Booking Environment and Outlook
|●||In November 2021, NCL Corporation Ltd. (“NCLC”) entered into a $1.0 billion commitment through August 15, 2022 that provides additional liquidity to the Company. If drawn, this commitment will convert into an unsecured note maturing in April 2024. The Company has not drawn and currently does not intend to draw under this commitment.|
|●||In November 2021, NCLC issued $1.15 billion aggregate principal amount of 1.125% Exchangeable Senior Notes due 2027 (the “2027 Exchangeable Notes”), which includes the full exercise of the initial purchasers’ greenshoe option. The initial exchange rate per $1,000 principal amount of 2027 Exchangeable Notes is 29.6850 ordinary shares, which is equivalent to an initial exchange price of approximately $33.69 per ordinary share, subject to adjustment in certain circumstances.|
|●||In November 2021, we repurchased $715.9 million aggregate principal amount of our 6.00% Exchangeable Senior Notes due 2024 (the “2024 Exchangeable Notes”) for approximately $1.4 billion.|
|●||In November 2021, the Company issued 46,858,854 ordinary shares to certain holders of the 2024 Exchangeable Notes in a registered direct offering. The proceeds of such offering were used to redeem $236.25 million aggregate principal amount of our 12.25% Senior Secured Notes due 2024 and $262.50 million aggregate principal amount of our 10.250% Senior Secured Notes due 2026, including any accrued but unpaid interest thereon, to pay related premiums, fees and expenses and for general corporate purposes, including the repurchase of a portion of the 2024 Exchangeable Notes.|
Our monthly average cash burn for the fourth quarter of 2021 was approximately $345 million, slightly lower than our prior estimate of $350 million for the fourth quarter of 2021. The cash burn rate includes ongoing ship operating expenses, administrative operating expenses, interest expense, taxes, debt deferral fees and non-newbuild capital expenditures and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings, newbuild related capital expenditures and other working capital changes.
About Norwegian Cruise Line Holdings Ltd.
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. With a combined fleet of 28 ships with nearly 60,000 berths, these brands offer itineraries to more than 490 destinations worldwide. The Company has nine additional ships scheduled for delivery through 2027, comprising approximately 24,000 berths.
Norwegian Cruise Line Holdings Ltd. established its SailSAFE health and safety program in response to the unique challenges of the COVID-19 global pandemic to protect guests, crew and communities visited. SailSAFE is a robust and comprehensive health and safety strategy with new and enhanced protocols to create multiple layers of protection against COVID-19. This science-backed plan for a safe and healthy return to cruising was developed in conjunction with a diverse group of globally recognized experts and will be continuously improved, modified and refined using the best available science and technology. For more information on the SailSAFE health and safety program please visit http://www.nclhltd.com/Health-and-Safety.
About the SailSAFE Global Health and Wellness Council
The SailSAFE Global Health and Wellness Council (“Council”) was established by Norwegian Cruise Line Holdings Ltd. to provide expert advice on the implementation, compliance with and continuous improvement of the Company’s SailSAFE health and safety program. The Council will complement the work of the Healthy Sail Panel and continuously evaluate and identify ways to improve health and safety standards, utilizing the best technologies and information available. The Council is cross-functional, diverse and extensively experienced, comprised of four experts at the forefront of their fields and led by Chairman of the Council, Dr. Scott Gottlieb, former commissioner of the U.S. Food and Drug Administration.
Adjusted Net Income. Net income, adjusted for non-cash compensation expense and any potential impacts associated with financing activities.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures, such as Adjusted Net Income, to enable us to analyze our performance. Adjusted Net Income is non-GAAP financial measure that excludes certain amounts and is used to supplement GAAP net income. We use Adjusted Net Income as a key performance measure of our earnings performance. We believe that both management and investors benefit from referring to this non-GAAP financial measure in assessing our performance and when planning, forecasting and analyzing future periods. This non-GAAP financial measure also facilitate management’s internal comparison to our historical performance. The amounts excluded in the presentation of this non-GAAP financial measure may vary from period to period; accordingly, our presentation of Adjusted Net Income may not be indicative of future adjustments or results. The Company does not provide estimated future results on a GAAP basis because the Company is unable to predict, with reasonable certainty, the future movement of foreign exchange rates or the future impact of certain gains and charges. These items are uncertain and will depend on several factors, including industry conditions, and could be material to the Company’s results computed in accordance with GAAP.
|●||the spread of epidemics, pandemics and viral outbreaks and specifically, the COVID-19 pandemic, including its effect on the ability or desire of people to travel (including on cruises), which is expected to continue to adversely impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price;|
|●||implementing precautions in coordination with regulators and global public health authorities to protect the health, safety and security of guests, crew and the communities we visit and to comply with regulatory restrictions related to the pandemic and the implementation of any such precautions;|
|●||legislation prohibiting companies from verifying vaccination status;|
|●||our indebtedness and restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and be in compliance with maintenance covenants and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements;|
|●||our ability to work with lenders and others or otherwise pursue options to defer, renegotiate, refinance or restructure our existing debt profile, near-term debt amortization, newbuild related payments and other obligations and to work with credit card processors to satisfy current or potential future demands for collateral on cash advanced from customers relating to future cruises;|
|●||our need for additional financing or financing to optimize our balance sheet, which may not be available on favorable terms, or at all, and our outstanding exchangeable notes and any future financing which may be dilutive to existing shareholders;|
|●||the unavailability of ports of call;|
|●||future increases in the price of, or major changes or reduction in, commercial airline services;|
|●||changes involving the tax and environmental regulatory regimes in which we operate, including new regulations aimed at reducing greenhouse gas emissions;|
|●||the accuracy of any appraisals of our assets as a result of the impact of the COVID-19 pandemic or otherwise;|
|●||our success in controlling operating expenses and capital expenditures;|
|●||trends in, or changes to, future bookings and our ability to take future reservations and receive deposits related thereto;|
|●||adverse events impacting the security of travel, such as terrorist acts, armed conflict and threats thereof, acts of piracy, and other international events;|
|●||adverse incidents involving cruise ships;|
|●||adverse general economic and related factors, such as fluctuating or increasing levels of unemployment, underemployment and the volatility of fuel prices, declines in the securities and real estate markets, and perceptions of these conditions that decrease the level of disposable income of consumers or consumer confidence;|
|●||breaches in data security or other disturbances to our information technology and other networks or our actual or perceived failure to comply with requirements regarding data privacy and protection;|
|●||changes in fuel prices and the type of fuel we are permitted to use and/or other cruise operating costs;|
|●||mechanical malfunctions and repairs, delays in our shipbuilding program, maintenance and refurbishments and the consolidation of qualified shipyard facilities;|
|●||the risks and increased costs associated with operating internationally;|
|●||our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues;|
|●||our inability to obtain adequate insurance coverage;|
|●||pending or threatened litigation, investigations and enforcement actions;|
|●||any further impairment of our trademarks, trade names or goodwill;|
|●||volatility and disruptions in the global credit and financial markets, which may adversely affect our ability to borrow and could increase our counterparty credit risks, including those under our credit facilities, derivatives, contingent obligations, insurance contracts and new ship progress payment guarantees;|
|●||our reliance on third parties to provide hotel management services for certain ships and certain other services;|
|●||fluctuations in foreign currency exchange rates;|
|●||our expansion into new markets and investments in new markets and land-based destination projects;|
|●||overcapacity in key markets or globally; and|
|●||other factors set forth under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021.|
Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 pandemic. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown.
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