Royal Caribbean Reports Strong Q4 2023; Forecasts Record 2024

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Royal Caribbean Group today reported 2023 Earnings per Share  of $6.31 and Adjusted EPS of $6.77.

These results were better than the company’s guidance due to stronger close-in demand, according to a press release.

The strength is continuing into 2024 with Adjusted EPS expected to be in the range of $9.50 to $9.70 per share.

“2023 was an exceptional year, propelled by unmatched demand for our brands from new and loyal guests,” said Jason Liberty, president and CEO, Royal Caribbean Group. “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,” added Liberty. “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.”

Full Year 2023 Results:

  • Gross Margin Yields increased 13.2% as-reported. Net Yields increased 13.5% in Constant Currency (13.2% as-reported). Both metrics are 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 are compared to 2019, and include approximately 65 bps, compared to prior guidance, related to increase in stock compensation expense due to the significant rise in share price.
  • Total revenues were $13.9 billion, Net Income was $1.7 billion or $6.31 per share, Adjusted Net Income was $1.8 billion or $6.77 per share, and Adjusted EBITDA was $4.5 billion.

 

Full Year 2024 Outlook:

  • WAVE season is off to a record start. Booked load factors and rates are higher than all prior years.
  • Net Yields are expected to increase 5.25% to 7.25% in Constant Currency (5.30% to 7.30% as-reported), compared to 2023.
  • NCC, excluding Fuel, per APCD is expected to increase 3.75% to 4.25% in Constant Currency (3.80% to 4.30% as-reported) compared to 2023, and include 315 bps of costs related to increased drydock days and the new operations of Hideaway Beach at Perfect Day at CocoCay.
  • Adjusted EPS is expected to grow 40% year over year and be in the range of $9.50 to $9.70.
  • The company expects to achieve two of its Trifecta goals in 2024: triple digit EBITDA per APCD and ROIC in the teens, one year earlier than prior expectations.

 

Fourth Quarter 2023 Results

Net Income for the fourth quarter of 2023 was $0.3 billion or $1.06 per share compared to Net Loss of $(0.5) billion or $(1.96) per share for the same period in the prior year. Adjusted Net Income was $0.3 billion or $1.25 per share for the fourth quarter of 2023 compared to Adjusted Net Loss of $(0.3) billion or $(1.12) per share for the same period in the prior year.  The company also reported total revenues of $3.3 billion and Adjusted EBITDA of $1.0 billion.

Gross Margin Yields increased 30.9% as-reported, and Net Yields increased 17.9% in Constant Currency (17.3% as-reported) when compared to the fourth quarter of 2019. Load factor for the quarter was 105%.

Gross Cruise Costs per APCD increased 9.7% as-reported, compared to 2019. NCC, excluding Fuel, per APCD increased 6.7% in Constant Currency (6.2% as-reported), when compared to 2019 and included approximately 250 bps related to increase in stock compensation expense compared to prior guidance due to the significant rise in share price.

Full Year 2023 Results

For the full year 2023, the company reported Net Income of $1.7 billion or $6.31 per share compared to Net Loss of $(2.2) billion or $(8.45) per share in the prior year. The company also reported Adjusted Net Income of $1.8 billion or $6.77 per share for the full year 2023 compared to Adjusted Net Loss of $(1.9) billion or $(7.50) per share in the prior year.

Gross Margin Yields increased 13.2% as-reported, and Net Yields increased 13.5% in Constant Currency (13.2% as-reported) when compared to 2019.

Gross Cruise Costs per APCD increased 10.9% as-reported and NCC, excluding Fuel, per APCD increased 7.9% in Constant Currency (7.5% as-reported), compared to 2019, and included 65 bps related to increase in stock compensation expense due to the significant rise in share price, compared to prior guidance.

Update on Bookings

The company said it was is very encouraged about the demand and pricing environment for 2024.  Overall, the five best booking weeks of the company’s history have occurred since the last earnings call, including the first three weeks of WAVE. As a result, the company is now in a record booked position in both rate and volume. The booking strength is widespread benefiting all key itineraries. Consumer spending onboard and pre-cruise purchases continue to exceed prior years driven by greater participation at higher prices, indicating quality and healthy future demand.

The market response to the company’s new ships (particularly Icon of the Seas), existing hardware and the expansion of Perfect Day at CocoCay (with Hideaway Beach) has been excellent and further positions the company for strong yield and earnings growth in 2024.

“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,” said Jason Liberty, president and CEO, Royal Caribbean Group. “We have exciting new vacation experiences in 2024, including the game changing Icon of the Seas, and have entered the year in a record booked position at significantly higher prices, further positioning us for a strong 2024.”

As of December 31, 2023, the Group’s customer deposit balance was at $5.3 billion.

First Quarter 2024

Net Yields are expected to increase 15.2% to 15.7% in Constant Currency (15.3% to 15.8% as-reported) compared to 2023. First quarter yield growth is benefiting from both Load factor catch up and the annualization of pricing power that began during WAVE of 2023.

NCC, excluding Fuel, per APCD, is expected to increase 7.10% to 7.60% in Constant Currency (7.20% to 7.70% as-reported) compared to 2023 and includes 380 bps of costs related to increased drydock days and the operations of Hideaway Beach.

Based on current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects first quarter Adjusted EPS to be in the range of $1.10 to $1.20.

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