Royal Caribbean Cruises Ltd. today reported GAAP and adjusted earnings of $1.06 and $1.09, respectively, up over 25% from last year and better than expectations. Full year adjusted earnings are also expected to be up 25% in the range of $6.00 to $6.10, down $0.20 from the midpoint of earlier guidance due to a negative impact of approximately $0.27 related to currency and fuel.
Yields and costs for the year are also performing generally as expected. The sale of 51% of the Pullmantur Group announced in May was completed at the end of July. Consequently, Pullmantur’s results will no longer be consolidated in the company’s accounts. Since Pullmantur’s yields and costs are lower than the fleet average, this change has the effect of increasing the company’s yields and costs metrics for 2016.
KEY HIGHLIGHTS
Second Quarter 2016 results:
Net Yields were up 1.1% on a Constant-Currency basis (down 0.5% As-Reported), in-line with previous guidance.
Net Cruise Costs (“NCC”) excluding fuel were up 1.9% on a Constant-Currency basis (up 1.5% As-Reported), in-line with guidance.
US GAAP Net Income was $229.9 million or $1.06 per share, versus $185.0 million, or $0.84 per share in 2015.
Adjusted Net Income was $235.2 million, or $1.09 per share, versus $185.0 million, or $0.84 per share in 2015, better than guidance due to lower than expected fuel expense.
Full Year 2016 forecast:
Net Yields are expected to increase in the range of 4.0% to 4.5% on a Constant-Currency basis (up approximately 2.0% As-Reported) with the increase from previous guidance driven primarily by the deconsolidation of the Pullmantur Group.
NCC excluding fuel are expected to be up approximately 1.0% on a Constant-Currency basis (up flat to up 1.0% As-Reported), unchanged from previous guidance. This includes a slight increase in this cost metric driven by the deconsolidation of the Pullmantur Group.
Adjusted EPS is expected to be in the range of $6.00 to $6.10 per share, a $0.20 decrease from the mid-point of the company’s previous guidance, driven by a negative $0.27 impact of currency and fuel rates, partially offset by the better than expected second quarter.
“Our business remains strong and we continue to improve our return profile,” said Richard Fain, chief executive officer. “This keeps us solidly on our path towards the Double-Double.”
SECOND QUARTER RESULTS
US GAAP Net Income for the second quarter 2016 was $229.9 million or $1.06 per share, compared to $185.0 million or $0.84 per share in 2015. Adjusted Net Income for the second quarter of 2016 was $235.2 million, or $1.09 per share, up over 25% versus the same quarter last year. The outperformance for the quarter was primarily driven by better than anticipated fuel expense.
Net Yields on a Constant-Currency basis increased 1.1%, in-line with guidance. The portfolio of global destinations performed as expected. Constant-Currency NCC excluding fuel increased 1.9%, also in-line with previous guidance.
Bunker pricing net of hedging for the second quarter was $511 per metric ton and consumption was 346,000 metric tons.