MW Norwegian Cruise on Trump's call to pay U.S. taxes: It's 'really, really complicated'

By Tomi Kilgore

Norwegian's earnings show the cruise boom continued, but the outlook exposed some cracks and the stock turned lower

Shares of Norwegian Cruise Line Holdings Ltd. turned lower Thursday, after the cruise operator swung to a fourth-quarter profit that beat expectations by a wide margin, but provided an outlook on profitability that showed some cracks in the cruise industry's armor.

And when asked on its postearnings call with analysts about the Trump administration's call for cruise operators to start paying U.S. taxes, company executives responded by saying it's too "complicated" to make any assumptions or predictions.

Norwegian's stock $(NCLH)$ rose as much as 3.8% in the first minute after the opening bell, but quickly reversed coursed. It was down 2.3% in recent trading, toward a four-month low.

A week ago, newly confirmed U.S. Commerce Secretary Howard Lutnick pointed out that cruise operators, which have headquarters in the U.S. but are incorporated in foreign companies, don't pay any U.S. taxes. He echoed President Donald Trump's sentiment by saying in an interview on Fox News that "those taxes are going to be paid."

Read: Will cruise operators actually have to pay U.S. taxes? The prospect is hurting their stocks.

Chief Executive Harry Sommer said somewhat jokingly that before the call started, the company had discussed how many questions about the tax issue would come up, especially since Norwegian was the first cruise operator to report earnings since Lutnick's comments. On a more serious note, Sommer said the tax code that gives Norwegian an exemption from paying U.S. taxes is "really, really complicated," and would need legislation for it to change.

"Now considering how many moving pieces there are, and the complexity of our business and the complexity or the variety, if you will, of our deployment, and the relatively short amount of time our ships are in U.S. waters ... it's really hard for us to speculate on what this would mean to us," Sommer said, according to an AlphaSense transcript of the call.

He added that over time, if there is more clarity on the issue, then he might be able to comment.

Regarding the outlook for this year, the company said it continues to experience "strong consumer demand for its offerings across itineraries" through 2025 and into 2026.

"As a result, the company remains at its optimal booked position on a 12-month forward basis," Norwegian said in a statement.

But despite that upbeat bookings outlook and better-than-expected fourth-quarter results, the stock still fell as its guidance on profitability was below expectations.

For full-year 2025, Norwegian expects adjusted earnings per share, which excludes nonrecurring items, of approximately $2.05, which is below the current average EPS estimate of analysts surveyed by FactSet of $2.09.

And net yield, a measure of profitability per passenger cruise day, is seen growing 2.4% in 2025, while analysts were modeling for a rise of 4%.

The company also expects occupancy of about 103.4% for the year, down from 104.9% in 2024.

Meanwhile, net income for the quarter ended Dec. 31 was $254.5 million, or 52 cents a share, after a loss of $106.5 million, or 25 cents a share, in the same period a year prior. Results were hurt last year by the conflict in Israel and the Red Sea.

Excluding certain items, adjusted EPS was 26 cents, well above the FactSet consensus of 11 cents.

Revenue grew 6.2% to $2.11 billion, just above the FactSet consensus of $2.10 billion.

Passenger-ticket revenue was up 5.7% to $1.41 billion, in line with the FactSet consensus. Onboard and other revenue increased 7.2% to $700.6 million, above expectations of $683.9 million.

Net yield for the quarter rose by 9%, including the impact of currency moves, to beat the FactSet consensus of 5.3% growth.

Norwegian's stock has slipped 4.9% this year to date, after running up 28.4% in 2024 and 63.7% in 2023. The S&P 500 index SPX has gained 1% so far this year after advancing 23.3% last year.

-Tomi Kilgore

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February 27, 2025 12:47 ET (17:47 GMT)

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