Norwegian Cruise Line Beats 2025 Earnings Targets Despite Debt Load

Norwegian Cruise Line Holdings (NCLH) announced its financial results for the fourth quarter and the full year ending December 31, 2025, outlining steady revenue expansion alongside shifts in profitability and margins.

Margin expansion in the fourth quarter of 2025

• The company generated total revenue of $2.2 billion, a 6 percent increase from the same period in 2024. This growth was largely supported by an increase in Capacity Days, meaning more available passenger cruise days were offered and sold across the fleet.
• GAAP net income declined significantly year over year, reaching $14.3 million compared to $254.5 million in the fourth quarter of 2024.
• Earnings per share were $0.03, reflecting the lower net income reported under GAAP.
• Gross margin per Capacity Day rose 7.6 percent compared to 2024 on an as-reported basis and improved 8.1 percent when measured on a Constant Currency basis. This indicates stronger profitability per available cruise day, even when excluding currency fluctuations.
• Net yield, which reflects revenue earned per passenger cruise day after adjustments, increased approximately 4.0 percent on an as-reported basis and 3.8 percent on a Constant Currency basis. These results aligned closely with the company’s previously issued guidance range of 3.5 to 4.0 percent.
• Adjusted EBITDA for the quarter increased 20 percent to $564 million, up from $468 million in 2024, surpassing the company’s guidance target of $555 million.
• Adjusted EPS climbed 46 percent to $0.28, exceeding guidance of $0.27 and signaling stronger underlying operational momentum despite the GAAP earnings decline.

Full year 2025 performance reflects moderate expansion

• Total revenue reached $9.8 billion, a 3.7 percent increase from 2024. As in the fourth quarter, revenue growth was primarily fueled by higher Capacity Days across the fleet.
• GAAP net income for the year totaled $423.2 million, down from $910.3 million in the prior year, with earnings per share of $0.92. While profitability under GAAP declined year over year, the company continued to demonstrate operational improvements in key performance metrics.
• Gross margin per Capacity Day improved 6.3 percent on an as-reported basis and 7.1 percent on a Constant Currency basis compared to 2024.
• Net yield increased approximately 2.3 percent as reported and 2.4 percent on a Constant Currency basis, in line with the company’s guidance range of 2.4 to 2.5 percent.
• Adjusted EBITDA for the full year rose 11 percent to $2.73 billion, compared to $2.45 billion in 2024, slightly exceeding the guidance target of $2.72 billion.
• Adjusted EPS increased 19 percent to $2.11, outperforming the projected $2.10.
• At year-end, total debt was $14.6 billion, and net debt was $14.4 billion. Net leverage reached 5.3x as of December 31, 2025, reflecting the company’s current debt position relative to earnings.

2026 outlook signals continued earnings improvement

Looking ahead, the company projects continued financial progress in 2026.

• Full-year adjusted EBITDA is expected to reach approximately $2.95 billion, indicating anticipated growth in operating profitability.
• The full-year adjusted operational EBITDA Margin is forecast at approximately 37 percent, suggesting further efficiency improvements and margin expansion.
• Full-year adjusted net income is projected to total approximately $1.12 billion, with adjusted EPS expected to reach $2.38.
• By the end of 2026, net leverage is expected to improve slightly to around 5.2x, reflecting gradual balance-sheet strengthening while maintaining operational growth.

A couple of weeks ago, Elliott Management, a US-based activist hedge fund, revealed that it had built a stake of more than 10 percent in NCLH, making Elliott one of the company’s most influential shareholders. After the announcement, shares rose about 6 percent in morning trading.

Photo by Alonso Reyes on Unsplash