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Royal Caribbean (RCL) Q1 Earnings Beat Estimates, Fall Y/Y

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Royal Caribbean Cruises Ltd. RCL reported first-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate. However, the metrics declined sharply on a year-over-year basis.

Nonetheless, the company resumed operations in limited capacity and started receiving positive reviews by customers sailing through the same. Going forward, the initiative is likely to boost the company’s image in terms of sailing demonstrations under the COVID-19 environment. Furthermore, it expects to re-start its global cruise operation in a phased manner with initial cruises having reduced guest occupancy, modified itineraries as well as enhanced health and safety protocols.

Following the results, shares of the company gained 3.3% during the pre-market trading hours.

Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise

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

Q1 Earnings & Revenues

The company reported adjusted loss per share of $4.44, narrower than the Zacks Consensus Estimate of a loss of $4.54. In the prior-year quarter, it had reported adjusted loss per share of $1.48 per share.

Quarterly revenues of $42 million beat the consensus mark of $41 million by 2.4%. In the prior-year quarter, the company had reported revenues of $2,032.8 million. Due to the pandemic, the company suspended its global cruise operation beginning Mar 13, 2020, which resulted in the cancellation of first-quarter sailings. The cancellations have also been extended for most of its ships till Jun 30, 2021.

During suspension of operations, the company anticipates cash burn of approximately $300 million, higher than the previous estimate of $250-$290 million per month. The upside is likely to be driven by expenses relating to the fleetwide restart of operations and timing.

Quarterly Highlights

During the first-quarter 2021, passenger ticket revenues plunged 98.5% year over year to $20.8 million, while onboard and other revenues declined to $21.2 million from $655.9 million reported in the prior-year quarter.

Total cruise operating expenses were $283.5 million compared with $1,510.8 million at the end of first-quarter 2020.

Other Financial Information

As of Mar 31, 2021, the company had cash and cash equivalents of approximately $5.1 billion compared with $3.7 billion as on Dec 31, 2020. As of Mar 31, the company’s long-term debt was nearly $20.7 billion compared with $18 billion as of Dec 31, 2020.

The company announced that as of Mar 31, 2021, the anticipated debt maturities for the remainder of 2021 and 2022 are $0.2 billion and $2.2 billion, respectively.

Fleet Updates

During first-quarter 2021, the company added Odyssey of the Seas to its fleet. Meanwhile, the company stated that it expects to add Silver Dawn to the Silversea fleet during fourth-quarter 2021. Moving into 2022, the company has two ships scheduled for delivery namely — Wonder of the Seas and Celebrity Beyond.

2021 Guidance

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

The company anticipates to report net loss on both GAAP and adjusted basis for the second quarter and the fiscal 2021.

The company expects depreciation and amortization expenses to be in the range of $320 million to 325 million, for the second quarter 2021. Net interest expense for the second quarter are expected to be approximately $270 million. Meanwhile, capital expenditures for the remaining of 2021 are anticipated to be $1.1 billion.

The pandemic has significantly impacted bookings for 2021. However, cumulative advance booking for sailings in the first half of 2022 are within historical ranges and high prices compared with 2019 levels. During the quarter, the company witnessed 75% of new bookings for 2021. However, the remaining 25% reflect redemption of Future Cruise Credits and the "Lift & Shift" program.

Zacks Rank & 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). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked stock worth considering in the same space includes Camping World Holdings, Inc. CWH, that carries a Zacks Rank #2 (Buy).

Camping World has a three-five-year EPS growth rate of 34.7%.

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Carnival Corporation (CCL) : Free Stock Analysis Report

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Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report

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