Royal Caribbean Q2 2023 Earnings Report
Key Takeaways
Royal Caribbean Group reported a strong second quarter with Earnings per Share of $1.70 and Adjusted Earnings per Share of $1.82, exceeding guidance due to strong pricing and onboard revenue. The company is increasing its 2023 Adjusted Earnings per Share guidance by 33% to $6.00 – $6.20.
Strong ticket pricing from North America and Europe itineraries, combined with strength in onboard revenue, led to better-than-expected revenues.
Gross Margin Yields increased 13.1% As-Reported, and Net Yields increased 12.9% in Constant-Currency compared to the second quarter of 2019.
Total revenues were a record $3.5 billion, Net Income was $458.8 million, Adjusted Net Income was $491.7 million, Adjusted EBITDA was a record $1.2 billion and Operating Cash Flow was $1.4 billion.
Booking volumes in the second quarter remained significantly higher than the corresponding period in 2019 and at record pricing levels.
Royal Caribbean
Royal Caribbean
Royal Caribbean Revenue by Segment
Forward Guidance
The company provided the following guidance for the third quarter and full year 2023:
Positive Outlook
- Net Yields are expected to increase 13.5% to 14.0% in Constant-Currency (14.0% to 14.5% As-Reported), compared to the third quarter of 2019.
- Adjusted Earnings per Share for the third quarter are expected to be in the range of $3.38 to $3.48 per share.
- Net Yields are expected to increase 11.5% to 12.0% in Constant-Currency and As-Reported, compared to 2019.
- Adjusted Earnings per Share for the full year are expected to be in the range of $6.00 to $6.20 per share.
- Capacity change vs. 2019 for full year 2023 is expected to be 13.5%
Challenges Ahead
- NCC, excluding Fuel, per APCD is expected to increase approximately 11.2% in Constant-Currency and As-Reported, compared to third quarter 2019.
- Approximately half of the cost increase compared to 2019 is related to structural costs, timing shift of operating expenses from the second quarter, and increase in stock compensation expense.
- NCC, excluding Fuel, per APCD is expected to be up approximately 7.0% in Constant-Currency (6.7% As-Reported), compared to 2019.
- The increase in costs, relative to previous guidance, is driven by an increase in stock compensation expense due to the rise in share price and expected financial performance.
- Net Cruise Costs per APCD vs. 2019 approximately 11.6%
Revenue & Expenses
Visualization of income flow from segment revenue to net income