Royal Caribbean Reports Record 2018 Results And Provides Forward Guidance

Royal Caribbean Reports Record 2018 Results And Provides Forward Guidance

PR Newswire

MIAMI, Jan. 30, 2019 /PRNewswire/ -- Royal Caribbean Cruises Ltd. (NYSE: RCL) today reported 2018 US GAAP earnings of $8.56 per share and adjusted earnings of $8.86 per share.  In addition, the company announced that 2019 adjusted earnings are expected to be in the range of $9.75 to $10.00 per share.

KEY HIGHLIGHTS

Full Year 2018:

  • US GAAP Net Income was $1.8 billion or $8.56 per share and Adjusted Net Income was $1.9 billion or $8.86 per share in 2018 versus US GAAP and Adjusted Net Income of $1.6 billion or $7.53 per share in 2017.
  • Gross Yields were up 3.8% in Constant-Currency (up 3.9% As-Reported).  Net Yields were up 4.4% in Constant-Currency (up 4.5% As-Reported).
  • Gross Cruise Costs per Available Passenger Cruise Days ("APCD") increased 3.0% in Constant-Currency (up 3.2% As-Reported).  Net Cruise Costs ("NCC") excluding Fuel per APCD were up 4.1% in Constant-Currency (up 4.4% As-Reported).

Full Year 2019 Outlook:

  • Adjusted earnings are expected to be in the range of $9.75 to $10.00 per share.
  • Net Yields are expected to increase 6.5% to 8.5% in Constant-Currency and 6.0% to 8.0% As-Reported.  These metrics include approximately 350 basis points from the operation of Silversea, the new cruise terminal in Miami and the Perfect Day development.
  • NCC excluding Fuel per APCD are expected to increase 8.5% to 9.0% in Constant-Currency and 8.25% to 8.75% As-Reported.  These metrics include approximately 650 basis points from the operation of Silversea, the cruise terminal in Miami and the Perfect Day development.

FULL YEAR 2018

US GAAP Net Income for the year was $1.8 billion or $8.56 per share and Adjusted Net Income was $1.9 billion or $8.86 per share.  This result beat the January 2018 mid-point guidance by $0.21 per share and equates to a 17.5% year-over-year growth in adjusted earnings per share.  This result was achieved despite the unfavorable impact from currency and fuel which negatively affected earnings by approximately $123 million or $0.58 per share versus the January 2018 guidance.

"This year our teams achieved record financial results while introducing four new vessels, acquiring Silversea Cruises, inaugurating two stunning cruise terminals and implementing Excalibur on about half of our fleet," said Richard D. Fain, chairman and CEO.  "By any measure 2018 was a particularly stellar year, and the strong Wave makes us optimistic about 2019 as well."

Net Yields were up 4.4% in Constant-Currency.  Strong demand for our core products, better onboard revenues and the consolidation from Silversea's operations drove the year-over-year increase.

NCC excluding Fuel per APCD were up 4.1% in Constant-Currency.  The main drivers behind the year-over-year increase were more drydock days, the lapping of hardware changes, investments in technology and the consolidation of Silversea's operations.

FOURTH QUARTER RESULTS

US GAAP Net Income for the fourth quarter was $315.7 million or $1.50 per share and Adjusted Net Income was $322.1 million or $1.53 per share.  Last year, US GAAP and Adjusted Net Income were $288.0 million or $1.34 per share.

Gross Yields were up 7.3% in Constant-Currency.  Net Yields were up 6.8% in Constant-Currency, slightly better than the midpoint of guidance.

Gross Cruise Costs per APCD increased 6.1% in Constant-Currency.  NCC excluding Fuel per APCD were up 5.1% in Constant-Currency, lower than guidance, driven by timing.

Favorability from depreciation and our joint ventures also contributed to the quarter's positive performance.

Lastly, a combination of a stronger dollar and fuel rates negatively impacted the quarter by $0.04.

Bunker pricing net of hedging for the fourth quarter was $546.70 per metric ton and consumption was 357,700 metric tons.

FULL YEAR 2019

The company expects full year Adjusted EPS guidance to be in the range of $9.75 to $10.00 per share.

Wave Season has started on a strong note and the company's overall booked position for 2019 is better than last year's record high and at higher rates.  Demand for our main products is strong across all quarters.

The company expects a Net Yield increase in the range of 6.5% to 8.5% in Constant-Currency and 6.0% to 8.0% As-Reported for the full year.  These metrics include approximately 350 basis points from the operation of Silversea, the cruise terminal in Miami and the Perfect Day water-park and resort on the island of Cococay in The Bahamas, which will launch in May of 2019.  As an ultra-luxury brand, Silversea's revenues and expenses, on a per APCD basis, are both higher than the company's average.  Moreover, our new Miami based terminal and Perfect Day will also increase both our revenue and cost metrics, since their additions do not include APCDs.  As such, we have provided the impact of these items on our yield and cost metrics' forward guidance.

"Our yield outlook for 2019 is very encouraging" said Jason T. Liberty, executive vice president and CFO.  "Demand for our brands continues to accelerate and we are well positioned for another year of double-digit growth in our earnings per share."

We are also very excited about the introduction of Celebrity Flora in May 2019 - the first ship designed for the Galapagos - and the introduction of Spectrum of the Seas in the China market in June 2019.  These new ships will also be contributors to 2019 yield growth.

NCC excluding Fuel are expected to be up 8.5% to 9.0% in Constant-Currency and 8.25% to 8.75% As-Reported.  These metrics include approximately 650 basis points from the operation of Silversea, the cruise terminal in Miami and the Perfect Day development.

Taking into account current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company estimates 2019 Adjusted EPS will be in the range of $9.75 to $10.00 per share.

FIRST QUARTER 2019

Net Yields are expected to increase 7.5% to 8.0% in Constant-Currency and 5.5% to 6.0% As-Reported.  These metrics include approximately 375 basis points from the operation of Silversea and the cruise terminal in Miami.

NCC excluding Fuel per APCD for the quarter are expected to be up approximately 10% in Constant-Currency (up 9.0% to 9.5% As-Reported).  These metrics include approximately 800 basis points from the operation of Silversea, the cruise terminal in Miami and the Perfect Day development.

The company also noted that Silversea's seasonality is similar to RCL's core products. Silversea, which was acquired on July 31 2018, will be accounted for on a one quarter lag.  Its traditionally weaker fourth quarter will therefore be included in RCL's first quarter results.

Based on current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects first quarter Adjusted EPS to be approximately $1.10 per share.

FUEL EXPENSE AND SUMMARY OF KEY GUIDANCE STATS

Fuel Expense

The company does not forecast fuel prices and its fuel cost calculations are based on current at-the-pump prices, net of hedging impacts.  Based on today's fuel prices, the company has included $163 million and $690 million of fuel expense in its first quarter and full year 2019 guidance, respectively.

Forecasted consumption is 58% hedged via swaps for 2019 and 54%, 28%, 19% and 0% hedged for 2020, 2021, 2022 and 2023, respectively.  For the same five-year period, the annual average cost per metric ton of the hedge portfolio is approximately $377, $430, $463, $554 and $0, respectively.

The company provided the following fuel statistics for the first quarter and full year 2019

FUEL STATISTICS

First Quarter 2019

Full Year 2019

Fuel Consumption (metric tons)

364,200

1,486,300

Fuel Expenses

$163 million

$690 million

Percent Hedged (fwd. consumption)

57%

58%

The company provided the following guidance for the first quarter and full year 2019:

GUIDANCE

       As-Reported

Constant-Currency


First Quarter 2019

Net Yields

5.5% to 6.0%

7.5% to 8.0%

Net Cruise Costs per APCD

6.5% to 7.0%

Approx. 7.5%

Net Cruise Costs per APCD ex. Fuel

9.0% to 9.5%

Approx. 10.0%


Full Year 2019

Net Yields

6.0% to 8.0%

6.5% to 8.5%

Net Cruise Costs per APCD

5.25% to 5.75%

5.5% to 6.0%

Net Cruise Costs per APCD ex. Fuel

8.25% to 8.75%

8.5% to 9.0%




GUIDANCE

First Quarter 2019

Full Year 2019

Capacity Change

10.8%

8.6%

Depreciation and Amortization

$289 to $293 million

$1,245 to $1,255 million

Interest Expense, net

$91 to $95 million

$393 to $403 million

Adjusted EPS

Approx. $1.10

$9.75 to $10.00




SENSITIVITY

First Quarter 2019

Full Year 2019

1% Change in Currency

$4 million

$21 million

1% Change in Net Yields

$19 million

$87 million

1% Change in NCC ex Fuel

$12 million

$45 million

100 basis pt. Change in LIBOR

$6 million

$36 million

10% Change in Fuel prices

$9 million

$37 million


Exchange rates used in guidance calculations

GBP

$1.32


AUD

$0.72


CAD

$0.76


CNH

$0.15


EUR

$1.14


 

LIQUIDITY AND FINANCING ARRANGEMENTS

As of December 31, 2018, liquidity was $1.3 billion, including cash and the undrawn portion of the company's unsecured revolving credit facilities, net of our outstanding commercial paper borrowings.  The company noted that scheduled debt maturities (excluding commercial paper) for 2019, 2020, 2021, 2022 and 2023 are $1.6 billion, $1.7 billion, $0.8 billion, $1.6 billion and $0.7 billion, respectively.

CAPITAL EXPENDITURES AND CAPACITY GUIDANCE

Based upon current ship orders, projected capital expenditures for full year 2019, 2020, 2021, 2022 and 2023 are $2.9 billion, $3.3 billion, $2.9 billion, $3.4 billion and $1.0 billion, respectively.  Capacity changes for 2019, 2020, 2021, 2022 and 2023 are expected to be 8.6%, 4.1%, 9.0%, 7.7% and 2.8%, respectively.  These figures do not include potential ship sales or additions that we may elect to make in the future.

CONFERENCE CALL SCHEDULED

The company has scheduled a conference call at 10 a.m. Eastern Standard Time today to discuss its earnings.  This call can be heard, either live or on a delayed basis, on the company's investor relations website at www.rclinvestor.com.

Selected Operational and Financial Metrics

Adjusted Earnings per Share ("Adjusted EPS")

Represents Adjusted Net Income divided by the weighted average or by the diluted weighted average of shares outstanding, as applicable, at the end of the reporting period.  We believe this measure is meaningful when assessing our performance on a comparative basis.

Adjusted Net Income

Adjusted Net Income represents net income excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis.  For the periods presented, these items include the impairment loss related to Skysea Holding, the impairment loss and other costs related to the exit of our tour operations business, transaction costs related to the Silversea Cruises acquisition, the amortization of the Silversea Cruises intangible assets resulting from the acquisition, the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements  and the impact of the change in accounting principle related to the recognition of stock-based compensation expense from the graded attribution method to the straight-line attribution method for time-based stock awards.

Available Passenger Cruise Days ("APCD")

APCD is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period which excludes canceled cruise days and drydock days.  We use this measure to perform capacity and rate analysis to identify our main non-capacity drivers that cause our cruise revenue and expenses to vary.

Constant-Currency

We believe Net Yields, Net Cruise Costs and Net Cruise Costs excluding Fuel are our most relevant non-GAAP financial measures.  However, a significant portion of our revenue and expenses are denominated in currencies other than the US Dollar.  Because our reporting currency is the US Dollar, the value of these revenues and expenses in US Dollars will be affected by changes in currency exchange rates.  Although such changes in local currency prices are just one of many elements impacting our revenues and expenses, it can be an important element.  For this reason, we also monitor Net Yields, Net Cruise Costs, and Net Cruise Costs excluding Fuel in "Constant-Currency" - i.e., as if the current period's currency exchange rates had remained constant with the comparable prior period's rates.  We calculate "Constant-Currency" by applying the average prior year period exchange rates for each of the corresponding months of the reported and/or forecasted period, so as to calculate what the results would have been had exchange rates been the same throughout both periods.  We do not make predictions about future exchange rates and use current exchange rates for calculations of future periods.  It should be emphasized that the use of Constant-Currency is primarily used by us for comparing short-term changes and/or projections.  Over the longer term, changes in guest sourcing and shifting the amount of purchases between currencies can significantly change the impact of the purely currency-based fluctuations.

Gross Cruise Costs

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.  For the periods presented, Gross Cruise Costs exclude the impairment loss and other costs related to the exit of our tour operations business, transaction costs related to the Silversea Cruises acquisition and the impact of the change in accounting principle related to the recognition of stock-based compensation expense from the graded attribution method to the straight-line attribution method for time-based stock awards, which were included within marketing, selling and administrative expenses.

Gross Yields

Gross Yields represent total revenues per APCD.

Net Cruise Costs ("NCC") and NCC excluding Fuel

Represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses and, in the case of Net Cruise Costs excluding Fuel, fuel expenses.  In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs and Net Cruise Costs excluding Fuel to be the most relevant indicators of our performance.

Net Revenues

Net Revenues represent total revenues less commissions, transportation and other expenses and onboard and other expenses.

Net Yields

Net Yields represent Net Revenues per APCD. We utilize Net Revenues and Net Yields to manage our business on a day-to-day basis as we believe that they are the most relevant measures of our pricing performance because they reflect the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses and onboard and other expenses.

Occupancy

Occupancy, in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days by APCD.  A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

Passenger Cruise Days

Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

For additional information see "Adjusted Measures of Financial Performance" below.

Royal Caribbean Cruises Ltd. (NYSE: RCL) is a global cruise vacation company that controls and operates four global brands: Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises and Silversea Cruises.  We are also a 50% joint venture owner of the German brand TUI Cruises and  a 49% shareholder in the Spanish brand Pullmantur Cruceros.  Together these brands operate a combined total of 60 ships with an additional 16 on order as of December 31, 2018.  They operate diverse itineraries around the world that call on all seven continents.  Additional information can be found on www.royalcaribbean.com, www.celebritycruises.com, www.azamaraclubcruises.com, www.silversea.com, www.tuicruises.com, www.pullmantur.es, or www.rclinvestor.com.  

Certain statements in this release relating to, among other things, our future performance constitutes forward-looking statements under the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to: statements regarding revenues, costs and financial results for 2018 and beyond. Words such as "anticipate," "believe," "could," "driving," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," "would," and similar expressions are intended to help identify forward-looking statements.  Forward-looking statements reflect management's current expectations, are based on judgments, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements.  Examples of these risks, uncertainties and other factors include, but are not limited to the following: the impact of the economic and geopolitical environment on key aspects of our business, such as the demand for cruises, passenger spending, and operating costs; our ability to obtain new borrowings or capital in amounts sufficient to satisfy our capital expenditures, debt repayments and other financing needs; incidents or adverse publicity concerning the travel industry generally or the cruise industry specifically; concerns over safety, health and security aspects of traveling; unavailability of ports of call; the uncertainties of conducting business internationally and expanding into new markets and new ventures; changes in operating and financing costs; the impact of foreign currency exchange rates, interest rate and fuel price fluctuations; vacation industry competition and changes in industry capacity and overcapacity; the risks and costs associated with protecting our systems and maintaining integrity and security of our business information, as well as personal data of our guests, employees and others;  the impact of new or changing legislation and regulations on our business; emergency ship repairs, including the related lost revenue; the impact of issues at shipyards, including ship delivery delays, ship cancellations or ship construction cost increases; shipyard unavailability; and the unavailability or cost of air service.

More information about factors that could affect our operating results is included under the captions "Risk Factors" in our most recent quarterly report on Form 10-Q, as well as our other filings with the SEC, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent annual report on Form 10-K and our recent quarterly report on Form 10-Q, copies of which may be obtained by visiting our Investor Relations website at www.rclinvestor.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to us on the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Adjusted Measures of Financial Performance

This press release includes certain adjusted financial measures defined as non-GAAP financial measures under Securities and Exchange Commission rules, which we believe provide useful information to investors as a supplement to our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles, or US GAAP.

The presentation of adjusted financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with US GAAP. These measures may be different from adjusted measures used by other companies. In addition, these adjusted measures are not based on any comprehensive set of accounting rules or principles. Adjusted measures have limitations in that they do not reflect all of the amounts associated with our results of operations as do the corresponding US GAAP measures.

A reconciliation to the most comparable US GAAP measure of all adjusted financial measures included in this press release can be found in the tables included at the end of this press release.  We have not provided a quantitative reconciliation of (i) projected Total Revenues to projected Net Revenues, (ii) projected Gross Yields to projected Net Yields, (iii) projected Gross Cruise Costs to projected Net Cruise Costs and projected Net Cruise Costs excluding Fuel and (iv) projected Net Income and Earnings per Share to projected Adjusted Net Income and Adjusted Earnings per Share because preparation of meaningful US GAAP projections of Total Revenues, Gross Yields, Gross Cruise Costs, Net Income and Earnings per Share would require unreasonable effort. Due to significant uncertainty, we are unable to predict, without unreasonable effort, the future movement of foreign exchange rates, fuel prices and interest rates inclusive of our related hedging programs.  In addition, we are unable to determine the future impact of restructuring expenses or other non-core business related gains and losses which may result from strategic initiatives. These items are uncertain and could be material to our results of operations in accordance with US GAAP. Due to this uncertainty, we do not believe that reconciling information for such projected figures would be meaningful.


ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands, except per share data)










Quarter Ended


Year Ended


December 31,


December 31,


2018


2017


2018


2017









Passenger ticket revenues

$

1,651,591



$

1,420,410



$

6,792,716



$

6,313,170


Onboard and other revenues

680,710



584,057



2,701,133



2,464,675


Total revenues

2,332,301



2,004,467



9,493,849



8,777,845


Cruise operating expenses:








Commissions, transportation and other

354,786



302,994



1,433,739



1,363,170


Onboard and other

124,550



100,080



537,355



495,552


Payroll and related

250,309



216,129



924,985



852,990


Food

139,560



123,659



520,909



492,857


Fuel

195,552



172,204



710,617



681,118


Other operating

295,656



230,635



1,134,602



1,010,892


Total cruise operating expenses

1,360,413



1,145,701



5,262,207



4,896,579


Marketing, selling and administrative expenses

327,693



311,059



1,303,144



1,186,016


Depreciation and amortization expenses

280,168



240,358



1,033,697



951,194


Operating Income

364,027



307,349



1,894,801



1,744,056


Other income (expense):








Interest income

6,138



13,345



32,800



30,101


Interest expense, net of interest capitalized

(97,420)



(69,800)



(333,672)



(299,982)


Equity investment income

42,524



35,888



210,756



156,247


Other income (expense)

5,184



1,257



11,107



(5,289)



(43,574)



(19,310)



(79,009)



(118,923)


Net Income

320,453



288,039



1,815,792



1,625,133


Less: Net income attributable to noncontrolling interest

4,750





4,750




Net Income attributable to Royal Caribbean
Cruises Ltd.

$

315,703



$

288,039



$

1,811,042



$

1,625,133










Earnings per Share:








Basic

$

1.51



$

1.35



$

8.60



$

7.57


Diluted

$

1.50



$

1.34



$

8.56



$

7.53










Weighted-Average Shares Outstanding:








Basic

209,001



213,831



210,570



214,617


Diluted

210,051



215,085



211,554



215,694


















Comprehensive Income








Net Income

$

320,453



$

288,039



$

1,815,792



$

1,625,133


Other comprehensive income (loss):








Foreign currency translation adjustments

(411)



3,097



(14,251)



17,307


Change in defined benefit plans

694



697



7,643



(5,583)


(Loss) gain on cash flow derivative hedges

(397,437)



188,835



(286,861)



570,495


Total other comprehensive (loss) income

(397,154)



192,629



(293,469)



582,219










Comprehensive (Loss) Income

(76,701)



480,668



1,522,323



2,207,352


Less: Comprehensive income attributable to noncontrolling interest

4,750





4,750




Comprehensive (Loss) Income attributable to Royal Caribbean Cruises Ltd.

$

(81,451)



$

480,668



$

1,517,573



$

2,207,352










 

 

STATISTICS










Quarter Ended


Year Ended


December 31,


December 31,


2018 (1)


2017


2018 (1)


2017

Passengers Carried

1,582,311



1,397,262



6,084,201



5,768,496


Passenger Cruise Days

10,910,732



9,933,493



41,853,052



40,033,527


APCD

10,183,172



9,284,160



38,425,304



36,930,939


Occupancy

107.1

%


107.0

%


108.9

%


108.4

%













(1) These amounts only include August and September 2018 amounts for Silversea Cruises due to the three-month reporting lag.

 

 

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)






As of


December 31,


December 31,


2018


2017


(unaudited)



Assets




Current assets




Cash and cash equivalents

$

287,852



$

120,112


Trade and other receivables, net

324,507



318,641


Inventories

153,573



111,393


Prepaid expenses and other assets

456,547



258,171


Derivative financial instruments

19,565



99,320


Total current assets

1,242,044



907,637


Property and equipment, net

23,466,163



19,735,180


Goodwill

1,378,353



288,512


Other assets

1,611,710



1,429,597


Total assets

$

27,698,270



$

22,360,926






Liabilities, redeemable noncontrolling interest and shareholders' equity




Current liabilities




Current portion of long-term debt

$

1,646,841



$

1,188,514


Commercial paper

775,488




Accounts payable

488,212



360,113


Accrued interest

74,550



47,469


Accrued expenses and other liabilities

899,761



903,022


Derivative financial instruments

78,476



47,464


Customer deposits

3,148,837



2,308,291


Total current liabilities

7,112,165



4,854,873


Long-term debt

8,355,370



6,350,937


Other long-term liabilities

583,254



452,813


Total liabilities

16,050,789



11,658,623


Redeemable noncontrolling interest

542,020




Shareholders' equity




Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding)




Common stock ($0.01 par value; 500,000,000 shares authorized; 235,847,683 and 235,198,901 shares issued, December 31, 2018 and December 31, 2017, respectively)

2,358



2,352


Paid-in capital

3,420,900



3,390,117


Retained earnings

10,263,282



9,022,405


Accumulated other comprehensive loss

(627,734)



(334,265)


Treasury stock (26,830,765 and 21,861,308 common shares at cost, December 31, 2018 and December 31, 2017, respectively)

(1,953,345)



(1,378,306)


Total shareholders' equity

11,105,461



10,702,303


Total liabilities, redeemable noncontrolling interest and shareholders' equity

$

27,698,270



$

22,360,926


 


ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)






Year Ended


December 31,


2018


2017

Operating Activities




Net Income

$

1,815,792



$

1,625,133


Adjustments:




Depreciation and amortization

1,033,697



951,194


Impairment losses

33,651




Net deferred income tax (benefit) expense

(2,679)



1,730


Loss (gain) on derivative instruments not designated as hedges

61,148



(61,704)


Share-based compensation expense

46,061



69,459


Equity investment income

(210,756)



(156,247)


Amortization of debt issuance costs

41,978



45,943


Gain on sale of property and equipment



(30,902)


Gain on sale of unconsolidated affiliate

(13,680)




Recognition of deferred gain

(21,794)




Changes in operating assets and liabilities:




Increase in trade and other receivables, net

(9,573)



(32,043)


(Increase) decrease in inventories

(23,849)



2,424


(Increase) decrease in prepaid expenses and other assets

(71,770)



20,859


Increase in accounts payable

91,737



36,780


Increase in accrued interest

18,773



1,303


Increase in accrued expenses and other liabilities

42,937



34,215


Increase in customer deposits

385,990



274,705


Dividends received from unconsolidated affiliates

243,101



109,677


Other, net

18,375



(17,960)


Net cash provided by operating activities

3,479,139



2,874,566


Investing Activities




Purchases of property and equipment

(3,660,028)



(564,138)


Cash received on settlement of derivative financial instruments

76,529



63,224


Cash paid on settlement of derivative financial instruments

(98,074)




Investments in and loans to unconsolidated affiliates

(27,172)



(10,396)


Cash received on loans to unconsolidated affiliates

124,238



62,303


Proceeds from the sale of property and equipment



230,000


Proceeds from the sale of unconsolidated affiliate

13,215




Acquisition of Silversea Cruises, net of cash acquired

(916,135)




Other, net

(1,731)



5,415


Net cash used in investing activities

(4,489,158)



(213,592)


Financing Activities




Debt proceeds

8,590,740



5,866,966


Debt issuance costs

(81,959)



(51,590)


Repayments of debt

(6,963,511)



(7,835,087)


Proceeds from issuance of commercial paper notes

4,730,286




Repayments of commercial paper notes

(3,965,450)




Purchase of treasury stock

(575,039)



(224,998)


Dividends paid

(527,494)



(437,455)


Proceeds from exercise of common stock options

4,264



2,525


Other, net

(13,764)



3,843


Net cash provided by (used in) financing activities

1,198,073



(2,675,796)


Effect of exchange rate changes on cash

(20,314)



2,331


Net increase (decrease) in cash and cash equivalents

167,740



(12,491)


Cash and cash equivalents at beginning of year

120,112



132,603


Cash and cash equivalents at end of year

287,852



120,112


Supplemental Disclosures




Cash paid during the year for:




Interest, net of amount capitalized

$

252,466



$

249,615






Non-Cash Investing Activities




Contingent consideration for the acquisition of Silversea Cruises

$

44,000



$


Purchases of property and equipment included in accounts payable and accrued expenses and other liabilities

$



$

139,644


Notes receivable issued upon sale of property and equipment

$



$

20,409


 

 


ROYAL CARIBBEAN CRUISES LTD.

NON-GAAP RECONCILING INFORMATION

(unaudited)













 Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):














Quarter Ended December 31,


Year Ended December 31,


2018


2018 On a Constant Currency Basis


2017


2018


2018 On a Constant Currency Basis


2017

Passenger ticket revenues

$

1,651,591



$

1,676,250



$

1,420,410



$

6,792,716



$

6,784,937



$

6,313,170


Onboard and other revenues

680,710



683,669



584,057



2,701,133



2,697,798



2,464,675


Total revenues

2,332,301



2,359,919



2,004,467



9,493,849



9,482,735



8,777,845


Less:












Commissions, transportation
and other

354,786



358,653



302,994



1,433,739



1,432,267



1,363,170


Onboard and other

124,550



124,967



100,080



537,355



536,941



495,552


Net Revenues

$

1,852,965



$

1,876,299



$

1,601,393



$

7,522,755



$

7,513,527



$

6,919,123



APCD

10,183,172



10,183,172



9,284,160



38,425,304



38,425,304



36,930,939


Gross Yields

$

229.03



$

231.75



$

215.90



$

247.07



$

246.78



$

237.68


Net Yields

$

181.96



$

184.25



$

172.49



$

195.78



$

195.54



$

187.35














 Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD):














Quarter Ended December 31,


Year Ended December 31,


2018


2018 On a Constant Currency Basis


2017


2018


2018 On a Constant Currency Basis


2017

Total cruise operating expenses

$

1,360,413



$

1,366,926



$

1,145,701



$

5,262,207



$

5,254,105



$

4,896,579


Marketing, selling and administrative expenses (2)

326,514



328,750



311,059



1,269,368



1,264,509



1,186,016


Gross Cruise Costs

1,686,927



1,695,676



1,456,760



6,531,575



6,518,614



6,082,595


Less:












Commissions, transportation and other

354,786



358,653



302,994



1,433,739



1,432,267



1,363,170


Onboard and other

124,550



124,967



100,080



537,355



536,941



495,552


Net Cruise Costs

1,207,591



1,212,056



1,053,686



4,560,481



4,549,406



4,223,873


Less:












Fuel

195,552



195,555



172,204



710,617



710,621



681,118


Net Cruise Costs Excluding Fuel

$

1,012,039



$

1,016,501



$

881,482



$

3,849,864



$

3,838,785



$

3,542,755














APCD

10,183,172



10,183,172



9,284,160



38,425,304



38,425,304



36,930,939


Gross Cruise Costs per APCD

$

165.66



$

166.52



$

156.91



$

169.98



$

169.64



$

164.70


Net Cruise Cost per APCD

$

118.59



$

119.03



$

113.49



$

118.68



$

118.40



$

114.37


Net Cruise Costs Excluding Fuel per APCD

$

99.38



$

99.82



$

94.94



$

100.19



$

99.90



$

95.93






(2)

For the quarter ended December 31, 2018, the amount does not include transaction costs related to the Silversea Cruises acquisition of $1.2 million. For the year ended December 31, 2018, the amount does not include transaction costs related to the Silversea Cruises acquisition of $31.8 million, the impairment and other costs related to the exit of our tour operations business of $11.3 million and the impact of the change in accounting principle of $9.2 million related to the recognition of stock-based compensation expense.

 

 

ROYAL CARIBBEAN CRUISES LTD.

NON-GAAP RECONCILING INFORMATION (CONTINUED)

(unaudited)









Adjusted Net Income attributable to Royal Caribbean Cruises Ltd. and Adjusted Earnings per Share were calculated as follows (in thousands, except per share data):






Quarter Ended December 31,


Year Ended December 31,


2018


2017


2018


2017

Net Income attributable to Royal Caribbean
Cruises Ltd.

$

315,703



$

288,039



$

1,811,042



$

1,625,133


Adjusted Net Income attributable to Royal
Caribbean Cruises Ltd.

322,084



288,039



1,873,363



1,625,133


Net Adjustments to Net Income
attributable to Royal Caribbean Cruises
Ltd. - Increase

$

6,381



$



$

62,321



$


Adjustments to Net Income attributable to
Royal Caribbean Cruises Ltd.:








Impairment loss related to Skysea Holding

$



$



$

23,343



$


Impairment and other costs related to exit of tour operations business (3)





11,255




Transaction costs related to the Silversea Cruises acquisition

1,179





31,759




Amortization of Silversea Cruises intangible assets resulting from the acquisition

2,046





2,046




Noncontrolling interest adjustment (4)

3,156





3,156




Impact of change in accounting principle (5)





(9,238)




Net Adjustments to Net Income attributable to Royal Caribbean Cruises Ltd. - Increase

$

6,381



$



$

62,321



$










Earnings per Share - Diluted

$

1.50



$

1.34



$

8.56



$

7.53


Adjusted Earnings per Share - Diluted

1.53



1.34



8.86



7.53


Net Adjustments to Earnings per Share - Increase

$

0.03



$



$

0.30



$










Adjustments to Earnings per Share:








Impairment loss related to Skysea Holding

$



$



$

0.11



$


Impairment and other costs related to exit of tour operations business (3)





0.05




Transaction costs related to the Silversea Cruises acquisition

0.01





0.15




Amortization of Silversea Cruises intangible assets resulting from the acquisition

0.01





0.01




Noncontrolling interest adjustment (4)

0.01





0.02




Impact of change in accounting principle (5)





(0.04)




Net Adjustments to Earnings per Share - Increase

$

0.03



$



$

0.30



$










Weighted-Average Shares Outstanding - Diluted

210,051



215,085



211,554



215,694






(3)

In 2014, we created a tour operations business that focused on developing, marketing and selling land based tours around the world through an e-commerce platform. During the second quarter of 2018, we decided to cease operations and exit this business. As a result, we incurred exit costs, primarily consisting of fixed asset impairment charges and severance expense.



(4)

Adjustment made to exclude the impact of the contractual accretion requirements associated with Silversea Cruises Group Ltd.'s noncontrolling interest.



(5)

In January 2018, we elected to change our accounting policy for recognizing stock-based compensation expense from the graded attribution method to the straight-line attribution method for time-based stock awards.

 

Cision View original content:http://www.prnewswire.com/news-releases/royal-caribbean-reports-record-2018-results-and-provides-forward-guidance-300786628.html

SOURCE Royal Caribbean Cruises Ltd.

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