Royal Caribbean: Record First Quarter Earnings, Increases Full Year Guidance

The new Symphony of the Seas

Royal Caribbean Cruises today reported record first quarter results and increased its outlook for the full year, according to a company statement.

The company reported first quarter US GAAP earnings of $1.02 per share and Adjusted earnings of $1.09 per share beating guidance due to better revenue. Full year Adjusted earnings guidance is increased by $0.15 to a range of $8.70 to $8.90 per share.

Results for the First Quarter 2018:

  • US GAAP Net Income was $218.7 million or $1.02 per share and Adjusted Net Income was $232.8 million or $1.09 per share versus US GAAP and Adjusted Net Income of $214.7 million or $0.99 per share in 2017.
  • Gross Yields were up 3.1% in Constant-Currency (up 5.1% As-Reported). Net Yields were up 4.9% in Constant-Currency (up 7.0% As-Reported).
  • Gross Cruise Costs per APCD increased 5.0% in Constant-Currency (up 6.1% As-Reported). Net Cruise Costs ("NCC") excluding Fuel per APCD were up 11.2% in Constant-Currency (up 12.5% As-Reported)

Full Year 2018:

  • Overall, the company's booked position remains at a record level, better than last year in both rate and volume.
  • Adjusted earnings are expected to be in the range of $8.70 to $8.90 per share, up $0.15 from initial guidance.
  • Net Yields are expected to increase 2.0% to 3.75% in Constant-Currency (up approximately 4.0% As-Reported).
  • NCC excluding Fuel per APCD are expected to be up approximately 2.5% in Constant-Currency (up 3.0% to 3.5% As-Reported).

"This year is proving to be another strong year with all our brands firing on all cylinders," said Richard D. Fain, chairman and CEO. "The market continues to support our growth as our people keep focused on delivering our targets and goals. The strength of this market plus our new ships in 2018 (Symphony of the Seas, Azamara Pursuit, Mein Schiff 1 and Celebrity Edge), position us nicely for 2019 as well."

FIRST QUARTER 2018

US GAAP Net Income for the first quarter of 2018 was $218.7 million or $1.02 per share and Adjusted Net Income was $232.8 million or $1.09 per share. Last year, US GAAP and Adjusted Net Income were $214.7 million or $0.99 per share. The improvement over last year and over previous guidance was mainly driven by better than expected revenue from our global brands and our joint ventures.

Gross Yields were up 3.1% and Net Yields were up 4.9% in Constant-Currency. Demand for our core products came in as expected, while demand for experiential related onboard products and activities was better than anticipated. Net Onboard revenue yields grew by 6.3% in Constant-Currency.

Gross Cruise Costs per APCD increased 5.0% in Constant-Currency. Net Cruise Costs ("NCC") excluding Fuel per APCD were up 11.2% in Constant-Currency, higher than guidance, driven by timing.

Bunker pricing net of hedging for the first quarter was $500.2 per metric ton and consumption was 320.6 metric tons.

"We are delighted to report another record breaking quarter and to be driving towards record earnings for the year, above our initial guidance," said Jason T. Liberty, executive vice president and CFO. "Revenues continue to excel and expenses, even including some new demand generating initiatives, continue to be carefully controlled."

During this quarter the company completed the $500 million share repurchase program authorized a year ago.

FULL YEAR 2018

The company has increased its forecast of full year Adjusted EPS to a range of $8.70 to $8.90 per share, $0.15 above the previous guidance.

The company's 2018 booked position is better than last year's record high and ahead in both volume and rate. All core products are generally in line with the company's previous expectations.

The company expects a Net Yield increase in the range of 2.0% to 3.75% in Constant-Currency and approximately 4.0% As-Reported for the full year.

NCC excluding Fuel are expected to be up approximately 2.5% in Constant-Currency and up 3.0% to 3.5% As-Reported. This revised cost guidance reflects some shifts related to our joint ventures that will be shown below the operating profit line versus above line. The updated guidance also reflects increased investments in demand generating activities.

Taking into account current fuel pricing, interest and currency exchange rates, and the factors detailed above, the company estimates 2018 Adjusted EPS will be in the range of $8.70 to $8.90 per share.

SECOND QUARTER 2018

An unusually strong market in 2017 generated an unusually strong Net Yield increase of 11.5% during the second quarter of 2017. That, plus the timing of the Easter vacation period make for a tough year-over-year comparable. Nevertheless the company expects Constant-Currency Net Yields to be up in the range of 1.5% to 2.0% for the second quarter of 2018.

NCC Excluding Fuel are expected to be up approximately 5.0% in Constant-Currency. The elevated cost comparable for the quarter is the result of additional drydock days and further investments in the product and demand generating activities.

Based on current fuel pricing, interest and currency exchange rates, and the factors detailed above, the company expects second quarter Adjusted EPS to be $1.85 to $1.90 per share.

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