Royal Caribbean Group reported third quarter Earnings per Share (“EPS”) of $4.21 and Adjusted EPS of $5.20.
According to the ٌRoual Caribbean Group these results were better than the company’s guidance due to stronger pricing on close-in 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 expense and the company’s return to its pre-Covid unsecured balance sheet.
Adjusted EPS
The company is increasing its full year 2024 Adjusted EPS guidance to $11.57 – $11.62. The increase in earnings expectations is driven by the strong revenue performance in the third quarter and an increase in pricing expectations for the fourth quarter.
The fourth quarter Adjusted EPS guidance of $1.40 – $1.45 includes $0.24 of headwinds – one third is related to Hurricane Milton, with the remainder driven by the timing of costs shifting from the third quarter, and higher non-cash stock compensation.
“Our exceptional third quarter results and increased full year expectations reflect the robust demand for our differentiated vacation experiences,” said Jason Liberty, president and CEO, Royal Caribbean Group.
“We see elevated demand patterns continuing as we build the business for 2025, and although the yield comparable will be a high bar, our proven formula of moderate capacity growth, moderate yield growth and strong cost discipline is expected to continue to deliver strong financial results. While we are still very early in the planning process, we anticipate earnings per share in 2025 to start with a $14 handle.”
Third Quarter 2024:
- Load factor in the third quarter was 111%.
- Gross Margin Yields were up 13.4% as-reported. Net Yields were up 7.9% in Constant Currency and as-reported.
- Gross Cruise Costs per Available Passenger Cruise Days (“APCD”) increased 1.3% as-reported. Net Cruise Costs (“NCC”), excluding Fuel, per APCD increased 4.0% in Constant-Currency and as-reported.
- Total revenues were $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.
Full Year 2024 Outlook:
- Net Yields are expected to increase 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% in Constant Currency and as-reported. The increase in costs, compared to prior guidance, is driven by higher 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 $1.0 billion or $3.65 per share for the same period in the prior year. 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 in the prior year. The company also reported total revenues of $4.9 billion and Adjusted EBITDA of $2.1 billion.
Gross Margin Yields increased
Gross Margin Yields increased 13.4% as-reported, and Net Yields increased 7.9% in Constant Currency (and as-reported), when compared to the third quarter of 2023. Load factor for the quarter was 111%. Net Yield growth exceeded the company’s guidance mainly due to higher pricing across key products, with particular strength for European and Alaskan itineraries, and better onboard revenue.
Gross Cruise Costs per APCD increased 1.3% as-reported, compared to the third quarter of 2023. NCC, excluding Fuel, per APCD increased 4.0% in Constant Currency (and as-reported), when compared to the third quarter of 2023, and includes the benefit of costs that are shifting to the fourth quarter.
The best vacation experience
Royal Caribbean Group continues to deliver the best vacation experience through innovative new ships and exciting private destinations. This quarter, the Company announced its plans to expand its private destinations portfolio with Perfect Day Mexico, expected to open in 2027.
Silversea’s new
The company also announced Silversea’s new 150-room hotel in Puerto Williams, Chile to provide a further-elevated and seamless guest experience for its Antarctica expeditions, expected to open in 2025. These new experiences are in addition to the Royal Beach Club Paradise Island, expected to open in 2025, and Royal Beach Club Cozumel expected to open in 2026.
Update on Bookings and Onboard Revenue
The demand and pricing environment accelerated since the last earnings call, exceeding 2023 levels. Closer-in demand for 2024 sailings exceeded expectations, contributing to higher load factors at higher prices and higher onboard revenue for the third quarter. Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2023 levels driven by greater participation at higher prices.
The market response to the company’s new ships, existing hardware, and private destinations, has been excellent and accelerating – further positioning the company for yield growth in 2025. Demand for 2025 is strong with booked load factors in line with prior years and at higher rates, allowing for further pricing and yield growth as 2025 bookings continue to ramp up.
Fourth Quarter 2024
Net Yields are expected to increase 5.1% to 5.6% in Constant Currency and 5.3% to 5.8% as-reported as compared to the same period in the prior year. The expected growth in yield is driven by strong demand for Caribbean itineraries and continued strength in onboard revenue. Net Yield expectations in the fourth quarter include approximately 40bps of negative impact from Hurricane Milton. The expected yield growth in the fourth quarter is on top of 17.9% growth in Net Yields in Constant Currency in the fourth quarter of 2023 as compared to the same period in 2019.
NCC, excluding Fuel, per APCD, is expected to increase 11.6% to 12.1% in Constant Currency and 11.7% to 12.2% as-reported as compared to the same period in the prior year. The year-over-year increase is predominately driven by an increase in drydock days, non-cash stock compensation, and shifting of costs from the third quarter.
Based on current fuel pricing, 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.
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