Adjusted earnings per share of $4.27 and US GAAP of $4.20 included a 13-cent impact from Dorian and were under the $4.31 consensus expectation and guidance of $4.35. Adjusted profit a year ago was $3.98 per share while US GAAP EPS was $3.86.
Adjusted 2019 guidance
Royal Caribbean updated its full year adjusted EPS guidance to a range of $9.50 to $9.55 per share, which includes a negative impact of approximately 15 cents per share from Dorian. This is under Wall Street’s $9.64 estimate.
Excluding the hurricane impact, the company increased the midpoint of its guidance by 8 cents per share.
‘Particularly strong performance in US and China’
‘Our business continues to thrive and exceed our expectations,’ Chairman and CEO Richard Fain said. ‘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.’
Third quarter adjusted net income was $896.8m, while US GAAP net income was $883.2m, including the negative impact of approximately $27m from itinerary disruptions and relief efforts related to Hurricane Dorian.
Revenues were $3.2bn, up from $2.8bn a year ago.
Net yields were up 6.4% in constant currency and up 5.2% as reported. Net cruise costs excluding fuel per available passenger cruise day were up 11% in constant currency and up 10.6% as reported.
These yield and cost metrics have not been adjusted to separate out Hurricane Dorian impact.
For the full year, net yields are expected to increase approximately 8% in constant currency and approximately 6.75% as reported, while net cruise costs excluding fuel per available passenger cruise day are forecast to be up approximately 11% in constant currency and 10.5% as reported.
Dorian most disruptive storm in RCL history
Hurricane Dorian had an unusual impact. Three main Florida embarkation ports closed on a weekend as a precautionary measure. This impacted 16 sailings, making Dorian the most disruptive storm in the company's history. The financial impact was particularly large because the affected ships included Royal Caribbean’s very successful Oasis class, because Perfect Day at CocoCay was closed for 10 days, and because of the company’s extensive relief efforts.
‘2019 is shaping up to be another year of solid yield growth and record earnings despite some unusual headwinds,’ EVP and CFO Jason Liberty said. ‘As we enter 2020, we are particularly enthusiastic about the new ship deliveries, the development of new destinations, our fleet modernization and technology initiatives. These investments will help us deliver even greater vacations while generating higher yields and better returns.’
Fourth quarter outlook
Net yields are expected to be up approximately 6.75% in constant currency and up 6.25% as reported. These metrics include approximately 300 basis points from the operation of Silversea, Cruise Terminal A at PortMiami and the Perfect Day development. These net yields were negatively impacted by approximately 140 basis points related to the abrupt discontinuation of the Cuba sailings.
Net cruise costs excluding fuel per available passenger cruise day are expected to increase approximately 14.5% in constant currencey and 14.25% as reported. This includes approximately 300 basis points from the operation of Silversea, the new cruise terminal and the Perfect Day development.
The fourth quarter includes a higher number of drydocks, affecting the cost metric by approximately 600 basis points. Costs for the quarter are also impacted by the timing of expenses from the previous quarter, a further increase in technology and product development investments and hurricane relief efforts. These expenses are expected to be partially offset by anticipated favorability from activities below the line.
All told, Royal Caribbean expects fourth quarter EPS of approximately $1.40, under Wall Street’s $1.46 forecast.
Strong early booking trends for 2020
Royal Caribbean said it is experiencing strong early booking trends for 2020. Rates are higher than the same time last year in all four quarters, booked load factors are ahead of same time 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 Silver Moon and Silver Origin, to be delivered during the summer, has been ‘excellent.’
The company said it is particularly excited with the demand for Perfect Day at CocoCay, which has been opening in phases since May. While still early in the booking cycle, the view for 2020 is 'encouraging' and the company expects another year of solid yield and earnings growth.
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