Royal Caribbean: Better Than Expected Q2 2023 Results

Posted on 28 July, 2023 by Spacejunkie2

Royal Caribbeans Serenade of the Seas leaving the port of Vancouver, photo credit Spacejunkie2 Flickr

Royal Caribbean Group today reported second-quarter Earnings per Share of $1.70 and Adjusted Earnings per Share of $1.82.

These results were significantly better than the company’s guidance due to more robust pricing on closer-in demand and further strength in onboard revenue, the company said in a statement.

As a result of the accelerating demand environment for its vacation experiences, the company is increasing its 2023 Adjusted Earnings per Share guidance by 33% to $6.00 – $6.20.

“Our brands continue to fire on all cylinders, resulting in record yields and second-quarter earnings significantly exceeding our expectations,” said Jason Liberty, president and CEO, of Royal Caribbean Group. “Demand for cruising and our brands is exceptionally strong and we have seen another step change in booking volumes and pricing, leading us to now expect double-digit net yield growth for the full year. We also expect to achieve record Adjusted EBITDA per APCD and Return on Invested Capital this year and are well on our way toward achieving our Trifecta goals.”

Key Highlights

Strong ticket pricing from both North America and Europe itineraries, combined with strength in onboard revenue, led to better-than-expected revenues in the second quarter and a significant increase in the company’s full-year outlook for revenue and earnings.

Second Quarter 2023:

Gross Margin Yields increased 13.1% As-Reported, and Net Yields increased 12.9% in Constant-Currency (12.6% As-Reported), both compared to the second quarter of 2019.
Gross Cruise Costs per Available Passenger Cruise Day (“APCD”) increased by 10.9% As-Reported, and Net Cruise Costs (“NCC”), excluding Fuel, per APCD increased by 9.0% in Constant-Currency (8.6% As-Reported), both compared to the second quarter of 2019. The favourable timing of operating expenses was offset by the increase in stock compensation expense due to the rise in share price and expected financial performance.
Total revenues were a record $3.5 billion, Net Income was $458.8 million or $1.70 per share, Adjusted Net Income was $491.7 million or $1.82 per share, Adjusted EBITDA was a record $1.2 billion and Operating Cash Flow was $1.4 billion.

Full Year 2023 Outlook:

Net Yields are expected to increase 11.5% to 12.0% in Constant-Currency and As-Reported, compared to 2019.
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.
Adjusted Earnings per Share for the entire year are expected to be in the range of $6.00 to $6.20 per share.

Third Quarter 2023 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.
NCC, excluding Fuel, per APCD is expected to increase by approximately 11.2% in Constant-Currency and As-Reported, compared to the third quarter of 2019. Approximately half of the cost increase compared to 2019 is related to structural costs, a timing shift of operating expenses from the second quarter, and an increase in stock compensation expense.
Adjusted Earnings per Share for the third quarter are expected to be in the range of $3.38 to $3.48 per share.

Second Quarter 2023

The company reported Net Income for the second quarter of $458.8 million or $1.70 per share compared to Net Loss of $(0.5) billion or $(2.05) per share for the same period in the prior year. The company also reported an Adjusted Net Income of $491.7 million or $1.82 per share for the second quarter compared to an Adjusted Net Loss of $(0.5) billion or $(2.08) per share for the same period in the prior year.

Second-quarter revenue significantly exceeded the company’s guidance due to higher pricing and higher shipboard revenue across the company’s key itineraries, including the Caribbean and Europe. The load factor for the second quarter was 105%.

Gross Cruise Costs per APCD increased by 10.9% As-Reported, compared to 2019. NCC, excluding Fuel, per APCD increased by 8.6% As-Reported and 9.0% in constant currency, compared to 2019. Favourable timing of operating expenses drove NCC lower, however, it was offset entirely by an increase in stock compensation expense-related costs due to the significant rise in share price and expected financial performance.

Update on Bookings

Booking volumes in the second quarter remained significantly higher than in the corresponding period in 2019 and at record pricing levels. Demand for 2023 sailings has significantly exceeded expectations and bookings for 2024 sailings are up significantly versus all prior years at record prices. Demand from the North American consumer has remained incredibly strong throughout the year, and booking volumes from European consumers who are booking European cruises this summer have accelerated.

The further increase in yield expectations for the year is the result of higher pricing and onboard revenue expectations for key itineraries, particularly in North America and Europe. Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2019 levels driven by greater participation at higher prices.

As of June 30, 2023, the Group’s customer deposit balance was at a record-high $5.7 billion.

New Carnival Venezia Ready to Debut in Europe

Posted on 30 May, 2023 by Spacejunkie2

The new Carnival Venezia is ready for its big debut in Europe.

After being prepared at the Navantia shipyard in Cádiz, the 2019-built vessel is on its way to Southern Spain, where it will embark on its first commercial voyage on May 29.

A transatlantic crossing, the cruise precedes Venezia’s U.S. debut, which is scheduled for mid-June. Sailing from Barcelona to New York City, the 15-night repositioning voyage features visits to five ports in Spain, the UK, Portugal and Canada.

Upon arriving in New York on June 13, the Venezia is set to kick off a year-round program of cruises out of the Manhattan Cruise Terminal.

Extending through late 2024, the schedule includes four- to 15-night cruises to Bermuda, the Caribbean, the Bahamas, Canada and New England.

For the 2024-25 winter, the Carnival Venezia is set to debut in Florida offering a series of cruises to the Caribbean and the Bahamas departing from Port Canaveral.

The first ship in the company’s new “Carnival Fun Italian Style” brand, the Venezia is debuting a brand-new concept.

Initially built for Costa Cruises, the Vista-Class vessel was designed with public areas and facilities inspired by the Italian city of Venice.

Combining the ship’s existing features with Carnival’s signature product, the new concept offers Italian-themed activities and experiences, such as a different version of Guy’s Burger Joint – which will serve its classic burgers and new, especially-created options inspired by Italy.

During its recent drydock in Spain, the Venezia also received other signature features of Carnival Cruise Line, including the Carnival Waterworks aqua park, the Piano Bar 88 and the Fahrenheit 555 Steakhouse.

In 2024, a second ship is set to join the “Carnival Fun Italian Style Concept,” as the Florence-inspired Costa Firenze enters the fleet for a West Coast program.

Enchanted Opens Princess’ 2023 Summer Program in Europe

Posted on 24 March, 2023 by Spacejunkie2

The Enchanted Princess is launching Princess Cruises’ 2023 summer program in Europe today.

After crossing the Atlantic, the vessel is in Barcelona to start the first cruise of the season: a six-night voyage to the Western Mediterranean.

Cruising roundtrip from the Spanish port, the itinerary sails to France and Gibraltar. In addition to the UK port in the Iberian Peninsula, the cruise features visits to Ajaccio and Marseille, as well as two full days at sea.

Following a routine drydock, the Enchanted Princess continues its European summer program in mid-April, offering additional itineraries in both the Western and Eastern Mediterranean.

The series of seven-to 21-night cruises include different destinations across the Greek Islands, France, Spain, Italy, Turkey, Montenegro and more.

Fifth in a series of six ships known as Royal Class, the Enchanted Princess first entered service in November 2021.

Built-in Italy by the Fincantieri shipyard, the 3,660-guest ship offers more than 25 dining venues and bars onboard, including the new such as La Mer, a French Bistro that debuted on the Majestic Princess.

The ship also offers varied entertainment options, as well as unique Sky Suites. According to Princess, the balconies of the staterooms – which measure over 90 square meters – are among the biggest in the entire cruise industry.

In addition to the Enchanted Princess, three other Princess Cruises vessels are cruising in Europe during the 2023 summer: the Sky Princess, the Regal Princess and the Island Princess.

Mostly sailing in Northern Europe, the ships will offer different itineraries between March and early December.

Based out of the UK, the Sky Princess is sailing a series of four- to 24-night cruises to Scandinavia, Iceland, Norway, the Canaries, the Baltic and the Mediterranean departing from Southampton.

Also sailing from the English port, the Regal Princess is poised to sail a program of ten- and 12-night itineraries to the British Islands.

Completing the local offering, the Island Princess sails in Northern Europe and the Mediterranean, offering longer cruises departing from Southampton, Copenhagen, Civitavecchia and more.