Royal Caribbean Reports 2018 Full Year and Q4 Earnings

Serenade of the Seas

Royal Caribbean Cruises today reported 2018 US GAAP earnings of $8.56 per share and adjusted earnings of $8.86 per share. In addition, the company announced that 2019 adjusted earnings are expected to be in the range of $9.75 to $10.00 per share.

For 2018, US GAAP Net Income was $1.8 billion or $8.56 per share and Adjusted Net Income was $1.9 billion or $8.86 per share in 2018 versus US GAAP and Adjusted Net Income of $1.6 billion or $7.53 per share in 2017. 

Gross Yields were up 3.8% in Constant-Currency (up 3.9% As-Reported). Net Yields were up 4.4% in Constant-Currency (up 4.5% As-Reported). 

Gross Cruise Costs per Available Passenger Cruise Days ("APCD") increased 3.0% in Constant-Currency (up 3.2% As-Reported). Net Cruise Costs ("NCC") excluding Fuel per APCD were up 4.1% in Constant-Currency (up 4.4% As-Reported).

For the full year 2019, the company said adjusted earnings are expected to be in the range of $9.75 to $10.00 per share. 

Net Yields are expected to increase 6.5% to 8.5% in Constant-Currency and 6.0% to 8.0% As-Reported. These metrics include approximately 350 basis points from the operation of Silversea, the new cruise terminal in Miami and the Perfect Day development. 

NCC excluding Fuel per APCD are expected to increase 8.5% to 9.0% in Constant-Currency and 8.25% to 8.75% As-Reported. These metrics include approximately 650 basis points from the operation of Silversea, the cruise terminal in Miami and the Perfect Day development.

2018 Highlights 

US GAAP Net Income for the year was $1.8 billion or $8.56 per share and Adjusted Net Income was $1.9 billion or $8.86 per share. This result beat the January 2018 mid-point guidance by $0.21 per share and equates to a 17.5% year-over-year growth in adjusted earnings per share. This result was achieved despite the unfavorable impact from currency and fuel which negatively affected earnings by approximately $123 million or $0.58 per share versus the January 2018 guidance.

"This year our teams achieved record financial results while introducing four new vessels, acquiring Silversea Cruises, inaugurating two stunning cruise terminals and implementing Excalibur on about half of our fleet," said Richard D. Fain, chairman and CEO. "By any measure 2018 was a particularly stellar year, and the strong Wave makes us optimistic about 2019 as well."

Net Yields were up 4.4% in Constant-Currency. Strong demand for core products, better onboard revenues and the consolidation from Silversea's operations drove the year-over-year increase, the company said.

NCC excluding Fuel per APCD were up 4.1% in Constant-Currency. The main drivers behind the year-over-year increase were more drydock days, the lapping of hardware changes, investments in technology and the consolidation of Silversea's operations.

US GAAP Net Income for the fourth quarter was $315.7 million or $1.50 per share and Adjusted Net Income was $322.1 million or $1.53 per share. Last year, US GAAP and Adjusted Net Income were $288.0 million or $1.34 per share.

Gross Yields were up 7.3% in Constant-Currency. Net Yields were up 6.8% in Constant-Currency, slightly better than the midpoint of guidance.

Gross Cruise Costs per APCD increased 6.1% in Constant-Currency. NCC excluding Fuel per APCD were up 5.1% in Constant-Currency, lower than guidance, driven by timing.

Favorability from depreciation and joint ventures also contributed to the quarter's positive performance.

Lastly, a combination of a stronger dollar and fuel rates negatively impacted the quarter by $0.04.

Bunker pricing net of hedging for the fourth quarter was $546.70 per metric ton and consumption was 357,700 metric tons.

The company expects full year Adjusted EPS guidance to be in the range of $9.75 to $10.00 per share for the full year 2019.

Wave Season has started on a strong note and the company's overall booked position for 2019 is better than last year's record high and at higher rates, the company said.

The company expects a Net Yield increase in the range of 6.5% to 8.5% in Constant-Currency and 6.0% to 8.0% As-Reported for the full year.

These metrics include approximately 350 basis points from the operation of Silversea, the cruise terminal in Miami and the Perfect Day water-park and resort on the island of Cococay in The Bahamas, which will launch in May of 2019.

As an ultra-luxury brand, Silversea's revenues and expenses, on a per APCD basis, are both higher than the company's average.

Moreover, the new Miami based terminal and Perfect Day will also increase both company revenue and cost metrics, since their additions do not include APCDs. 

"Our yield outlook for 2019 is very encouraging" said Jason T. Liberty, executive vice president and CFO. "Demand for our brands continues to accelerate and we are well positioned for another year of double-digit growth in our earnings per share."

Q1 2019

Net Yields are expected to increase 7.5% to 8.0% in Constant-Currency and 5.5% to 6.0% As-Reported in the first quarter. These metrics include approximately 375 basis points from the operation of Silversea and the cruise terminal in Miami.

NCC excluding Fuel per APCD for the quarter are expected to be up approximately 10% in Constant-Currency (up 9.0% to 9.5% As-Reported). These metrics include approximately 800 basis points from the operation of Silversea, the cruise terminal in Miami and the Perfect Day development.

The company also noted that Silversea's seasonality is similar to RCL's core products. Silversea, which was acquired on July 31 2018, will be accounted for on a one quarter lag. Its traditionally weaker fourth quarter will therefore be included in RCL's first quarter results.

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 $1.10 per share.

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