Royal Caribbean Cruises Surges After Strong Q2 Earnings Driven By High Pricing

Royal Caribbean Cruises Ltd RCL reported second-quarter sales growth of 61.3% year-on-year to $3.52 billion Thursday, beating the consensus of $3.41 billion.

Second-quarter revenue significantly exceeded the company's guidance due to higher pricing and higher shipboard revenue across the key itineraries.

Passenger ticket revenues rose 72% Y/Y to $2.4 billion versus last year.

Total cruise operating expenses were $1.95 billion versus $1.68 billion a year ago. Gross Margin Yields increased 13.1% versus Q2 2019.

Gross Cruise Costs per Available Passenger Cruise Days (APCD) increased 10.9% compared to Q2 2019.

Operating income for the quarter was $771.6 million, with an operating margin of 21.9%.

The occupancy rate in Q2 was 105% versus 82% last year.

Royal Caribbean held $726.4 billion in cash and equivalents as of June 30, 2023.

Adjusted EPS of $1.82 beat the analyst consensus of $1.55.

As of June 30, 2023, the group's customer deposit balance was $5.67 billion.  

Outlook: Royal Caribbean expects FY23 net yields are expected to increase 11.5% to 12% in constant currency vs. 2019.

RCL raised its FY23 adjusted EPS guidance from $4.40-$4.80 to $6-$6.20 against the consensus of $4.77.

The company sees Q3 adjusted EPS of $3.38 - $3.48 (consensus $2.88) and net yields increase of 13.5% - 14%  vs. 2019.

RCL Price Action: RCL shares are trading higher by 10.58% at $111.61 midday Thursday.

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