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MIAMI — Cruise operator Royal Caribbean's net income jumped 55 percent in the third quarter, helped partly by bookings made closer to sailing dates, lower costs and ships using less fuel.
The Miami-based company also raised its 2010 earnings forecast on Tuesday and said it's likely to set a new earnings-per-share record in 2011.
Its stock surged $5.08, or 14.5 percent, to $40.23. The shares hit a new 52-week high of $40.93 earlier in the session.
Royal Caribbean Chairman and CEO Richard Fain explained during a conference call that the performance was partly the result of diligent cost containment.
"Unfortunately we are producing these results despite, not because of, the economy," he explained.
Royal Caribbean Cruises Ltd. reported its net income climbed to $356.8 million, or $1.64 per share, for the quarter. A year earlier, net income was $230.4 million, or $1.07 per share.
The results topped the $1.57 per share that analysts surveyed by Thomson Reuters predicted. These estimates normally remove one-time items.
Revenue for the period ended Sept. 30 increased 17 percent to $2.06 billion. Wall Street expected $2.05 billion.
Net yields, which reflect a company's revenue without some variable costs like commissions and transportation, rose 5.2 percent. The figure increased 7.2 percent on a constant currency basis.
"We continue to characterize demand for our brands as steady and solid and the strength of our third quarter results is certainly a validation of that," Fain said in a statement.
Chief Financial Officer Brian Rice indicated during the conference call that demand is gradually improving, with customer deposits currently running 20 percent higher than a year ago.
Royal Caribbean's brands include Celebrity Cruises, Royal Caribbean International and Azamara Club Cruises. It has 39 ships in service and three being built.
Royal Caribbean said its newest vessel, Allure of the Seas, is set for delivery on Thursday. The ship will sail to the Caribbean throughout the year, leaving from Port Everglades, Fla.
Third-quarter fuel usage was better than expected, coming in at 342,400 metric tons.
Royal Caribbean now expects 2010 earnings between $2.43 and $2.47 per share. Its prior forecast was for net income between $2.25 and $2.35 per share.
JPMorgan's Kevin Milota said in a client note that Royal Caribbean's forecast includes a 39 cents per share gain from a legal settlement. Excluding this gain, the cruise operator's adjusted earnings forecast is $2.04 to $2.08 per share.
Milota maintained an "Overweight" rating.
For the fourth quarter, Royal Caribbean anticipates earnings of 8 cents to 12 cents per share. Net yields are expected to rise about 4 percent to 5 percent for both the year and quarter on an as-reported basis.
Analysts predict 2010 earnings of $1.94 per share and fourth-quarter net income of 16 cents per share.
Looking ahead to 2011, Royal Caribbean said it expects yield increases to be comparable to those of 2010, which would put the company on track to set a new 2011 earnings per share record.
"Profitability momentum moving into 2011 is also quite strong with our newest vessels performing exceptionally well and our management team controlling costs very effectively. The economy is still tough, but even facing such headwinds our outlook is remarkably encouraging," Frain said.
