Royal Caribbean Group reported third-quarter earnings per share (“EPS”) of $4.21 and adjusted EPS of $5.20.

According to the company, these results were better than the company’s forecasts due to higher pricing based on nearby demand, continued strength in onboard revenue and lower costs due to timing. Additionally, balance sheet actions taken in the third quarter resulted in lower interest expense and the company’s return to its pre-Covid unsecured balance sheet.

The company increases its full-year 2024 adjusted EPS guidance to $11.57 – $11.62. The increase in earnings expectations is driven by strong revenue performance in the third quarter and an increase in pricing expectations for the fourth quarter. Fourth-quarter adjusted EPS guidance of $1.40 to $1.45 includes $0.24 of headwinds: one-third related to Hurricane Milton, with the remainder due to cost lags compared to in the third quarter and higher non-cash stock compensation.

“Our exceptional third quarter results and increased expectations for the full year reflect the strong demand for our differentiated vacation experiences,” said Jason Liberty, President and CEO of Royal Caribbean Group. “We expect strong demand patterns to continue as we expand our business for 2025, and while comparable yield will be a high bar, our proven formula of moderate capacity growth, moderate yield growth and strong cost discipline is expected to continue to produce strong financial results. . Although we are still very early in the planning process, we expect earnings per share in 2025 to start at $14.

Third quarter 2024:

• The load factor in the third quarter was 111%.
• Gross margin returns increased by 13.4% as reported. Net returns increased by 7.9% at constant exchange rates and as announced.
• Gross Cruise Costs per Available Passenger Cruise Days (“APCD”) increased by 1.3% as reported. Net Cruise Costs (“NCC”), excluding fuel, per APCD increased 4.0% in constant currency and as reported.
• Total revenue was $4.9 billion, net income was $1.1 billion, or $4.21 per share, adjusted net income was $1.4 billion, or $5.20 per share , and adjusted EBITDA of $2.1 billion.

Outlook for the year 2024:

• Net returns are expected to increase from 10.8% to 11.3% in constant currency (10.9% to 11.4% as reported).
• NCC, excluding fuel, per APCD is expected to increase by approximately 6.2% to 6.7% in constant currency and as indicated. The increase in costs, compared to previous forecasts, is due to higher stock-based compensation.
• Adjusted EPS is expected to grow 71% year over year and be between $11.57 and $11.62.

Third quarter 2024 results

Net income for the third quarter of 2024 was $1.1 billion, or $4.21 per share, compared to net income of $1.0 billion, or $3.65 per share, for the same period of the previous year. Adjusted net income was $1.4 billion, or $5.20 per share, for the third quarter of 2024, compared with adjusted net income of $1.1 billion, or $3.85 per share. , for the same period of the previous year. The company also reported total revenue of $4.9 billion and adjusted EBITDA of $2.1 billion.

Gross margin returns increased 13.4% as reported and net returns increased 7.9% in constant currency (and as reported), compared to Q3 2023. Load factor for the quarter was by 111%. Net yield growth exceeded the company’s forecasts, primarily due to higher pricing on key products, with particular strength on Europe and Alaska itineraries, and better onboard revenue.

Gross cruise costs per APCD increased 1.3% as reported compared to Q3 2023. Gross cruise costs, excluding fuel, per APCD increased 4.0% in constant currency (and as reported), compared to the third quarter of 2023, and includes the benefit of costs that are deferred to the fourth quarter.

Royal Caribbean Group continues to deliver the best vacation experience through innovative new ships and exciting private destinations. This quarter, the company announced plans to expand its private destination portfolio with Perfect Day Mexico, scheduled to open in 2027. The company also announced construction of a new 150-room Silversea hotel in Puerto Williams , in Chile, to provide an even more improved and transparent customer experience. for its Antarctic expeditions, scheduled to open in 2025. These new experiences are in addition to the Royal Beach Club Paradise Island, scheduled to open in 2025, and the Royal Beach Club Cozumel, scheduled to open in 2026.

“We wake up every day with an obsessive focus on our mission: providing our guests with the best vacation experiences possible. In pursuit of this mission, we are very excited to further expand our Perfect Day collection with Perfect Day Mexico and develop the southernmost hotel on the planet,” said Jason Liberty, President and CEO of Royal Caribbean Group. “Along with the expansion of our Icon Class, we look to continue to change the game and position ourselves to win a greater share of the $1.9 trillion vacation industry.

Update on onboard reservations and revenue

The demand and pricing environment has accelerated since the last earnings release, surpassing 2023 levels. Demand for sailings closer to 2024 has exceeded expectations, contributing to higher load factors at lower prices. and higher on-board revenues for the third quarter. Consumer spending on board, as well as pre-cruise purchases, continues to far exceed 2023 levels, driven by greater participation at higher prices.

Market response to the company’s new vessels, existing equipment and private destinations has been excellent and accelerating, further positioning the company for yield growth in 2025. Demand for 2025 is strong with coefficients of reserved filling consistent with those of previous years and at higher rates. , enabling further growth in prices and yields as bookings for 2025 continue to increase.

“Our business performance continues to be robust, driven by strong demand and excellent operational execution,” said Naftali Holtz, Chief Financial Officer of Royal Caribbean Group. “Our strong recorded position is exactly where we want to be to further optimize our performance profile and implement our formula for success – moderate capacity growth, moderate yield growth and strong cost discipline – positioning us for continue to generate margin expansion and strong financial returns. .”

Fourth quarter 2024

Net returns are expected to increase by 5.1% to 5.6% in constant currency and by 5.3% to 5.8% as reported compared to the same period last year. The expected yield growth is driven by strong demand for Caribbean itineraries and continued strength in onboard revenue. Fourth-quarter net return expectations include approximately 40 basis points of negative impact from Hurricane Milton. The expected growth in yields in the fourth quarter comes on top of the 17.9% growth in constant currency net yields in the fourth quarter of 2023 compared to the same period of 2019.

NCC, excluding fuel, by APCD, is expected to increase 11.6% to 12.1% in constant currency and 11.7% to 12.2% as reported compared to the same period of the previous year. The year-over-year increase was primarily due to an increase in dry dock days, non-cash stock compensation and cost shifting from the third quarter.

Based on current fuel prices, interest rates, foreign exchange rates and the factors detailed above, the Company expects fourth quarter adjusted EPS to be between $1.40 and $1.40. $.45.