Royal Caribbean Reports Q4 and Full Year 2017

Adventure of the Seas (Photo: Cees Bustraan)

Royal Caribbean Cruises reported 2017 US GAAP and adjusted earnings of $7.53 per share — beating the its own Double-Double EPS target and the mid-point of previous guidance by $0.75 and $0.16, respectively.  In addition, the company announced that 2018 adjusted earnings are expected to be in the range of $8.55 to $8.75 per share, according to a statement. 

KEY HIGHLIGHTS

Full Year 2017:

- US GAAP and Adjusted Net Income were $1.63 billion or $7.53 per share. Last year, US GAAP Net Income was $1.28 billion, or $5.93 per share, and Adjusted Net Income was $1.31 billion, or $6.08 per share.

- Gross Yields were up 5.7% on a Constant-Currency basis (up 5.9% As-Reported). Net Yields were up 6.4% on a Constant-Currency basis (up 6.5% As-Reported).

- Gross Cruise Costs per APCD increased 1.9% on a Constant-Currency and As-Reported basis. Net Cruise Costs ("NCC") excluding Fuel per APCD were up 2.0% on a Constant-Currency and As-Reported basis.

Full Year 2018 Outlook:

- Adjusted earnings are expected to be in the range of $8.55 to $8.75 per share.

- Net Yields are expected to increase 1.5% to 3.5% on a Constant-Currency basis (up 2.75% to 4.75% As-Reported).

- NCC excluding Fuel per APCD are expected to be up 1.5% to 2.0% on a Constant-Currency basis (up 2.0% to 2.5% As-Reported).

FULL YEAR 2017

US GAAP and Adjusted Net Income for the year were $1.63 billion or $7.53 per share.  This result beat the January 2017 mid-point guidance by $0.53 or $115 million and equates to a 23.8% year-over-year growth in earnings per share.  This result was achieved despite an unusually ferocious hurricane season which hurt earnings by approximately $55 million or $0.26 per share.

"Our teams worked hard to achieve the Double-Double goals and now they have done it", said Richard D. Fain, chairman and CEO.  "Each of the brands performed excellently during the past year raising their guest satisfaction and employee engagement scores to new heights.  This augurs well as we focus on our previously announced 20/20 Vision."

Net Yields increased 6.4% on a Constant-Currency basis versus 3.9% in 2016.  A combination of strong demand for North American and European products as well as the onboard offerings drove the impressive growth rate, the company said. 

NCC excluding Fuel per APCD were up 2.0% on a Constant–Currency basis mainly driven by investments in revenue generating activities, relief efforts due to the hurricanes and payroll related incentives. 

"We started the year very well positioned to achieve our Double-Double goals, and 2017 ended up being exceptionally good, resulting in the company exceeding these goals," said Jason T. Liberty, executive vice president and CFO.  "Strong demand trends for cruising coupled with disciplined cost management helped deliver another record year for the company."

FOURTH QUARTER RESULTS

US GAAP and Adjusted Net Income for the fourth quarter were $288.0 million or $1.34 per share.  Last year, US GAAP and Adjusted Net Income were $261.1 million or $1.21 per share and $264.7 million, or $1.23 per share. 

Gross Yields were up 4.1% on a Constant-Currency basis.  Net Yields were up 3.9% on a Constant-Currency basis, beating the mid-point of the guidance by 165 basis points.  Strong close-in demand for our core products combined with better than expected onboard spend drove the outperformance.

Gross Cruise Costs per APCD increased 5.6% on a Constant-Currency basis.  Net Cruise Costs ("NCC") excluding Fuel per APCD were up 8.7% on a Constant-Currency basis.

Today, the company also announced that it will give a bonus to every one of its 66,000 employees equal to 5% of their salary, excluding corporate officers. This Thank-you, Thank-you Bonus will be in the form of equity grants vesting over 3 years, thus giving every employee a stake in the company's future success. 

The Thank-you, Thank-you Bonus totals approximately $80 million.  It will also include major upgrading of crew facilities and recreation areas.

"Our people are what make our business," said Richard D. Fain, chairman and CEO.  "We wanted to show our appreciation in a tangible way and we wanted it to reach every employee regardless of level in the organization.  It was our way of saying thanks a million; in fact, thanks 80 million."

FULL YEAR 2018

The company's booked position for 2018 is better than last year's record high and at higher rates.  North American and European consumers continue to drive strong demand for all of our main products.  These trends, coupled with strong onboard spend and a positive outlook for our Asia Pacific products, are positioning the company for a ninth consecutive year of yield growth, according to a press release. 

The company expects a Net Yield increase in the range of 1.5% to 3.5% on a Constant-Currency basis and 2.75% to 4.75% on an As-Reported basis for the full year.

"Our yields are increasing on top of an exceptional 6.4% Net Yield growth experienced in 2017," said Jason T. Liberty, executive vice president and CFO.  "This is quite extraordinary and a testament to the strength in the demand for cruising and our brands."

NCC excluding Fuel are expected to be up 1.5% to 2.0% on a Constant-Currency and 2.0% to 2.5% on an As-Reported basis.

Taking into account current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company estimates 2018 Adjusted EPS will be in the range of $8.55 to $8.75 per share.

FIRST QUARTER 2018

Net Yields are expected to increase 3.0% to 3.5% on a Constant-Currency basis and approximately 5.5% As-Reported.

NCC excluding Fuel per APCD for the quarter are expected to be up approximately 10.0% on a Constant-Currency basis (up approximately 11.0% As-Reported).  Operating costs for the full year show continued good discipline, although the cadence of costs between quarters will vary.  Costs in the first quarter are expected to be higher driven by more drydock days, fewer APCDs and the lapping of hardware changes.

Based on current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects first quarter Adjusted EPS to be approximately $0.95 per share.

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