RCL Q1 beats forecasts, Grand Bahama Shipyard, fuel, F/X impact full year

Robust demand for cruises in Royal Caribbean's first quarter drove $1.31 adjusted earnings per share, sailing past guidance and the $1.11 forecast by Wall Street. The Q1 results and improved revenue outlook will cushion the negative full-year impacts of the Grand Bahama Shipyard incident, the stronger dollar and higher fuel prices.

RCL shares rose more than 5% before market open.

New full-year guidance $9.65 to $9.85

Adjusted EPS guidance for 2019 goes to a range of $9.65 to $9.85, down from the $9.75 to $10 forecast in January. Wall Street had been projecting $9.95.

The new range includes negative impacts of 25 cents per share related to the drydock incident and approximately 25 cents per share from the stronger dollar and higher fuel prices. Much of these impacts are being offset by the better Q1 results and an improved revenue outlook.

'The demand trends are strong, further exhibiting the strength for our brands and the public's growing propensity to cruise,' CFO Jason Liberty said.

Q1 details

First quarter revenue rose to $2.4bn, up from $2bn a year ago.

Q1 adjusted net income was $275.8m, or $1.31 per share, up from $232.8m, or $1.09 a year ago. US GAAP net income was $249.7m, or $1.19 per share, up from $218.7m, or $1.02 in Q1 2018.

Net yields increased 9.3% in constant currency, or 7.2% as reported. Net cruise costs excluding fuel per available passenger cruise day were up 9.6% in constant-currency, or 8.7% as reported.

Record booked position

Overall, the company's booked position remains at a record level in both rate and volume.

Net yields are expected to increase 7.5% to 9% in constant currency, or up 6.5% to 8% as reported. These metrics include approximately 350 basis points from the operation of Silversea, the new Terminal A at PortMiami and the Perfect Day at CocoCay development.

Net cruise costs excluding fuel per APCD are expected to be up approximately 10% in constant currency, or up about 9.5% as reported, mainly due to the loss of cruise days as a result of canceled sailings. These metrics include approximately 700 basis points from the Silversea operation, the new cruise terminal and the Perfect Day development.

'Extensive' Oasis damage at Grand Bahama

On April 1, Oasis of the Seas was undergoing maintenance when two construction cranes collapsed on the stern of the ship, causing 'extensive' damage. Oasis had to go to Cadiz, Spain, for repairs. As a result, the ship was taken out of service for almost a month and is expected to return to service for its normally scheduled May 5 sailing from Barcelona.

The financial impact, net of insurance, will be approximately 25 cents per share for the full year, mostly due to lost revenue.

Q2 guidance

Net yields are expected to increase approximately 9.5% in constant currency and 8% to 8.5% as reported. These metrics include approximately 400 basis points from Silversea, the new cruise terminal and the Perfect Day development.

Net cruise costs excluding fuel per APCD for the quarter are expected to increase approximately 10% in constant currency and 9% to 9.5% as reported. These metrics include approximately 800 basis points from Silversea, the new cruise terminal and the Perfect Day development.

All told, adjusted EPS is forecast in the range of $2.45 to $2.50. Excluding the impact from Grand Bahama Shipyard and the currency and fuel headwinds versus the January guidance, adjusted EPS for Q2 would have been in the range of $2.65 to $2.70.

Posted 01 May 2019

© Copyright 2019 Seatrade UBM (UK) Ltd. Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade UBM (UK) Ltd.

Anne Kalosh

Editor, Seatrade Cruise News & Senior Associate Editor Seatrade Cruise Review