Highlights From Royal Caribbean CEO’s TV Appearance

Highlights From Royal Caribbean CEO’s TV Appearance
  • Royal Caribbean reported Q4 results and a Coronavirus update Tuesday morning.
  • The company estimates at this time a 25 cent per share EPS impact.
  • Management also announced a new set of objectives to be achieved by 2025.

Royal Caribbean Cruises has become one of the more closely followed stocks as it could be disproportionately impacted by the Coronavirus as a travel and leisure company. On Tuesday, RCL CEO Richard Fain was a guest on CNBC’s “The Exchange” shortly after the company released fourth quarter results.

Q4 Review

Royal Caribbean said it earned $1.42 per share in the fourth quarter on revenue of $2.517 billion. By comparison, Street analysts were expecting the company to earn $1.42 per share on revenue of $2.54 billion.

Net income dropped from $315.7 million last year to $297.4 million, mostly due to the cancellation of trips to Cuba and disruptions from Hurricane Dorian.

No Big Impact From Coronavirus

Despite what some investors may be thinking, Fain said his cruise company is seeing “very little impact” from the Coronavirus, aside from China and neighboring regions in Asia. In the meantime, governments around the world, especially China, are taking a “very proactive” approach. This represents a welcome shift in stance compared to prior outbreaks and it is “giving a lot of people confidence” in the cruise industry’s outlook.

The company said earlier in a press release it expects the Coronavirus to impact its EPS by 25 cents a share. So far, eight cruises from China have been canceled.

The virus outbreak is “highly fluid” and any outlook can’t reasonably be estimated at the current time. As such, any near-term guidance will be updated as the situation stabilizes and management can better quantify any impact, the company also said.

Sailing Towards The Future

Beyond the near-term, the company announced ambitious 2025 financial objectives in what it calls “20>25 by 2025.”  By 2025, the company expects to deliver an EPS of $20 per share compared to what it guided for 2020 of $10.40 to $10.70 per share. 

The company also pledged to lower its carbon footprint by 25%, deliver strong returns on invested capital, and improve the guest experience.

“We are pairing ambitious business and environmental goals because we all understand that businesses must do our part to meet the needs of all our stakeholders,” Fain also said in the earnings release.  “Over the last years, our people have worked hard to deliver strong performance on both profitability metrics and important societal goals. This 20>25 by 2025 program should help take those efforts to the next level.”

By Jayson Derrick
Jayson Derrick has been writing professionally about stocks since 2011. He is particularly interested in alternative investments, hedge funds, and activist investing. He is a big fan of NHL hockey and lives in Montreal, Canada with his wife and four year old daughter.
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