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Royal Caribbean (RCL) Q1 Earnings & Revenues Miss Estimates

Zacks Equity Research

Royal Caribbean Cruises Ltd. RCL reported first-quarter 2020 results, wherein both earnings and revenues missed the respective Zacks Consensus Estimate. The top line missed the consensus estimate for the third straight quarter. Moreover, both earnings and revenues declined sharply year over year due to the coronavirus pandemic. 

The company reported adjusted loss per share of $1.48, wider than the Zacks Consensus Estimate of a loss of 81 cents. In the prior-year quarter, the company had reported adjusted earnings per share of $1.31 per share.

Total revenues were $2,032.8 million, missing the consensus mark of $2,103 million and declined 16.7% from the year-ago quarter. Due to the pandemic, the company suspended its global cruise operation beginning Mar 13, 2020. This resulted in cancellation of 130 sailings during the first quarter.

During the suspension of its operations, the company anticipates cash burn in the range of nearly $250 million to $275 million per month.

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise

Royal Caribbean Cruises Ltd. price-consensus-eps-surprise-chart | Royal Caribbean Cruises Ltd. Quote

Quarterly Highlights

Passenger ticket revenues decreased 19.5% to $1,376.9 million, and onboard and other revenues declined 10.4% to $655.9 million.

Total cruise operating expenses of $1,413.7 million improved 15% on a year-over-year basis.

Other Financial Information

As of Apr 30, 2020, the company had cash and cash equivalents of approximately $2.3 billion. On May 19, 2020, the company completed its $3.3 billion senior secured notes offering. 

The company announced that as of May 19, 2020, the anticipated debt maturities for the remainder of 2020 and 2021 are $0.4 billion and $0.9 billion, respectively.

Guidance

Due to the pandemic, the company has withdrawn guidance. The company is unable to estimate the financial losses due to the coronavirus as the magnitude and duration of the same remains uncertain.

The company announced interest expenses for the remainder of the year (Apr 1, 2020 through Dec 31, 2020) in the range of $590 million to $610 million.

Zacks Rank & A Stock to Consider

Royal Caribbean, which shares space with Carnival Corporation & Plc CCL and Norwegian Cruise Line Holdings Ltd. NCLH, has a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the same space include Manchester United plc MANU, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Manchester United has an impressive long-term earnings growth rate of 22.8%.

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