Royal Caribbean Group will release its third quarter earnings later this week, which is an opportunity to gain insight into what the cruise giant has planned next.
Royal Caribbean Group will release its third quarter 2022 earnings on Thursday, November 3, 2022. They'll subsequently hold a conference call with Wall Street analysts to discuss the results in greater detail.
There will be a lot of data and figures shared on Thursday, including tidbits of information of interest to cruise fans. The earnings report and call are meant for investors, but there will be things talked about during the call that cruise fans may care about because it speaks to the future of the cruise line.
The earnings call is held with Royal Caribbean Groups' top executives, including Royal Caribbean Group CEO Jason Liberty and Royal Caribbean International CEO Michael Bayley.
In the past, executives have talked about policy changes, new projects, and updated work that has otherwise not been publicly talked about. This is often one of the best times to get updates and answers without having them directly asked by cruisers.
It's impossible to know in advance which questions will get answers, but here is a wish list of questions cruise fans are eager to hear about during this week's earnings call.
Return to profitability?
At the last earnings call in July, it seemed the third quarter would be a turning point in terms of making some real money again and beginning to erode the debt accrued during the last two years.
Executives said they expected to be profitable by the third quarter.
Royal Caribbean Group Chief Financial Officer Naftali Holtz said back in July, "For the third quarter, and based on current currency exchange rates, fuel rates and interest rates, we expect to generate $2.9 to $3 billion in total revenues."
"Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) of $700 to $750 million and adjusted earnings per share of $0.05 to $0.25."
That is of course a forecast and things could change, but Wall Street will be hyper focused on how profitable (or not) the company was this quarter.
Certainly Royal Caribbean Group has had the benefit of having all of its ships back in service and they've said they planned to ensure as many passengers as possible could be onboard, expanding margins, and managing their balance sheet.
"When our business is fully operational, it generates significant cash flow. We are confident in our ability to continue on our recovery as we build the future of the Royal Caribbean Group," said Mr. Holtz during the last call.
How full will cruise ships will be this winter?
Royal Caribbean has been sailing with its ships at full capacity for months, so will that trend continue into the winter months?
Capacity is critical to Royal Caribbean's profitability, and how full their ships are is an indicator of the overall health of their business.
Mr. Holtz talked about how busy the third quarter was expected to be in last quarter's call, "Overall, we expect load factors of approximately 95% for the third quarter and triple digits by the end of the year."
"We have been sailing at above 100% in the Caribbean since mid-June, and most of our other North American base itineraries are now averaging about 100%."
The Caribbean market has been incredibly strong for Royal Caribbean Group, although other markets have been a bit softer, such as Europe. A combination of the Ukraine war and Covid reduced demand in the second quarter and Mr. Holtz it pushed their recovery of 100% fleet wide occupancy to the fourth quarter of 2022.
Nonetheless, customer deposit balance as of June 30th was $4.2 billion, a record high for the company. Investors will want to know where that figure stands today.
Any updates on expansion projects?
Many initiatives were paused since 2020, and with numbers bouncing back, could this be an opportunity for Royal Caribbean to resume them?
From the CocoCay adults-only beach, to Perfect Day at Lelepa, to a beach club in the Bahamas, there are plenty of question marks about when and where we will see new ways to go on vacation.
From a business perspective, the company has sometimes provided updates on these sort of capital spending projects because it helps reinforce the notion that demand for a cruise will be even higher with new offerings.
New ship updates?
I would expect there to be some discussion of Icon of the Seas and how well it sold out of the gate last week, but will we get more information about Icon or other new ships?
Utopia of the Seas will also debut in late 2024, and there are orders for two more Icon Class cruise ships beyond that.
Since new cruise ships attract so much attention (and come with a heft price tag), will we get any hints as to what the future of the cruise line looks like going through the rest of this decade.
The company tends to be cagey with details related to new ships that have not been announced yet, but timelines and expectations are sometimes shared at these calls.
How to listen to the call
There will be full coverage of anything intriguing that comes out of Royal Caribbean Group's third quarter 2022 earnings call right here on RoyalCaribbeanBlog, but if you would like to listen on your own, here's how.
The call will be available on-line at the company's investor relations website, www.rclinvestor.com. The call begins at 10am Eastern Time on Thursday, November 3, 2022.
You will be able to listen via the link provided close to the start of the call.
