Royal Caribbean Reports 2019 First Quarter Earnings

Navigator of the Seas

Royal Caribbean Cruises today reported record first quarter results and updated its full year Adjusted EPS guidance to a range of $9.65 to $9.85 per share. 

This range includes negative impacts of $0.25 related to the incident in the Grand Bahama Shipyard and approximately $0.25 as a result of a stronger dollar and higher fuel prices versus the January guidance, the company said. 

The vast majority of these impacts are being offset by better first quarter results and an improved revenue outlook, said a press release.

For the first quarter, the company reported US GAAP earnings of $1.19 per share and adjusted earnings of $1.31 per share, beating the previous guidance mainly due to better revenue.

KEY HIGHLIGHTS

First Quarter 2019 results:

US GAAP Net Income was $249.7 million or $1.19 per share and Adjusted Net Income was $275.8 million or $1.31 per share. Last year, 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.

Gross Yields were up 10.8% in Constant-Currency (up 8.8% As-Reported). Net Yields were up 9.3% in Constant-Currency (up 7.2% As-Reported).

Gross Cruise Costs per Available Passenger Cruise Days ("APCD") increased 9.5% in Constant-Currency (up 8.5% As-Reported). Net Cruise Costs ("NCC") excluding Fuel per APCD were up 9.6% in Constant-Currency (up 8.7% As-Reported).

Full Year 2019 Outlook:

Net revenue yields in the first quarter beat the company's previous guidance and are expected to do so for the rest of the year as well. Overall, the company's booked position remains at a record level in both rate and volume, Royal Caribbean said.

Adjusted earnings for the full year are expected to be in the range of $9.65 to $9.85 per share. This range includes the negative impacts of $0.25 per share from the incident in the Grand Bahama Shipyard and approximately $0.25 per share from currency and fuel since the January guidance.

Net Yields are expected to increase 7.5% to 9.0% in Constant-Currency (up 6.5% to 8.0% As-Reported). These metrics include approximately 350 basis points from the operation of Silversea, the new cruise terminal and the Perfect Day development.

NCC excluding Fuel per APCD are expected to be up approximately 10.0% in Constant-Currency (up approximately 9.5% As-Reported). The main driver of the increase versus the January guidance is the loss of cruise days as a result of canceled sailings. These metrics include approximately 700 basis points from the operation of Silversea, the new cruise terminal and the Perfect Day development.

FIRST QUARTER 2019

US GAAP Net Income for the first quarter of 2019 was $249.7 million or $1.19 per share and Adjusted Net Income was $275.8 million or $1.31 per share, beating the January guidance by $0.21 per share.  Last year, 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. 

The improvement over last year was mainly driven by increased revenue from the global brands, according to the company.

Gross Yields were up 10.8% and Net Yields were up 9.3% in Constant-Currency, higher than the January guidance due to better than anticipated demand for onboard experiential products and activities as well as strong close in demand for core products.

Gross Cruise Costs per APCD increased 9.5% in Constant-Currency.  NCC excluding Fuel per APCD were up 9.6% in Constant-Currency, slightly lower than guidance, driven by timing.

Additionally, better than expected performance below the line, mainly due to better than expected performance from joint ventures, contributed to the first quarter's positive performance.

Bunker pricing net of hedging for the first quarter was $444.1 per metric ton and consumption was 360,700 metric tons.

"We are very pleased to report another record-breaking quarter and to be driving towards record earnings for the year," said Jason T. Liberty, executive vice president and CFO.  "The demand trends are strong, further exhibiting the strength for our brands and the public's growing propensity to cruise."

FULL YEAR 2019 OUTLOOK

The company expects its full year Adjusted EPS to be in the range of $9.65 to $9.85 per share.  This range includes the negative impact of $0.25 per share from the shipyard incident and also includes the negative impact of approximately $0.25 per share from currency and fuel since the January guidance.  Better first quarter results and an improved revenue outlook are offsetting the vast majority of these two negative impacts.  Excluding these impacts, Adjusted EPS would have been in the range of $10.15 to $10.35 per share.

Overall, the company's booked position remains at a record level in both rate and volume.  As it has in the past, the company noted that its booked position on rate and volume is a product of numerous factors including market forces, itinerary composition, market segmentation and the company's revenue management decisions.

Net Yields for the year are expected to increase 7.5% to 9.0% in Constant-Currency, up relative to prior guidance due to better results in the first quarter as well as stronger demand for the balance of the year.  While the incident at the Grand Bahama Shipyard had a negative impact on overall revenue, it was neutral to Net Yields.

NCC excluding Fuel for the year are expected to be up approximately 10.0% in Constant-Currency, higher than previous guidance mainly due to the canceled sailings that reduced capacity.

Taking into account current fuel pricing, interest and currency exchange rates, and the factors detailed above, the company estimates 2019 Adjusted EPS will be in the range of $9.65 to $9.85 per share.

"It is exciting to see our team exceeding the very bullish revenue targets we established at the beginning of the year," said Richard D. Fain, chairman and CEO.  "We continue to see another great year in a long line of positive results driven by the continued strength of our brands."

SECOND QUARTER 2019

Net Yields are expected to increase approximately 9.5% in Constant-Currency and 8.0% to 8.5% As-Reported.  These metrics include approximately 400 basis points from the operation of Silversea, the new cruise terminal and the Perfect Day development.

NCC excluding Fuel per APCD for the quarter are expected to increase approximately 10.0% in Constant-Currency and 9.0% to 9.5% As-Reported.  These metrics include approximately 800 basis points from the operation of Silversea, the new cruise terminal and the Perfect Day development.

Based on current fuel pricing, interest and currency exchange rates, and the factors detailed above, the company expects second quarter Adjusted EPS to be in the range of $2.45 to $2.50 per share.  Excluding the impact from the Grand Bahama Shipyard incident, and the currency and fuel headwinds versus the January guidance, Adjusted EPS for the second quarter would have been in the range of $2.65 to $2.70 per share.

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