Royal Caribbean Group (RCL) has reported third quarter 2024 earnings per share (EPS) of $4.21 and adjusted EPS of $5.20.
These results were better than the company’s guidance, due to stronger pricing on close-in demand, continued strength in on board revenue and lower costs, due to timing.
In addition, 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.
RCL has increased its full year 2024 adjusted EPS guidance to $11.57 – $11.62, which was driven by the strong revenue performance in 3Q24 and an increase in pricing expectations for the next quarter.
The 4Q24 ajusted 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 3Q24, 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 (pictured).
“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,” he said.
In 3Q24, the load factor was 111%, gross margin yields were up 13.4% as-reported, while 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% in constant-currency and as-reported.
Total revenues were $4.9 bill, net income was $1.1 bill or $4.21 per share, adjusted net income was $1.4 bill or $5.20 per share, and adjusted EBITDA was $2.1 bill.
For the full year, 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 around 6.2% to 6.7% in constant currency and as-reported.
The increase in costs, compared to the previous 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.
“We wake up every day obsessively focused on our mission of delivering a lifetime of the very best vacation experiences to our guests. In pursuit of that mission, we are very excited to further broaden our Perfect Day Collection with Perfect Day Mexico and to develop the Southernmost hotel on Earth,” Liberty added.
“Together with the expansion of our ‘Icon’ class, we look to continue to change the game and position ourselves to win a greater share of the $1.9 trill vacation industry.”
“The performance of our business continues to be robust, driven by strong demand and excellent operational execution,” said Naftali Holtz, Royal Caribbean Group’s CFO.
“Our strong booked position is exactly where we want to be to further optimise our yield profile and deliver on our formula of success – moderate capacity growth, moderate yield growth and strong cost discipline – positioning us to continue to deliver margin expansion and strong financial returns.”
As of 30th September, 2024, RCL’s liquidity position was $3.9 bill, which includes cash and cash equivalents and undrawn revolving credit facility capacity.
“This quarter, we achieved an important milestone of returning to a fully unsecured capital structure while also reducing cost of capital and recapturing a portion of our Covid-era share dilution,” added Holtz.
“Our strong balance sheet position allows us to further support our growth ambitions and expand capital allocation, while delivering strong cash flow and maintaining investment grade balance sheet metrics.”
RCL also said that of 30th September, 2024, the scheduled debt maturities for the remainder of 2024, 2025, 2026, and 2027 were $0.7 bill, $1.6 bill, $2.9 bill and $2.6 bill, respectively.
Capital expenditures for the full year are expected to be around $3.4 bill, based on current foreign exchange rates, and are predominantly related to the new ship orderbook. Non-new ship related capital expenditures are expected to be $0.7 bill.
Capacity changes for 2024, 2025, 2026, and 2027 are expected to be 8%, 5%, 7%, and 5%, respectively.
These figures do not include potential ship sales or additions that the company may elect in the future.
