On July 25, 2024, Royal Caribbean Group (RCL, Financial) released its 8-K filing reporting robust second-quarter results, surpassing analyst expectations and raising its full-year guidance. The company, the world's second-largest cruise operator, achieved Earnings per Share (EPS) of $3.11 and Adjusted EPS of $3.21, significantly higher than the estimated $2.79. Revenue for the quarter reached $4.1 billion, exceeding the estimated $4.04 billion.
Company Overview
Royal Caribbean Group operates 65 ships across five global and partner brands, including Royal Caribbean International, Celebrity Cruises, and Silversea. The company also holds a 50% stake in a joint venture operating TUI Cruises and Hapag-Lloyd Cruises. This diverse portfolio allows Royal Caribbean to compete on innovation, quality, variety, and price.
Performance Highlights
Royal Caribbean Group's second-quarter performance was driven by strong demand and favorable timing of expenses. The company reported a load factor of 108%, with Gross Margin Yields up 24.2% and Net Yields up 13.3% in constant currency. Gross Cruise Costs per Available Passenger Cruise Days (APCD) increased by 4.9%, while Net Cruise Costs (NCC), excluding fuel, rose by 5.7% in constant currency.
Financial Achievements
The company achieved all three of its Trifecta goals 18 months ahead of schedule, including triple-digit Adjusted EBITDA per APCD, ROIC in the teens, and double-digit Adjusted EPS. Royal Caribbean Group's Adjusted EBITDA for the quarter was $1.6 billion, with operating cash flow also at $1.6 billion. The company's board declared a quarterly dividend of $0.40 per share, reinstating dividends for the first time since the pandemic.
Income Statement Summary
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenues | $4.1 billion | $3.5 billion |
| Net Income | $854 million | $459 million |
| Adjusted Net Income | $882 million | $492 million |
| Adjusted EPS | $3.21 | $1.82 |
Balance Sheet and Cash Flow
As of June 30, 2024, Royal Caribbean Group's liquidity position was $3.8 billion, including cash and cash equivalents and undrawn revolving credit facility capacity. The company repaid the remaining balance of its ship-related debt amortization deferral and increased its revolving credit facility capacity by $90 million.
Outlook and Guidance
Due to continued strong demand, Royal Caribbean Group raised its full-year 2024 Adjusted EPS guidance to $11.35 - $11.45, representing a 68% year-over-year growth. The company expects Net Yields to increase by 10.4% to 10.9% in constant currency for the full year. For the third quarter, Adjusted EPS is projected to be in the range of $4.90 to $5.00.
Commentary
"Our momentum continues! We met our financial targets 18 months earlier than expected, have our balance sheet in a strong position, reinstated our dividend, and ... we are just getting started," said Jason Liberty, president and CEO, Royal Caribbean Group.
"Exceptional demand for our vacation experiences has accelerated our performance by generating significant yield growth over the past several years," added Liberty.
Conclusion
Royal Caribbean Group's strong second-quarter performance and optimistic full-year outlook highlight the company's resilience and strategic positioning in the cruise industry. With robust demand and effective cost management, Royal Caribbean Group is well-positioned to deliver strong shareholder returns and capitalize on the growing global vacation market.
Explore the complete 8-K earnings release (here) from Royal Caribbean Group for further details.
