Royal Caribbean Cruises today reported US GAAP and Adjusted Earnings per Share of $0.99 for the first quarter. Royal Caribbean said that this is better than expected mainly due to improved revenue and overall bookings for the rest of the year continue to perform as expected. As a result, full year adjusted earnings guidance is increased to a range of $7.00 to $7.20.
The company also announced today board authorization for a $500 million share repurchase program.
Looking at the year as a whole, the company’s expectations remain largely unchanged from the guidance it provided 3 months ago:
– Bookings, overall, are not materially different, with strength in Europe offsetting the impact of Korea;
– Currency and fuel are not materially different;
– Costs continue to be under control; and
– First quarter results are the key drivers of the upward guidance revision for the full year.
Results for the First Quarter 2017:
– US GAAP and Adjusted Net Income was $214.7 million or $0.99 per share, versus US GAAP Net Income of $99.1 million or $0.46 per share and — – – Adjusted Net Income of $124.0 million or $0.57 per share in 2016.
– Net Yields were up 6.0% on a Constant-Currency basis and 5.9% As-Reported.
– Net Cruise Costs (“NCC”) excluding fuel per APCD decreased 4.4% on a Constant-Currency basis (down 4.9% As-Reported).
Full Year 2017:
“Our progress continues on a steady upward path toward our Double-Double goals,” said Richard D. Fain, chairman and CEO. “The year started off with a very positive tone and the tone has only continued to please. We are looking forward to our fifth consecutive year of double-digit earnings growth.”
SHARE REPURCHASE PROGRAM
The company also announced today that it received board approval to implement a program to repurchase up to $500 million of its common stock. The plan will include opportunistic open market purchases over the coming periods.
Last week we achieved our financial objective of becoming an Investment Grade company with Moody’s announcement improving the company’s credit rating to Baa3 with a stable outlook.
“We continue to execute on our core financial objectives: improving shareholder returns, being an investment grade credit and moderately growing our business,” said Jason T. Liberty, executive vice president and CFO. “Over the past five years, we have increased our dividends fivefold, repurchased close to $750 million in common stock to date and have now reached investment grade. This new repurchase program is another example of our commitment to improve returns for our shareholders.”
FIRST QUARTER RESULTS
US GAAP and Adjusted Net Income for the first quarter of 2017 was $214.7 million, or $0.99 per share, compared to US GAAP Net Income of $99.1 million or $0.46 per share and Adjusted Net Income of $124.0 million, or $0.57 per share, in the first quarter of 2016. Strong close-in demand for the Caribbean drove the majority of the outperformance versus guidance.
Net Yields on a Constant-Currency basis increased 6.0% during the quarter. Constant-Currency NCC excluding fuel decreased 4.4%. Bunker pricing net of hedging for the first quarter was $531 per metric ton and consumption was 334,000 metric tons.
FULL YEAR 2017
The company has updated full year Adjusted EPS guidance to a range of $7.00 to $7.20 from $6.90 to $7.10.
Overall, the year has developed very much along the trajectory the company projected at the beginning of the year. Bookings started the year on a very strong note and continued to please. This strong demand for cruises generally has offset the recent headwinds from the disrupted Korean sailings mainly during the second and third quarters.
“First quarter’s results are evidence that demand for cruise has room to grow, especially considering a 7% yield improvement achieved in the first quarter of last year,” said Jason T. Liberty, executive vice president and CFO. “With consumers making the choice to spend more on experiences, our innovative hardware and superb onboard delivery is thriving.”
The company expects a Net Yield increase in the range of 4.5% to 6.0% on a Constant-Currency basis and 4.0% to 5.5% on an As-Reported basis.
Net Cruise Costs excluding fuel are expected to be flat to up slightly on a Constant-Currency basis and flat on an As-Reported basis.
SECOND QUARTER 2017
Constant-Currency Net Yields are expected to increase 10.0% to 10.5% in the second quarter of 2017. Strong demand for European and North American products, the deconsolidation of Pullmantur and new hardware are the key drivers of the expected yield improvement in the quarter.
NCC excluding fuel are expected to be down approximately 2.0% on a Constant-Currency basis. The absence of new ship launches and fewer drydock expenses are driving a reduction in costs relative to the prior year.
Based on current fuel pricing, interest rates and currency exchange rates, the company expects second quarter Adjusted EPS will be in the range of $1.60 to $1.65 per share.
