Royal Caribbean Cruises reported net income of $47.0 million, or $0.21 per share, on revenues of $1.8 billion for the first quarter ended March 31, 2012, compared to net income of $78.4 million, or $0.36 per share, on revenues of $1.7 billion for the same period last year.
Q1 2012 results included a $0.01 per share mark-to-market gain on the company’s fuel option portfolio versus a $0.11 per share gain in the first quarter of 2011. Except for fuel pricing, all operational metrics for the first quarter were in line with or better than its previous guidance, the company stated.
Revenues improved to $1.8 billion in the first quarter of 2012 compared to $1.7 billion in the first quarter of 2011 as a result of capacity increases and yield improvements. Net Yields increased 7.0% on a Constant-Currency basis (+6.4% As-Reported). NCC excluding fuel increased 5.7% on a Constant-Currency basis (+5.1% As-Reported). Approximately 350 basis points of the Net Yield improvement and approximately 500 basis points of the NCC increases during the quarter relate to previously announced deployment initiatives and changes to the company’s distribution system.
The company said that “as expected, booking activity has continued to gradually improve over the last several months. Since the company’s earnings announcement on February 2, 2012, the price of oil has risen which, at current levels and net of hedging, would increase bunker expenses $0.15 per share for the year.
Taking into account current fuel pricing and currency exchange rates, and the factors detailed above, the company currently estimates 2012 earnings will be in the range of $1.80 to $2.10 per share.
2012 Outlook: Royal Caribbean reported that overall, booking trends and pricing have been consistent with prior guidance. Cumulative bookings since early February have been down mid single digits, although gradual improvement continues. Bookings from the United States have been running ahead of same time last year for the past four weeks.
As expected, pricing reductions within the range of the company’s previous guidance have been implemented to address booking shortfalls on certain products through the end of the third quarter. Nevertheless, Constant-Currency booked APD’s remain ahead of the same time last year in all quarters. Overall, pricing remains in line with or higher than the same time last year for all major itinerary groups with the exception of Europe.
Bookings for the fourth quarter of 2012 and for 2013 sailings remain strong, with both load factors and pricing running ahead of same time last year. In addition, the company has seen an increase in summer demand for its Pullmantur brand’s tour product.
“Despite the extraordinary disruptions to our booking patterns this year, thus far the recovery is consistent with our forecasts,” said Brian J. Rice, executive vice president and chief financial officer. Rice continued, “The Caribbean and Alaska remain healthy and as expected, a wide range of outcomes still persist regarding Europe this summer. While the marketplace is still volatile and uncertain, we are narrowing our yield and EPS ranges to reflect our best estimates at this time.”
Taking into account current fuel pricing and currency exchange rates, and the factors detailed above, the company currently estimates that second quarter 2012 EPS will be within a range of ($0.05) to $0.05.
And taking into account current booking patterns, the company has narrowed its range of guidance for full year 2012 Net Yield increases to +2% to +5% on a Constant-Currency basis and +1% to +4% on an As-Reported basis. Excluding deployment initiatives and changes to the company’s distribution system, Net Yields are projected to be flat to up 3% on a Constant-Currency basis for the full year 2012.
Expenses: For the second quarter of 2012, NCC excluding fuel are expected to increase 10% to 11% on a Constant-Currency basis (+8% to +9% As-Reported). Approximately half of the NCC excluding fuel increase in the quarter relates to the previously referenced deployment initiatives and changes to the company’s distribution system. NCC excluding fuel are higher than normal in the second quarter due to marketing and related cost shifts from the first quarter and increased drydock days and related maintenance.
For the full year, NCC excluding fuel are expected to increase approximately 5% on a Constant-Currency basis (approximately +4% As-Reported). Excluding deployment initiatives and changes to the company’s distribution system, Constant-Currency NCC excluding fuel are expected to increase approximately 2% on a comparable basis to prior year. Versus February guidance, increased sales in the Pullmantur brand’s tour product are modestly increasing full year cost estimates by 50 basis points.
