Royal Caribbean Group today reported third quarter 2022 Earnings per Share of $0.13 and Adjusted Earnings per Share of $0.26. Third quarter results were better than expected and above guidance for the quarter mainly due to higher load factors from strong close-in demand, further improvement in onboard revenue and better cost performance. The Group also introduced the Trifecta Program, a new three-year initiative designed to drive superior performance.
“Last quarter's better than expected performance was a result of the continued robust demand environment and strong execution by our teams,” said Jason Liberty, president and chief executive officer of Royal Caribbean Group. "The combination of our leading global brands, the best and most innovative fleet in the industry, our nimble global sourcing platform and the very best people have delivered a successful return of our business to full operations and positions us well to deliver record yields and adjusted EBITDA in 2023," added Liberty. "The Trifecta Program provides us the financial coordinates we are looking to achieve over the next three years. As we have demonstrated in the past, we expect the formula of moderate yield growth, strong cost discipline, and moderate growth of our fleet will deliver a strong financial profile."
Business highlights
– Load factors in the third quarter were 96% overall, with Caribbean sailings reaching almost 105%.
– Total Revenue in the third quarter was $3.0 billion, Net Income was $33.0 million and Adjusted EBITDA was $742.3 million.
– Booking volumes in the third quarter accelerated versus the second quarter of 2022 and remained significantly higher than booking volumes received in the third quarter of 2019 for all future sailings.
– For 2023, all quarters are currently booked well within historical ranges at record pricing.
– During the third quarter, the company addressed $5.6 billion of its 2022 and 2023 debt maturities, resulting in $0.1 billion and $2.1 billion of maturities remaining in 2022 and 2023, respectively.
– Based on continued strength in consumer demand and typical load factor seasonality, the company expects fourth quarter load factors to be similar to third quarter overall, and to reach triple digits by year-end.
– For the fourth quarter of 2022, based on current currency exchange rates, fuel rates and interest rates, the company expects to generate Total Revenue of approximately $2.6 billion, Adjusted EBITDA of $350 - $400 million and Adjusted Loss per Share of ($1.30) – ($1.50).
– The Trifecta Program is designed to achieve three important financial goals by the end of 2025: increasing Adjusted EBITDA per APCD to triple digits, increasing Adjusted EPS to double digits, and achieving ROIC in the teens, while in parallel returning to an investment grade profile and reducing carbon intensity by double digits as compared to 2019.
Third quarter 2022
The company reported Net Income for the third quarter of $33.0 million or $0.13 per share compared to Net Loss of $(1.4) billion or $(5.59) per share for the same period in the prior year. The company also reported Adjusted Net Income of $65.8 million or $0.26 per share for the third quarter compared to Adjusted Net Loss of $(1.2) billion or $(4.91) per share for the same period in the prior year.
Third quarter load factors were 96% overall and almost 105% for Caribbean Sailings. As expected, total revenues per passenger cruise day were flat as reported and up 1% in constant currency versus the third quarter of 2019 despite the negative impact from the redemption of future cruise certificates (FCCs) and lower than average load factors on high priced Europe itineraries.
Gross Cruise Costs per APCD increased 1% as reported and in constant currency, compared to the second quarter 2022. Net Cruise Costs (NCC), excluding fuel, per APCD improved 11% as reported and 10% in constant currency, compared to the second quarter of 2022. Gross Cruise Costs per APCD and NCC, excluding fuel, per APCD for the third quarter included $3.37 per APCD related to health protocols and one-time lagging costs related to fleet ramp up.
NCC, excluding fuel, per APCD for the fourth quarter is expected to be higher by low to mid-single digits compared to the fourth quarter of 2019, all on a constant currency basis. The company still expects to have transitory costs in the fourth quarter, but are expected to normalize as the company is nearing full occupancies, full crew staffing levels, and adapting protocols. The improvement is partially offset by inflationary and supply chain challenges, mainly related to fuel and food costs, that are expected to continue to weigh on costs through the rest of this year and through the first half of 2023.
