Royal Caribbean Cruises Ltd. today reported GAAP and adjusted third quarter earnings of $3.21 and $3.20, respectively, up 13 percent from last year and better than expectations, said the company.

Full year adjusted earnings guidance is unchanged at $6.00 to $6.10 per share.

Looking ahead to 2017, the company’s booked position is better than same time last year on both volume and rate, supporting the company’s trajectory to the Double-Double.

Third Quarter 2016 results:

• Net Yields were up 2.9% on a Constant-Currency basis (up 0.4%, As-Reported), better than guidance driven mainly by strong close-in demand for North American itineraries.

• Net Cruise Costs (“NCC”) excluding fuel were down 1.6% on a Constant-Currency basis (down 2.0%, As-Reported), in line with guidance.

• US GAAP Net Income was $693.3 million or $3.21 per share, versus $228.8 million, or $1.03 per share in 2015. Last year’s figure includes an impairment charge related to Pullmantur.

• Adjusted Net Income was $690.9 million, or $3.20 per share, better than expectations driven by strong yields and positive movements in currency and fuel during the quarter, versus $628.1 million, or $2.84 per share, in 2015.

Full Year 2016 forecast:

• Net Yields are expected to be up 4.0% or better on a Constant-Currency basis (up in the range of 1.7% to 2.0% As-Reported). Strong close-in demand for North American products in the third quarter is helping offset the impact from the delay in opening Empress of the Seas sailings in the fourth quarter.

• NCC excluding fuel are expected to be up approximately 1.0% on a Constant-Currency basis (flat to up 1.0% As-Reported).

• Adjusted EPS is expected to be in the range of $6.00 to $6.10 per share, unchanged from prior guidance.

“Our business continues to progress solidly to the Double-Double, and our recent dividend increase is evidence of our confidence in that trajectory,” said Richard D. Fain, chairman and chief executive officer. “It is gratifying to again be headed towards record earnings for the year, above our initial guidance.”

Net Yields on a Constant-Currency basis increased 2.9% during the quarter, better than previous guidance. Continued strength in demand for North American products was a key driver of the outperformance while the balance of the portfolio performed in-line with expectations. Growth in onboard revenue continued to outpace overall net yield growth, despite an extraordinary outperformance last summer. Favorable trends in both currency and fuel compared to expectations also provided a benefit to the quarter.

US GAAP Net Income for the third quarter 2016 was $693.3 million or $3.21 per share, compared to $228.8 million or $1.03 per share in 2015 – this includes $399.3 million in non-cash impairment charges related to the Pullmantur brand that was taken last year. Adjusted Net Income for the third quarter of 2016 was $690.9 million, or $3.20 per share, which was $0.10 better than guidance and up 13% versus same quarter last year. About half of the outperformance was driven by better than expected revenue performance, with the balance of the improvement being mainly driven by the benefits of a weaker dollar and lower fuel prices.

Constant-Currency NCC excluding fuel decreased 1.6%, in-line with expectations. Bunker pricing net of hedging for the third quarter was $524 per metric ton and consumption was 341,000 metric tons.

2016

The company maintains full year Adjusted EPS guidance of $6.00 to $6.10 per share. Constant-Currency Net Yields are expected to be up 4.0% or better for the full year. Strong close-in demand for North American itineraries in the third quarter is helping offset an impact from the delayed opening of Empress of the Seas sailings during the fourth quarter. 

NCC excluding fuel are expected to be up approximately 1.0% on a Constant-Currency basis, in-line with previous guidance.

“Our strong booked position and continued focus on effective cost management is expected to keep full year earnings ahead of initial guidance and positions us well for the Double-Double in 2017,” said Jason T. Liberty, chief financial officer. “Minor operational variations are causing some timing shifts between quarters, but the overall market and our overall results remain unchanged from our last guidance.”

Taking into account current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects 2016 Adjusted EPS in the range of $6.00 to $6.10 per share. 

Q4

Constant-Currency Net Yields are expected to be up approximately 6.0% in the fourth quarter of 2016, and NCC excluding fuel are expected to be down approximately 1.5%. 

These yield improvement expectations in the fourth quarter are largely driven by the deconsolidation of Pullmantur that was announced earlier this year, strong demand for our new hardware and a higher mix of North American and Australian based itineraries. 

Based on current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects fourth quarter Adjusted EPS to be approximately $1.20 per share. 

2017

At this time, 2017 itineraries are booked ahead of last year in both rate and volume. New ships including Harmony of the Seas and Ovation of the Seas are seeing strong trends, supporting a solid outlook for 2017. 

“Next year marks the finish line for the Double-Double and we are looking forward to a strong finish to this chapter in our continuous journey of rising shareholder returns,” said Richard D. Fain, chairman and chief executive officer. “New hardware, continued strength onboard, along with continued cost discipline and a highly motivated team over 65,000 strong is proving to be a winning combination.”