Royal Caribbean Group today reported second quarter Earnings per Share (“EPS”) of $3.11 and Adjusted EPS of $3.21.

According to a statement, these results were better than the company’s guidance due to stronger pricing on close-in demand and continued strength in onboard revenue, as well as favorable timing of expenses of approximately $0.15. As a result of continued strong demand for its vacation experiences, the company is increasing its full year 2024 Adjusted EPS guidance to $11.35 – $11.45, or 68% year over year growth. In addition, the company’s board of directors declared a quarterly dividend of $0.40 per share payable on October 11, 2024 to shareholders of record at the close of business on September 20, 2024.

“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.

“As we look forward, we remain intensely focused on driving strong shareholder returns by delivering a lifetime of vacations and taking a greater share of the rapidly growing $1.9 trillion global vacation market. This is underpinned by our formula for future success – disciplined growth and moderate yield growth while controlling our costs.”

Key Highlights

Strong demand for the company’s vacation experiences, including onboard spend, led to stronger revenue in the second quarter and a further improvement in yield and earnings expectations for the balance of the year.

Second Quarter 2024:

• For the 12 months ending June 30, 2024, the company achieved all three of its Trifecta goals: triple digit Adjusted EBITDA per APCD, ROIC in the teens, and double digit Adjusted EPS.
• Load factors in the second quarter were 108%.
• Gross Margin Yields were up 24.2% as-reported. Net Yields were up 13.3% in Constant-Currency (13.2% as-reported).
• Gross Cruise Costs per Available Passenger Cruise Days (“APCD”) increased 4.9% as-reported. Net Cruise Costs (“NCC”), excluding Fuel, per APCD increased 5.7% in Constant-Currency (5.5% as-reported).
• Total revenues were $4.1 billion, Net Income was $854 million or $3.11 per share, Adjusted Net Income was $882 million or $3.21 per share, Adjusted EBITDA was $1.6 billion, and Operating cash flow was $1.6 billion.

Full Year 2024 Outlook:

• Net Yields are expected to increase 10.4% to 10.9% in Constant-Currency and  as-reported.
• NCC, excluding Fuel, per APCD is expected to increase approximately 6.0% in Constant-Currency and as-reported. The increase in costs, compared to prior guidance, is driven entirely by higher stock-based compensation due to the significant increase in share price.
• Adjusted EPS is expected to grow 68% year-over-year and be in the range of $11.35 to $11.45.

Second Quarter 2024 Results

Net Income for the second quarter of 2024 was $854 million or $3.11 per share compared to Net Income of $459 million or $1.70 per share for the same period in the prior year. Adjusted Net Income was $882 million or $3.21 per share for the second quarter of 2024 compared to Adjusted Net Income of $492 million or $1.82 per share for the same period in the prior year. The company also reported total revenues of $4.1 billion and Adjusted EBITDA of $1.6 billion.

Gross Margin Yields increased 24.2% as-reported, and Net Yields increased 13.3% in Constant-Currency (13.2% as-reported), when compared to the second quarter of 2023. Load factor for the quarter was 108%, up three percentage points compared to the second quarter of 2023. Net Yield growth exceeded the company’s guidance mainly due to higher pricing on new and like for like hardware and higher onboard revenue.

Gross Cruise Costs per APCD increased 4.9% as-reported, compared to the second quarter of 2023. NCC, excluding Fuel, per APCD increased 5.7% in Constant-Currency (5.5% as-reported), when compared to the second quarter of 2023. Costs in the quarter were favorable $0.15 to prior guidance due to the timing of expenses.

Update on Bookings and Onboard Revenue

The demand and pricing environment remained very strong since the last earnings call. Booking volumes were higher than the corresponding period in 2023 and at record pricing levels. The company continues to be in a record booked position for 2024 sailings. Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2023 levels driven by greater participation at higher prices.

The further increase in yield expectations for the year is the result of higher pricing and onboard revenue expectations across key products, with particular strength in European and Alaskan itineraries.

“We are thrilled with the ongoing excitement for our incredible vacation experiences, which has continued to result in better bookings than prior years,” said Jason Liberty, president and CEO, Royal Caribbean Group. “We have seen strength for all key products and are already taking more bookings for 2025 sailings than 2024.”

As of June 30, 2024, the Group’s customer deposit balance was at $6.2 billion.

Third Quarter 2024

Net Yields are expected to increase 6.5% to 7.0% in Constant-Currency and as-reported. This expected growth in yield is driven by strong demand for European and Alaskan itineraries and continued strength in onboard revenue. The expected yield growth in the third quarter is on top of 16.7% growth in Net Yields Constant-Currency in the third quarter of 2023 as compared to the same period in 2019.

NCC, excluding Fuel, per APCD, is expected to increase 4.7% to 5.2%  in Constant-Currency and as-reported compared to the third quarter of 2023.

Based on current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects third quarter Adjusted EPS to be in the range of $4.90 to $5.00.