Royal Caribbean Reports Third Quarter Earnings, Raises Guidance – Cruise Industry News

Royal Caribbean Group reported third quarter earnings per share (“EPS”) of $4.21 and adjusted earnings per share of $5.20.

According to the company, these results were better than the company’s forecasts due to stronger pricing due to nearby demand, continued strength in onboard revenue and lower costs due to timing. Additionally, balance sheet actions taken in the third quarter resulted in lower interest expenses and the company’s return to its pre-Covid unsecured balance sheet.

The company is raising its full-year 2024 adjusted EPS guidance to $11.57-$11.62. The increase in earnings expectations is driven by strong revenue performance in the third quarter and an increase in price expectations for the fourth quarter. Adjusted Q4 EPS guidance of $1.40 – $1.45 includes $0.24 of headwinds; one-third is related to Hurricane Milton, and the remainder is driven by the change in timing of costs since the third quarter and increased non-cash stock compensation.

“Our exceptional third quarter results and heightened expectations for the full year reflect strong demand for our differentiated vacation experiences,” said Jason Liberty, president and CEO of Royal Caribbean Group. “We see elevated demand patterns continuing as we build the business to 2025, and while comparable performance will be a high bar, our proven formula of moderate capacity growth, moderate throughput growth and strong manufacturing discipline is expected to continue.” costs continue to generate solid financial results. . While we are still very early in the planning process, we anticipate that earnings per share in 2025 will start at a level of $14.”

Third quarter of 2024:

• The load factor in the third quarter was 111%.
• Gross margin returns increased 13.4% as reported. Net returns increased 7.9% on a constant currency and as-reported basis.
• Gross cruise costs per available passenger cruise day (“APCD”) increased 1.3% as reported. Net cruise costs (“NCC”), excluding fuel, per APCD increased 4.0% in constant currency and as reported.
• Total revenue was $4.9 billion, net income was $1.1 billion or $4.21 per share, adjusted net income was $1.4 billion or $5.20 per share and adjusted EBITDA was 2.1 billion dollars.

Outlook for the entire year 2024:

• Net returns are expected to increase by 10.8% to 11.3% in constant currency (10.9% to 11.4% as reported).
• NCC excluding fuel per APCD is expected to increase approximately 6.2% to 6.7% on a constant currency and as-reported basis. The increase in costs, compared to previous guidance, is due to increased stock-based compensation.
• Adjusted EPS is expected to grow 71% year over year and be in the range of $11.57 to $11.62.

Third quarter 2024 results

Net income for the third quarter of 2024 was $1.1 billion, or $4.21 per share, compared to net income of $1 billion, or $3.65 per share, during the same period a year ago. Adjusted net income was $1.4 billion or $5.20 per share for the third quarter of 2024 compared to adjusted net income of $1.1 billion or $3.85 per share for the same period a year earlier. The company also reported total revenue of $4.9 billion and adjusted EBITDA of $2.1 billion.

Gross margin returns increased 13.4% as reported and net returns increased 7.9% on a constant currency (and as reported) basis, compared to the third quarter of 2023. The load factor for the quarter It was 111%. Net yield growth exceeded the company’s forecasts, primarily due to higher prices on key products, with particular strength for Europe and Alaska itineraries, and improved onboard revenues.

Gross cruise costs per APCD increased 1.3% as reported, compared to Q3 2023. NCC, excluding fuel, per APCD increased 4.0% in constant currency (and as reported) , compared to the third quarter of 2023, and includes the benefit of costs carried forward to the fourth quarter.

Royal Caribbean Group continues to deliver the ultimate vacation experience through innovative new ships and exciting private destinations. This quarter, the company announced plans to expand its portfolio of private destinations with Perfect Day Mexico, expected to open in 2027. The company also announced Silversea’s new 150-room hotel in Puerto Williams, Chile, to provide an experience of guest even more elevated and perfect. for its expeditions to Antarctica, which is expected to open in 2025. These new experiences are in addition to the Royal Beach Club Paradise Island, which is expected to open in 2025, and the Royal Beach Club Cozumel which is expected to open in 2026.

“We wake up every day obsessively focused on our mission to provide our guests with a lifetime of the best vacation experiences. In pursuit of that mission, we are very excited to further expand our Perfect Day collection with Perfect Day Mexico and develop the world’s southernmost hotel,” said Jason Liberty, President and CEO of Royal Caribbean Group. “Along with the expansion of our Icon Class, we look to continue changing the game and position ourselves to gain a greater share of the $1.9 trillion vacation industry.”

Update on reservations and income on board

The demand and pricing environment has accelerated since the last earnings call, surpassing 2023 levels. Higher demand for 2024 sailings exceeded expectations, contributing to higher load factors at higher prices and higher onboard revenues for the third quarter. Consumer spending on board as well as pre-cruise purchases continue to significantly exceed 2023 levels driven by increased participation at higher prices.

Market response to the company’s new ships, existing hardware and private destinations has been excellent and is accelerating, further positioning the company for performance growth in 2025. Demand for 2025 is strong with factors of Charges booked in line with previous years and at higher rates. , allowing for further price and yield growth as 2025 bookings continue to rise.

“Our business performance continues to be strong, driven by strong demand and excellent operational execution,” said Naftali Holtz, Chief Financial Officer of Royal Caribbean Group. “Our strong reserve position is exactly where we want to be to further optimize our performance profile and deliver on our formula for success (moderate capacity growth, moderate throughput growth and strong cost discipline), positioning us to continue delivering margin expansion.” and strong financial returns. .”

Fourth Quarter 2024

Net returns are expected to increase by 5.1% to 5.6% on a constant currency basis and by 5.3% to 5.8% on a reported basis compared to the same period last year. The expected growth in yield is driven by strong demand for Caribbean itineraries and continued strength in onboard revenues. Net return expectations in the fourth quarter include approximately 40 basis points of negative impact from Hurricane Milton. The expected yield growth in the fourth quarter is in addition to the 17.9% growth in constant currency net yields in the fourth quarter of 2023 compared to the same period in 2019.

NCC excluding fuel per APCD is expected to increase by 11.6% to 12.1% in constant currency and 11.7% to 12.2% on a reported basis, compared to the same period of the previous year. The year-over-year increase is primarily due to an increase in dry dock days, non-cash stock clearing and cost carryover from the third quarter.

Based on current fuel prices, interest rates, currency exchange rates and the factors detailed above, the company expects fourth quarter adjusted EPS to be in the range of $1.40 to $1.45.