Royal Caribbean Group continued its trend of reporting strong quarterly earnings with its second quarter performance.
Thanks to strong demand and favorable timing of expenses, the company "above expectations" results for the second quarter.
Demand for cruises remains a constant for the company, which cited stronger pricing on close-in demand and continued strength in onboard revenue, as well as favorable timing of expenses, as reasons why results exceeded its expectations.
In a statement to the media, Royal Caribbean Group President and CEO Jason Liberty celebrated his company's strong performance, "Our momentum continues! We met our financial targets 18 months earlier than expected, have our balance sheet in a strong position, reinstated our dividend, and ... we are just getting started."
"Exceptional demand for our vacation experiences has accelerated our performance by generating significant yield growth over the past several years," added Liberty.
"As we look forward, we remain intensely focused on driving strong shareholder returns by delivering a lifetime of vacations and taking a greater share of the rapidly growing $1.9 trillion global vacation market. This is underpinned by our formula for future success – disciplined growth and moderate yield growth while controlling our costs."
Inside the second quarter
Total revenues for the second quarter were $4.1 billion, with a Net Income of $854 million, and Operating cash flow was $1.6 billion.
The average cruise ship sailed in the second quarter at 108% capacity. Occupancy rates over 100% are a good measure because it means there were more than two people in a lot of cabins.
Royal Caribbean is seeing high demand for its products along with high prices remaining in place since the last quarter.
In fact, booking volumes were higher than the second quarter in 2023 and at record pricing levels.
The company continues to be in a record booked position for 2024 sailings. Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2023 levels driven by greater participation at higher prices.
"We have seen strength for all key products and are already taking more bookings for 2025 sailings than 2024," Mr. Liberty commented.
The company was particularly proud of the fact it achieved all three of its financial goals. For the 12 months ending June 30, 2024, the company achieved all three of its Trifecta goals: triple digit Adjusted EBITDA per APCD, ROIC in the teens, and double digit Adjusted EPS.
Loan update
Royal Caribbean Group took out many loans during 2020 and 2021 in order to stay in business, and some of the critical ones are now paid off.
"During the quarter, the company repaid the remaining balance of its ship related debt amortization deferral obtained on its export credit facilities during 2020 and 2021, which removed the remaining restrictions on capital return."
"Our strong balance sheet allows us to expand capital allocation and reinstate a quarterly dividend, further supporting our goal of creating long-term shareholder value," said Royal Caribbean Group Chief Financial Officer Naftali Holtz.
