Royal Caribbean forecasts record 2024 income

2024-02-13T21:37:26+00:00 February 13th, 2024|Finance|

Royal Caribbean Group has reported earnings per share (E PS) of $6.31 and an adjusted EPS of $6.77 for 2023, which were better than the company’s guidance, due to stronger close-in demand.

The strength is continuing into 2024 with adjusted EPS expected to be in the range of $9.50 – $9.70 per share, the company said.

For the full year, RCL reported total revenues of $13.9 bill, net income of $1.7 bill, adjusted net income of $1.8 bill and adjusted EBITDA of $4.5 bill.

Gross margin yields increased 13.2% as-reported. net yields increased 13.5% in constant currency, compared to 2019.

Gross cruise costs per available passenger cruise day (APCD) increased 10.9% as-reported. Net cruise costs (NCC), excluding fuel, per APCD increased 7.9% in constant currency (7.5% as-reported). Both metrics include around 65 bps, compared to previous guidance, related to increase in stock compensation expense, due to the significant rise in share price.

For 2024, RCL forecast net yields will increase 5.25% – 7.25% in constant currency (5.30% – 7.30% as-reported), compared to 2023.

NCC, excluding fuel, per APCD is expected to increase 3.75% – 4.25% in constant currency (3.8% to 4.3% as-reported) compared to 2023, and includes 315 bps of costs related to increased drydocking days and the new operations of Hideaway Beach at Perfect Day at CocoCay.

Adjusted EPS is expected to grow 40% year-on-year to be in the range of $9.50 - $9.70.

WAVE season has seen a record start. Booked load factors and rates are higher than all previous years.

The company said that it expects to achieve two of its Trifecta goals in 2024 – triple digit EBITDA per APCD and ROIC in the teens, one year earlier than expectations.

For the furth quarter of last year, net income was $0.3 bill or $1.06 per share, compared to a net loss of $0.5 bill or a negative $1.96 per share for the same period in the previous year.

Adjusted net income was also $0.3 bill or $1.25 per share, compared to a loss of $0.3 bill or a negative $1.12 per share for the same period in 2022.  RCL lso reported total revenues of $3.3 bill and Adjusted EBITDA of $1 bill for 4Q23.

“2023 was an exceptional year, propelled by unmatched demand for our brands from new and loyal guests,” said Jason Liberty, RCL Group’s President and CEO (pictured).

“With the wind in our sails and record-breaking bookings, 2024 is poised to be another robust year, and we expect to achieve two of our Trifecta goals one year early.

“With our industry-leading global brands combined with the most innovative fleet and destinations, we remain intensely focused on delivering a lifetime of vacations and priceless memories for our guests while delivering exceptional long-term shareholder value.

“Demand for our brands continues to outpace broader travel as a result of consumer spend further shifting toward experiences and the exceptional value proposition of our products.

“We have exciting new vacation experiences in 2024, including the game changing ‘Icon of the Sea’s, and have entered the year in a record booked position at significantly higher prices, further positioning us for a strong 2024,” he said.

As of 31st December, 2023, the Group’s liquidity position was $3.1 bill, which included cash and cash equivalents and undrawn revolving credit facility capacity.

During 4Q23, the company refinanced its $3 bill revolving credit facilities and $500 mill term loan into new $3.5 bill multi-year revolving credit facilities. In addition, RCL repaid from liquidity on hand, the remaining $500 mill of its 11.5% senior secured notes due June, 2025.

Finally, the company settled its 2.875% convertible notes in November by utilising $224.5 mill of liquidity on hand and issuing 146,500 shares.

“Our accelerated performance and commitment to strengthening the balance sheet allowed us to pay off approximately $4 bill of debt in 2023 and significantly reduce leverage consistent with our Trifecta goal of returning to investment grade metrics,” said Naftali Holtz, Royal Caribbean Group’s CFO.

“We will continue to strategically allocate capital to invest in our future while also paying down debt, and will be close to investment grade metrics in 2024.”

This year’s capital expenditures are expected to be around $3.3 bill, based on current foreign exchange rates and are predominantly related to the company’s new ship orderbook.

RCL expects to take delivery of ‘Utopia of the Seas’ and ‘Silver Ray’ in 2024. All ship orders have committed financing in place.  Non-new ship related capital expenditures are expected to be $0.6 bill.

Meanwhile, RCL’s 2010-built ‘Allure of the Seas’ is to undergo a refurbishment project, Liberty said during the company’s fourth quarter earnings call.

The original project was cancelled in 2020, due to the pandemic. She is due to undergo a major upgrade during its forthcoming drydock scheduled for early 2025.

Liberty said that the work would not only include the guest areas but will also include technical upgrades for the environment.