Still, 2018 is expected to be a record year for RCL, and 2019 is shaping up to be even better, the company said.
Fuel and currency cost a dime in EPS
The new full-year 2018 range includes a negative impact of approximately a dime per share due to the stronger dollar and higher fuel prices since the company's previous guidance.
Q3 adjusted net income was $836.3m, or $3.98 per share, versus US GAAP and adjusted net income of $752.8m, or $3.49 per share, in 2017. US GAAP net income was $810.4m, or $3.86 per share. Revenues rose to $2.79bn, up from $2.57bn.
Better than expected close-in bookings, especially for Asia Pacific, Europe and Alaska cruises, and higher on-board sales of beverages and shore excursions drove the beat.
Net yields were up 2.6% in constant currency, and up 1.8% as reported. Net cruise costs excluding fuel per available passenger cruise day were down 0.1% in constant currency and down 0.4% as reported.
In revising its full-year earnings per share outlook from $8.70 to $8.90 previously to $8.75 to $8.85, RCL cited a negative impact of approximately 10 cents from currency and fuel, as well as Silversea's operations, which are accounted for on a three month lag. Net yields are expected to increase 4% to 4.5% in constant currency and approximately 4.5% as reported. These metrics include approximately 80 basis points from Silversea's operations.
The Q4 adjusted EPS range is $1.45 to $1.50.
Silversea results expected to be immaterial in 2018
The transaction closed on July 31, so the results corresponding to August and September will be consolidated in the fourth quarter. Silversea's revenues and expenses are both higher than those of the rest of the company. This will have an impact on some of the individual components of the income statement but, overall, RCL does not expect Silversea's financial results to be material to 2018 adjusted EPS.
Net cruise costs excluding ruel per available passenger cruise day are expected to be up approximately 4.5% in constant currency and up 4.5% to 5% as reported. Included are approximately 140 basis points from Silversea's operations.
Foreign exchange and fuel prices have continued to negatively impact RCL's results. Since the beginning of the year, currency and fuel have reduced expected earnings for both 2018 and 2019 by approximately 55 cents per share.
Strong early booking trends for 2019
That said, 2018 is shaping up to be another year of yield growth and record earnings, according to EVP and CFO Jason Liberty. 'As we enter 2019, we are particularly enthusiastic about the new projects that complement our core business such as Perfect Day at Cococay, the new terminal in Miami and Excalibur [the company's digital technology platform]. These investments will help us deliver even greater vacations while generating higher yields and better returns.'
'While 2018 is proving to be another record year, 2019 is shaping up to be even better,' RCL chairman and CEO Richard Fain said. 'I can't recall ever starting a new year with such an exciting blueprint. Our brands are strong, our new ships are awesome, our existing ship upgrades are powerful, our tech is exciting, our people are psyched and our other new products are opening new horizons.'
Higher booked load factors and rates
RCL reported strong early booking trends for 2019. Booked load factors and rates are higher than same time last year across all core products while the booking window has continued to extend. The market response to Symphony of the Seas, Azamara Pursuit and Celebrity Edge has been 'excellent.' While these ships are being introduced this year, 2019 will see the benefit of their full year of operations.
These three vessels together with Spectrum of the Seas, which will be introduced in June 2019 in Shanghai, are supporting a solid outlook for 2019. While still early in the booking cycle, the view for 2019 is encouraging, RCL said, and the company expects another year of solid yield and earnings growth.
Regarding Silversea's consolidation, while the bottom line impact in the near term is expected to be immaterial, higher average yields for the company and higher costs per berth are expected.
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