Royal Caribbean Cruises Ltd. today reported 2015 results and provided guidance for 2016. Continuing on its Double-Double trajectory, the company’s adjusted earnings for 2015 were $4.83 per share – up 42% over 2014, and are expected to further increase to $5.90 – $6.10 in 2016.

KEY HIGHLIGHTS

Full Year 2015:

Net Yields were up 3.5% on a Constant-Currency basis (down 1.0% As-Reported).
Net Cruise Costs (“NCC”) excluding fuel were down 0.6% on a Constant-Currency basis (down 3.2% As-Reported).
Adjusted Net Income was better than guidance at $1.07 billion, or $4.83 per share, versus Adjusted Net Income of $755.7 million, or $3.39 per share, in 2014. US GAAP Net Income was $665.8 million or $3.02 per share, versus $764.1 million, or $3.43 per share in 2014.
Full Year 2016 Outlook:

Net Yields are expected to increase 2.0% to 4.0% on a Constant-Currency basis (in the range of flat to up 2% As-Reported).
NCC excluding fuel are expected to be up 1% or less on a Constant-Currency basis (up 0.5% or less As-Reported).
Adjusted EPS for 2016 is expected to be in the range of $5.90 – $6.10 per share.
In the second quarter of 2016, Royal Caribbean International will take delivery of Ovation of the Seas, third in the highly successful Quantum class of vessels. Also debuting during the second quarter is Harmony of the Seas, third in the groundbreaking Oasis class. Splendour of the Seas will leave the Royal Caribbean fleet in April. During the summer, TUI Cruises, the company’s German joint venture, will take delivery of its third new build, Mein Schiff 5.
“Our core brands are firing on all cylinders, our new ships are performing exceptionally well and our costs are well controlled. This is driving 40%+ earnings growth in two consecutive years,” said Richard D. Fain, chairman and chief executive officer. “These very gratifying results combined with a strong start to Wave position us well on our path toward Double-Double.”

FOURTH QUARTER RESULTS

Adjusted and US GAAP Net Income for the fourth quarter of 2015 was $206.8 million, or $0.94 per share, compared to Adjusted Net Income of $70 million, or $0.32 per share, for the same period last year. Constant-Currency NCC excluding fuel were down 4.7%, 70 basis points better than guidance, mainly due to timing. Net Yields on a Constant-Currency basis increased 4.9% versus guidance of 4.5% to 5.0%. Stronger demand in the Caribbean and new China sailings in the winter drove an improvement versus last year.

FULL YEAR 2015 RESULTS

Adjusted Net Income for the full year 2015 was $1.07 billion, or $4.83 per share, compared to Adjusted Net Income of $755.7 million, or $3.39 per share, for the full year 2014. This represents a 42% year-over-year increase. US GAAP Net Income for the full year 2015 was $665.8 million.

Net Yields for the full year 2015 increased 3.5% on a Constant-Currency basis versus 2.4% in 2014.

NCC excluding fuel were down 0.6% on a Constant-Currency basis, marking another year of strong cost control. The average bunker price net of hedging for full year 2015 was $582 per metric ton and consumption was 1,367,000 metric tons.

Last quarter, the company announced that its Pullmantur brand would re-focus to the core market of Spain as a result of the deterioration of economies in Latin America. The company recorded a non-cash impairment charge of $399.3 million related to this change, which is reflected in the US GAAP Net Income figure.

During 2015, the US Dollar strengthened while the price of fuel in world markets declined. While the impact of currency is immediate, there is a lag before a change in the price of fuel flows through to business. There continues to be an inverse relationship between the foreign exchange impact on our currency exposures and fuel prices, but the offsets are not exact, especially in the short term. For 2015, the net impact of currency and fuel was a negative $0.25 per share relative to our January guidance.