57,464
Total non-operating income (expense)		(120,869)		(156,485)		(523,820)		(1,065,441)
Net loss before income taxes		(306,099)		(845,591)		(1,794,608)		(2,930,917)
Income tax benefit (expense)		10,705		(294)		7,179		(2,949)
Net loss	$	(295,394)	$	(845,885)	$	(1,787,429)	$	(2,933,866)
Weighted-average shares outstanding
Basic		420,798,538		370,016,479		419,224,710		356,591,143
Diluted		420,798,538		370,016,479		419,224,710		356,591,143
Loss per share
Basic	$	(0.70)	$	(2.29)	$	(4.26)	$	(8.23)
Diluted	$	(0.70)	$	(2.29)	$	(4.26)	$	(8.23)


	September 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	1,186,714	$	1,506,647
Short-term investments		—		240,000
Accounts receivable, net		393,118		1,167,473
Inventories		155,880		118,205
Prepaid expenses and other assets		421,672		269,243
Total current assets		2,157,384		3,301,568
Property and equipment, net		14,511,649		13,528,806
Goodwill		98,134		98,134
Trade names		500,525		500,525
Other long-term assets		1,683,237		1,300,804
Total assets	$	18,950,929	$	18,729,837
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt	$	1,012,722	$	876,890
Accounts payable		141,305		233,172
Accrued expenses and other liabilities		1,217,103		1,059,034
Advance ticket sales		2,291,624		1,561,336
Total current liabilities		4,662,754		3,730,432
Long-term debt		12,893,407		11,569,700
Other long-term liabilities		994,985		997,055
Total liabilities		18,551,146		16,297,187
Commitments and contingencies (Note 10)
Shareholders’ equity:
Ordinary shares, $0.001 par value; 980,000,000 shares authorized; 421,393,338 shares issued and outstanding at September 30, 2022 and 416,891,915 shares issued and outstanding at December 31, 2021		421		417
Additional paid-in capital		7,587,699		7,513,725
Accumulated other comprehensive income (loss)		(604,502)		(285,086)
Accumulated deficit		(6,583,835)		(4,796,406)
Total shareholders’ equity		399,783		2,432,650
Total liabilities and shareholders’ equity	$	18,950,929	$	18,729,837


	Three Months Ended September 30, 2022
					Accumulated
			Additional		Other				Total
	Ordinary		Paid-in		Comprehensive		Accumulated		Shareholders’
	Shares		Capital		Income (Loss)		Deficit		Equity
Balance, June 30, 2022	$	419	$	7,567,129	$	(377,292)	$	(6,288,441)	$	901,815
Share-based compensation		—		26,083		—		—		26,083
Issuance of shares under employee related plans		2		2,708		—		—		2,710
Net share settlement of restricted share units		—		(8,221)		—		—		(8,221)
Other comprehensive loss, net		—		—		(227,210)		—		(227,210)
Net loss		—		—		—		(295,394)		(295,394)
Balance, September 30, 2022	$	421	$	7,587,699	$	(604,502)	$	(6,583,835)	$	399,783

	Nine Months Ended September 30, 2022
					Accumulated
			Additional		Other				Total
	Ordinary		Paid-in		Comprehensive		Accumulated		Shareholders’
	Shares		Capital		Income (Loss)		Deficit		Equity
Balance, December 31, 2021	$	417	$	7,513,725	$	(285,086)	$	(4,796,406)	$	2,432,650
Share-based compensation		—		88,923		—		—		88,923
Issuance of shares under employee related plans		4		5,263		—		—		5,267
Net share settlement of restricted share units		—		(20,212)		—		—		(20,212)
Other comprehensive loss, net		—		—		(319,416)		—		(319,416)
Net loss		—		—		—		(1,787,429)		(1,787,429)
Balance, September 30, 2022	$	421	$	7,587,699	$	(604,502)	$	(6,583,835)	$	399,783


	Three Months Ended September 30, 2021
					Accumulated
			Additional		Other				Total
	Ordinary		Paid-in		Comprehensive		Accumulated		Shareholders’
	Shares		Capital		Income (Loss)		Deficit		Equity
Balance, June 30, 2021	$	370	$	6,329,585	$	(232,903)	$	(2,377,800)	$	3,719,252
Share-based compensation		—		39,922		—		—		39,922
Issuance of shares under employee related plans		—		2,052		—		—		2,052
Net share settlement of restricted share units		—		(14)		—		—		(14)
Other comprehensive loss, net		—		—		(32,088)		—		(32,088)
Net loss		—		—		—		(845,885)		(845,885)
Balance, September 30, 2021	$	370	$	6,371,545	$	(264,991)	$	(3,223,685)	$	2,883,239

	Nine Months Ended September 30, 2021
					Accumulated
			Additional		Other				Total
	Ordinary		Paid-in		Comprehensive		Accumulated		Shareholders’
	Shares		Capital		Income (Loss)		Deficit		Equity
Balance, December 31, 2020	$	316	$	4,889,355	$	(240,117)	$	(295,449)	$	4,354,105
Share-based compensation		—		88,974		—		—		88,974
Issuance of shares under employee related plans		—		3,141		—		—		3,141
Common share issuance proceeds, net		54		1,558,342		—		—		1,558,396
Net share settlement of restricted share units		—		(16,672)		—		—		(16,672)
Cumulative change in accounting policy		—		(131,240)		—		5,630		(125,610)
Other		—		(20,355)		—		—		(20,355)
Other comprehensive loss, net		—		—		(24,874)		—		(24,874)
Net loss		—		—		—		(2,933,866)		(2,933,866)
Balance, September 30, 2021	$	370	$	6,371,545	$	(264,991)	$	(3,223,685)	$	2,883,239


	Nine months ended September 30, 2021
	Previously				As
	Reported		Adjustments		Reported
Cash flows from investing activities
Purchases of short-term investments	$	—	$	(770,000)	$	(770,000)
Proceeds from maturities of short-term investments		—		205,000		205,000
Net cash used in investing activities		(542,971)		(565,000)		(1,107,971)

Net decrease in cash and cash equivalents		(1,365,666)		(565,000)		(1,930,666)
Cash and cash equivalents at end of period		1,934,816		(565,000)		1,369,816


	Balance Sheet location	September 30, 2022		December 31, 2021
Operating leases
Right-of-use assets	Other long-term assets	$	826,334	$	794,187
Current operating lease liabilities	Accrued expenses and other liabilities		40,708		34,407
Non-current operating lease liabilities	Other long-term liabilities		696,917		670,688


	Nine Months Ended September 30, 2022
						Change
	Accumulated		Change			Related to
	Other		Related to			Shipboard
	Comprehensive		Cash Flow			Retirement
	Income (Loss)		Hedges			Plan
Accumulated other comprehensive income (loss) at beginning of period	$	(285,086)	$	(279,696)		$	(5,390)
Current period other comprehensive income (loss) before reclassifications		(244,361)		(246,742)			2,381
Amounts reclassified into earnings		(75,055)		(75,339)	(1)		284	(2)
Accumulated other comprehensive income (loss) at end of period	$	(604,502)	$	(601,777)	(3)	$	(2,725)


			Unamortized
	Principal		Deferred		Net Carrying		Fair Value
	Amount		Financing Fees		Amount		Amount		Leveling
2024 Exchangeable Notes	$	146,601	$	(2,357)	$	144,244	$	157,958	Level 2
2025 Exchangeable Notes		450,000		(6,932)		443,068		419,864	Level 2
2027 1.125% Exchangeable Notes		1,150,000		(24,865)		1,125,135		735,161	Level 2
2027 2.5% Exchangeable Notes		473,175		(10,789)		462,386		320,974	Level 2


			Unamortized Debt
			Discount,
	Principal		including Deferred		Net Carrying		Fair Value
	Amount		Financing Fees		Amount		Amount		Leveling
2024 Exchangeable Notes	$	146,601	$	(3,408)	$	143,193	$	249,358	Level 2
2025 Exchangeable Notes		450,000		(8,525)		441,475		642,591	Level 2
2027 1.125% Exchangeable Notes		1,150,000		(28,948)		1,121,052		1,088,510	Level 2


Year	Amount
Remainder of 2022	$	332,696
2023		1,001,343
2024		3,763,958
2025		1,148,007
2026		2,050,992
2027		3,101,980
Thereafter		2,753,755
Total	$	14,152,731


		Assets				Liabilities
		September 30,		December 31,		September 30,		December 31,
	Balance Sheet Location	2022		2021		2022		2021
Derivative Contracts Designated as Hedging Instruments

Fuel contracts
	Prepaid expenses and other assets	$	62,387	$	29,349	$	2,713	$	—
	Other long-term assets		14,908		19,554		1,924		—
	Accrued expenses and other liabilities		2,363		—		3,028		—
	Other long-term liabilities		549		—		1,236		—
Foreign currency contracts
	Prepaid expenses and other assets		—		4,898		—		—
	Accrued expenses and other liabilities		—		—		240,918		98,592
	Other long-term liabilities		—		—		68,878		73,496
Interest rate contracts
	Accrued expenses and other liabilities		—		—		—		469
Total derivatives designated as hedging instruments		$	80,207	$	53,801	$	318,697	$	172,557

Derivative Contracts Not Designated as Hedging Instruments

Fuel contracts
	Prepaid expenses and other assets	$	9	$	10,836	$	184	$	—
	Other long-term assets		—		3,476		522		—
	Accrued expenses and other liabilities		—		—		138		—
	Other long-term liabilities		—		—		200		—
Total derivatives not designated as hedging instruments		$	9	$	14,312	$	1,044	$	—
Total derivatives		$	80,216	$	68,113	$	319,741	$	172,557


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Coupon interest	$	14,405	$	18,984	$	41,321	$	62,109
Amortization of deferred financing fees		3,005		2,593		8,145		7,802
Total	$	17,410	$	21,577	$	49,466	$	69,911


			Gross				Gross
	Gross		Amounts		Total Net		Amounts
September 30, 2022	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	77,304	$	(5,343)	$	71,961	$	—	$	71,961
Liabilities		314,398		(2,912)		311,486		(309,796)		1,690


			Gross				Gross
	Gross		Amounts		Total Net		Amounts
December 31, 2021	Amounts		Offset		Amounts		Not Offset		Net Amounts
Assets	$	68,113	$	—	$	68,113	$	(68,113)	$	—
Liabilities		172,557		—		172,557		(172,557)		—


					Location of Gain
					(Loss) Reclassified
					from Accumulated	Amount of Gain (Loss) Reclassified
	Amount of Gain (Loss)				Other Comprehensive	from Accumulated Other
	Recognized in Other				Income (Loss) into	Comprehensive Income
Derivatives	Comprehensive Loss				Income (Expense)	(Loss) into Income (Expense)
	Three Months		Three Months			Three Months		Three Months
	Ended		Ended			Ended		Ended
	September 30, 2022		September 30, 2021			September 30, 2022		September 30, 2021
Fuel contracts	$	(48,593)	$	19,202	Fuel	$	33,886	$	(10,278)
Fuel contracts		—		—	Other income (expense), net		(293)		(65)
Foreign currency contracts		(146,950)		(64,306)	Depreciation and amortization		(1,831)		(1,267)
Interest rate contracts		—		(30)	Interest expense, net		—		(1,338)
Total gain (loss) recognized in other comprehensive loss	$	(195,543)	$	(45,134)		$	31,762	$	(12,948)


	Three Months Ended September 30, 2022								Three Months Ended September 30, 2021
			Depreciation								Depreciation
			and		Interest		Other Income				and		Interest		Other Income
	Fuel		Amortization		Expense, net		(Expense), net		Fuel		Amortization		Expense, net		(Expense), net
Total amounts of income and expense line items presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	186,984	$	186,551	$	152,330	$	31,461	$	79,238	$	173,289	$	161,205	$	4,720

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense)
Fuel contracts		33,886		—		—		—		(10,278)		—		—		—
Foreign currency contracts		—		(1,831)		—		—		—		(1,267)		—		—
Interest rate contracts		—		—		—		—		—		—		(1,338)		—

Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into income (expense) as a result that a forecasted transaction is no longer probable of occurring
Fuel contracts		—		—		—		(293)		—		—		—		(65)


		Amount of Gain (Loss) Recognized in Income
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
	Location of Gain (Loss)	2022		2021		2022		2021
Derivatives not designated as hedging instruments
Fuel contracts	Other income (expense), net	$	(733)	$	7,398	$	33,345	$	57,505
Foreign currency contracts	Other income (expense), net		(1,905)		(4)		(13,761)		(61)


	Number of	Weighted-		Number of	Weighted-		Number of	Weighted-
	Time-Based	Average Grant		Performance-	Average Grant		Market-	Average Grant
	Awards	Date Fair Value		Based Awards	Date Fair Value		Based Awards	Date Fair Value
Non-vested as of January 1, 2022	7,771,623	$	27.02	1,841,113	$	35.68	50,000	$	59.43
Granted	4,890,659		18.56	1,857,750		18.48	—		—
Vested	(4,927,151)		25.18	(520,129)		28.39	—		—
Forfeited or expired	(287,949)		24.07	(292,043)		35.59	—		—
Non-vested as of September 30, 2022	7,447,182		22.80	2,886,691		25.93	50,000		59.43


	Remainder of
	2022		2023		2024		2025		2026		2027		Thereafter		Total
Long-term debt (1)	$	446,559	$	1,610,548	$	4,202,925	$	1,527,174	$	2,338,005	$	3,283,685	$	2,980,662	$	16,389,558
Ship construction contracts (2)		81,979		2,232,211		983,027		1,396,004		871,534		761,282		—		6,326,037
Total	$	528,538	$	3,842,759	$	5,185,952	$	2,923,178	$	3,209,539	$	4,044,967	$	2,980,662	$	22,715,595




10.1		Commitment Letter, dated as of July 26, 2022, among NCL Corporation Ltd. And the purchasers named therein (incorporated herein by reference to Exhibit 10.1 to Norwegian Cruise Line Holdings Ltd.’s Form 8-K filed on July 29, 2022 (File No. 001-35784))
31.1*		Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2*		Certification of the Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1**		Certifications of the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code


101*		The following unaudited consolidated financial statements from Norwegian Cruise Line Holdings Ltd.’s Quarterly Report on Form 10‑Q for the quarterly period ended September 30, 2022, formatted in Inline XBRL:

		(i) the Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021;

		(ii) the Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021;

		(iii) the Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021;

		(iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021;

		(v) the Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2022 and 2021; and

		(vi) the Notes to the Consolidated Financial Statements.

104*		The cover page from Norwegian Cruise Line Holdings Ltd.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL and included in the interactive data files submitted as Exhibit 101.


	NORWEGIAN CRUISE LINE HOLDINGS LTD.
	(Registrant)

	By:	/s/ FRANK J. DEL RIO
	Name:	Frank J. Del Rio
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ MARK A. KEMPA
	Name:	Mark A. Kempa
	Title:	Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)


Dated: November 8, 2022