It was a stellar third quarter 2019 for Royal Caribbean Cruises Ltd. (RCL), parent company of Royal Caribbean International, Celebrity Cruises and Azamara, as well as a 67 percent stakeholder in Silversea Cruises.
RCL reported record third quarter earnings of $883.2 million, or $4.20 per share, and adjusted earnings of $896.8 million, or $4.27 per share, which include a $0.13 negative impact from Hurricane Dorian.
Gross yields were up 6.6 percent, and net yields were up 6.4 percent.
The company also updated its full year adjusted earnings-per-share, or EPS, guidance to a range of $9.50 to $9.55 per share.
That includes a negative impact of approximately $.15 per share from Hurricane Dorian, which RCL described in its earnings release as the "most disruptive storm in the company's history" -- closing three major home ports and impacting 16 sailings.
RCL said in its earnings report: "Hurricane Dorian had an unusual, one-time impact on our financial performance...The financial impact was particularly large because the affected ships included our very successful Oasis-class, because we closed Perfect Day at Cococay for 10 days, and because of our extensive relief efforts."
The combination of guest compensation, the closure of that private island experience and relief efforts negatively impacted the third quarter by $27 million, or $.13 per share, and the full year by approximately $30 million, or $.15 per share.
That said, "our business continues to thrive and exceed our expectations," said Richard Fain, RCL's chairman and CEO (shown in the photo at right).
"While Hurricane Dorian had a negative impact, stronger demand for our brands and our key itineraries exceeded our expectations," he stressed.
Fain continued: "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 U.S. and China."
In addition, RCL had good points to make about the company's 2020 outlook:
- The company is 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 same time last year on a like-for-like basis.
- The booking window has extended.
- Market response to Celebrity Apex, which will debut in April; Royal Caribbean International's Odyssey of the Seas, to be delivered in fall 2020, and Silversea Cruises' Silver Moon and Silver Origin, both debuting in summer 2020, has been "excellent," RCL said in its earnings statement.
- Demand is very good for Perfect Day at CocoCay, the company's private destination in the Bahamas, which has been opening in phases since May 2019.
- While still early in the booking cycle, RCL said the view for 2020 is encouraging and the company expects another year of solid yield and earnings growth.
Third Quarter 2019 Results
Net income for the third quarter 2019 was $883.2 million, or $4.20 per share, compared with $810.4 million, or $3.86 per share last year.
Third quarter adjusted net income was $896.8 million, or $4.27 per share, compared with $836.3 million, or $3.98 per share, for the same period a year ago.
The 2019 third quarter results include the negative impact of approximately $27 million, or $.13 per share, from Hurricane Dorian's impact and relief efforts.
Gross yields for the quarter were up 6.6 percent and net yields were up by 6.4 percent.
Gross cruise costs per available passenger cruise days (APCD) increased 7.5 percent while net cruise costs excluding fuel per APCD were up 11 percent.
Full Year 2019 Outlook
Adjusted earnings for the full year are expected to be in the range of $9.50 to $9.55 per share. That includes the negative impact of $.15 per share related to Hurricane Dorian.
Net revenue yields are expected to increase approximately 8 percent.
The company also said it's increasing the midpoint of its guidance by $.08 per share.
What's the big takeaway from that? RCL's earnings statement said: "The company's booking strength has completely offset the negative yield impact related to Hurricane Dorian."
Taking into account current fuel pricing, interest and currency exchange rates, and some other factors, RCL estimates 2019 adjusted EPS will be in the range of $9.50 to $9.55 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 modernization and technology initiatives," Liberty said. "These investments will help us deliver even greater vacations while generating higher yields and better returns."
Fourth Quarter 2019
Net yields are expected to be up approximately 6.75 percent in constant currency and 6.25 percent as reported.
As it relates to the year-over-year cadence, the fourth quarter includes a higher number of drydocks affecting the cost metric.
The company anticipates that fourth quarter adjusted EPS will be approximately $1.40 per share.
RCL Liquidity & Capacity
As of September 30, 2019, RCL's liquidity was $2.2 billion, including cash and the undrawn portion of the company's unsecured revolving credit facilities, net of any outstanding commercial paper borrowings.
Based upon current ship orders, projected capital expenditures for full year 2019, 2020, 2021, 2022 and 2023 are $3 billion, $4.5 billion, $3.5 billion, $3.6 billion and $2.9 billion, respectively.
Capacity changes for 2019, 2020, 2021, 2022 and 2023 are expected to be 7.9 percent, 4.8 percent, 8 percent, 8.8 percent and 4.2 percent, respectively.
For more information, visit www.rclinvestor.com