Royal Caribbean Cruises has reported record third quarter US GAAP earnings of $4.20 per share and adjusted earnings of $4.27 per share.
These figures include a $0.13 negative impact from Hurricane ‘Dorian’.
The company also updated its full year Adjusted EPS guidance to a range of $9.50 to $9.55 per share, which includes a negative impact of about $0.15 per share from ‘Dorian’.
“Our business continues to thrive and exceed our expectations,” said Richard Fain, chairman and CEO. “While Hurricane ‘Dorian’ had a negative impact, stronger demand for our brands and our key itineraries exceeded our expectations.
“Excluding the hurricane impact, we are not only able to maintain our yield and earnings guidance, but to raise both slightly as a result of particularly strong performance in the US and China,” he said.
For 3Q19, US GAAP net income was $883.2 mill or $4.20 per share and adjusted net income was $896.8 mill or $4.27 per share including the negative impact of around $27 mill or $0.13 per share from itinerary disruptions and relief efforts related to Hurricane ‘Dorian’.
In 3Q18, US GAAP net income was $810.4 mill or $3.86 per share, and adjusted net income was $836.3 mill or $3.98 per share.
For 3Q19, gross yields were up 6.6% in constant-currency (up 5.4% as-reported), while net yields were up 6.4% in constant-currency (up 5.2% as-reported).
Gross cruise costs per available passenger cruise days (APCD) increased 7.5% in constant-currency (up 6.7% as-reported). Net cruise costs (NCC) excluding fuel per APCD were up 11% in constant-currency (up 10.4% as-reported).
For the full year, net revenue yields are expected to increase around 8% in constant-currency and about 6.75% as-reported.
NCC excluding fuel per APCD are expected to be up about 11% in constant-currency (up around 10.5% as-reported).
Hurricane ‘Dorian’ had an unusual, one-time impact on RCI’s financial performance, as three main Florida embarkation ports closed on a weekend as a precautionary measure.
These measures impacted 16 sailings and made this the most disruptive storm in the company’s history. The financial impact was particularly large because the affected ships included the ‘Oasis’ class ships.
The combination of guest compensation, the closure of Perfect Day at Cococay and the relief efforts negatively impacted the third quarter by $27 mill or $0.13 per share and the full year by around $30 mill or $0.15 per share.
“2019 is shaping up to be another year of solid yield growth and record earnings despite some unusual headwinds,” said Jason Liberty, executive vice president and CFO. “As we enter 2020, we are particularly enthusiastic about the new ship deliveries, the development of new destinations, our fleet modernisation and technology initiatives. These investments will help us deliver even greater vacations while generating higher yields and better returns.”
For 4Q19, the company said that net yields were expected to be up around 6.75% in constant-currency and about 6.25% as-reported.
These metrics include around 300 basis points from the operation of Silversea, the new cruise terminal and the Perfect Day development. However, the net yields were negatively impacted by about 140 basis points related to the abrupt discontinuation of the Cuba sailings.
NCC excluding Fuel per APCD for 4Q19 were expected to increase around 14.5% in constant-currency and about 14.25% as-reported.
As it relates to the year-over-year cadence, the fourth quarter includes a higher number of drydockings affecting the cost metric by around 600 basis points. Costs for the quarter will also be impacted by the timing of expenses from the previous quarter, a further increase in technology and product development investments and relief efforts related to the hurricane.
These expenses are expected to be partially offset by anticipated favourability from activities below the line.
Based on current fuel pricing, interest and currency exchange rates and the factors detailed above, the company expects 4Q19 adjusted EPS to be about $1.40 per share.
The company said that it was experiencing strong early booking trends for 2020. Rates are higher than same time last year in all four quarters, booked load factors are ahead of the same period last year on a like-for-like basis and the booking window has extended.
The market response to ‘Celebrity Apex’, which will debut in April; ‘Odyssey of the Seas’ to be delivered in the fall, and ‘Silversea Moon’ and ‘Silversea Origin’, to be delivered during the summer, has been excellent, RCI claimed.
As of 30th September, 2019, liquidity was $2.2 bill, including cash and the undrawn portion of the company’s unsecured revolving credit facilities, net of the outstanding commercial paper borrowings.
The company said that as of the same date, scheduled debt maturities (excluding commercial paper) for the remainder of 2019, 2020, 2021, 2022 and 2023 were $0.4 bill, $1.2 bill, $0.8 bill, $2.3 bill and $0.8 bill, respectively.
Based upon current ship orders, projected capital expenditures for full year 2019, 2020, 2021, 2022 and 2023 are $3 bill, $4.5 bill, $3.5 bill, $3.6 bill and $2.9 bill, respectively.
These figures were updated to reflect the company’s latest views on destination developments, sustainability initiatives, modernisation programmes and technology investments.
Capacity changes for 2019, 2020, 2021, 2022 and 2023 are expected to be 7.9%, 4.8%, 8%, 8.8% and 4.2%, respectively. These figures do not include potential ship sales or additions that maybe made in the future, the company explained.
Meanwhile, it has been reported that Royal Caribbean’s founder, long time President and Vice Chairman, Edwin Stephan passed away on 8th November, aged 87.
Stephan founded the RCCL in 1969 and a year later launched ‘Song of Norway’, the first ship purpose-built for warm-water cruising.
During his tenure, the company saw many industry firsts, including the line’s wide, open-air decks, and it was Stephan’s idea for the round, cantilevered Viking Crown Lounge that made Royal Caribbean ships unique.
RCCL was also the first to stretch a major cruise ship by inserting an additional mid-section into ‘Song of Norway’ in 1978.
