Royal Caribbean (RCL) Q3 Earnings & Revenues Lag Estimates

Zacks Equity Research
·3-min read

Royal Caribbean Cruises Ltd. RCL reported third-quarter 2020 results, wherein both top and bottom lines missed the Zacks Consensus Estimate. Notably, the bottom line missed the consensus estimate for the second straight quarter. Moreover, both the metrics declined sharply year over year due to the coronavirus pandemic.

The company reported adjusted loss per share of $5.62, wider than the Zacks Consensus Estimate of a loss of $4.92. In the prior-year quarter, it had reported adjusted earnings per share of $4.27 per share.

Total revenues were ($33.7) million, against the consensus mark of $56 million. In the prior year quarter, the company had reported revenues of $3,187 million. Due to the pandemic, the company suspended its global cruise operation beginning Mar 13, 2020, which resulted in the cancellation of third-quarter sailings.

During suspension of operations, the company anticipates cash burn in the range of nearly $250 million to $290 million per month.

Quarterly Highlights

Passenger ticket revenues decreased 99.9% to $107 million, while onboard and other revenues declined to ($36.9) million from $3,186.9 million in the prior-year quarter.

Total cruise operating expenses were $308.6 million, compared with $1,623 million at the end of third-quarter 2019.

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

Other Financial Information

As of Sep 30, 2020, the company had cash and cash equivalents of approximately $3 billion. As of Sep 30, 2020, the company’s long-term debt was $17.6 billion, compared with $8.4 billion at the end of Dec 31, 2019.

The company announced that as of Sep 30, 2020, the anticipated debt maturities for the remainder of 2020 and 2021 are $0.3 billion and $1.3 billion, respectively.

Capital expenditure for remainder of 2020 and 2021 are anticipated to be $0.5 billion and $2.1 billion, respectively.

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Due to the pandemic, the company has withdrawn guidance.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 remains uncertain.

The company anticipates to report net loss on both GAAP and adjusted basis for the fourth quarter and the fiscal 2020.

The pandemic has significantly impacted the bookings for remainder of 2020. However, booking for sailings in the second half of 2021 is within historical ranges.

Zacks Rank & Stocks to Consider

Royal Caribbean, which shares space with Carnival Corporation & Plc CCL and Norwegian Cruise Line Holdings Ltd. NCLH, has a Zacks Rank #4 (Sell).

A better-ranked stock worth considering in the same space includes Camping World Holdings, Inc. CWH, sporting a Zacks Rank #1 (Strong Buy). Camping World Holdings current-year earnings are likely to witness growth of 872.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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