Cruise Operator Royal Caribbean Registers Beat-And-Raise Quarter - What's Onboard?

Royal Caribbean Cruises Ltd RCL reported third-quarter FY23 sales growth of 39% year-on-year to $4.16 billion, beating the analyst consensus estimate of $4.076 billion.

Passenger ticket revenues rose 45.5% Y/Y to $2.94 billion versus last year.

Total cruise operating expenses were $2.13 billion versus $1.97 billion a year ago. 

Gross margin yields increased 19.1% as-reported, and net yields increased 16.7% in constant currency versus Q3 2019.

Operating income for the quarter jumped to $1.26 billion, with an operating margin of 30.4%.

The occupancy rate in Q3 was 109.7% versus 96.3% last year.

Royal Caribbean held $600.1 million in cash and equivalents as of September 30, 2023.

Adjusted EPS of $3.85 beat the consensus estimate of $3.46.

As of September 30, 2023, the group's customer deposit balance was $5 billion.  

"Our booked load factors are higher than all prior years and at higher rates, further supporting our trajectory towards the Trifecta goals," said President and CEO Jason Liberty.

Outlook: Royal Caribbean expects FY23 net yields to increase 12.9% to 13.4% in constant currency vs. 2019.

RCL raised its FY23 adjusted EPS guidance from $6-$6.20 to $6.58 - $6.63 against the consensus of $6.15.

The company sees Q4 adjusted EPS of $1.05 - $1.10 (consensus $1.05).

Price Action: RCL shares are trading higher by 1.02% at $83.06 on the last check Thursday.