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Royal Caribbean Reports Second Quarter Earnings

CoCoCay

Royal Caribbean Cruises today reported record second quarter results and updated its full year Adjusted EPS guidance to a range of $9.55 to $9.65 per share versus the company's latest midpoint guidance of $9.45 per share (including the impact of the Cuban travel restrictions). 

This is an improvement of approximately $0.15 per share due to better second quarter results and an improved revenue outlook for the second half of the year, according to a statement.

For the second quarter, the company reported US GAAP earnings of $2.25 per share and adjusted earnings of $2.54 per share.

Second Quarter 2019 Results:

US GAAP Net Income was $472.8 million or $2.25 per share and Adjusted Net Income was $532.7 million or $2.54 per share. Last year, US GAAP Net Income was $466.3 million or $2.19 per share, and Adjusted Net Income was $482.2 million or $2.27 per share.

Gross Yields were up 9.4% in Constant-Currency (up 8.2% As-Reported). Net Yields were up 9.5% in Constant-Currency (up 8.1% As-Reported). These results include a 30 basis point negative impact related to the discontinuation of the high yielding Cuba sailings.

Gross Cruise Costs per Available Passenger Cruise Days ("APCD") increased 8.2% in Constant-Currency (up 7.4% As-Reported). Net Cruise Costs ("NCC") excluding Fuel per APCD were up 8.9% in Constant-Currency (up 8.2% As-Reported).

Full Year 2019 Outlook:

Adjusted earnings for the full year are expected to be in the range of $9.55 to $9.65 per share.

Net revenue yields are expected to increase 7.75% to 8.25% in Constant-Currency (up 6.5% to 7.0% As-Reported). This range includes approximately 70 basis points related to the discontinuation of the high yielding Cuba sailings.

NCC excluding Fuel per APCD are expected to be up 10.0% to 10.5% in Constant-Currency (up 9.5% to 10.0% As-Reported).

"We are elated to see our brands executing so effectively, keeping our business in an exceptionally strong position," said Richard D. Fain, chairman and CEO.  "Our strategic focus on destinations, technology and people is clearly paying off.  And, our core products are doing exceptionally well, driven by a gratifyingly robust demand for the Caribbean."

SECOND QUARTER 2019

US GAAP Net Income for the second quarter of 2019 was $472.8 million or $2.25 per share and Adjusted Net Income was $532.7 million or $2.54 per share.  Last year, US GAAP Net Income was $466.3 million or $2.19 per share and Adjusted Net Income was $482.2 million or $2.27 per share.  The improvement over last year was mainly driven by increased revenue from global brands.

Gross Yields were up 9.4% and Net Yields were up 9.5% in Constant-Currency, within guidance.  Better demand for onboard experiences as well as strong close-in demand for the company's core products fully offset the impact from the travel restrictions to Cuba which equated to 30 basis points for the quarter.

Gross Cruise Costs per APCD increased 8.2% in Constant-Currency.  NCC excluding Fuel per APCD were up 8.9% in Constant-Currency, better than guidance, driven by timing.  The travel restrictions to Cuba were neutral to NCC excluding Fuel in the second quarter.

Additionally, lower interest expense contributed to the second quarter's positive performance.

Bunker pricing net of hedging for the second quarter was $483.8 per metric ton and consumption was 374,600 metric tons.

FULL YEAR 2019 OUTLOOK

The company expects its full year Adjusted EPS to be in the range of $9.55 to $9.65 per share.  The midpoint of the company's latest Adjusted EPS guidance was $9.45 (including the impact of the Cuban travel restriction).  Thus, the midpoint of the company's guidance has improved by approximately $0.15 per share due to better second quarter results and an improved revenue outlook for the second half of the year.

Net Yields for the year are expected to increase 7.75% to 8.25% in Constant-Currency.  This guidance includes the impact of approximately 70 basis points related to the discontinuation of the high yielding Cuba sailings.  Excluding this impact, the midpoint of the company's Net Yield guidance has improved by approximately 40 basis points versus previous guidance driven by better demand for core products in the second half of the year.

NCC excluding Fuel for the year are expected to be up 10.0% to 10.5% in Constant-Currency. This guidance reflects an increase in costs related to the travel restrictions to Cuba.

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 $9.55 to $9.65 per share.

"The company's booked position for the remainder of 2019 continues to set new records with all core products in line or ahead of the company's previous expectations," said Jason T. Liberty, executive vice president and CFO.  "While it is too early to provide detailed color on 2020, we are delighted that bookings are already off to a very strong start."

THIRD QUARTER 2019

Net Yields are expected to increase approximately 6.5% in Constant-Currency and 5.5% to 6.0% As-Reported.  These metrics include approximately 340 basis points from the operation of Silversea, the new cruise terminal and the Perfect Day development.  These Net Yields were negatively impacted by approximately 110 basis points related to the discontinuation of the Cuba sailings.

NCC excluding Fuel per APCD for the quarter are expected to increase approximately 11.0% in Constant-Currency and approximately 10.5% As-Reported.  These metrics include approximately 850 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 third quarter Adjusted EPS to be approximately $4.35 per share.

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