By Tomi Kilgore
Demand was already strong, but cruise operator was surprised at how swiftly it accelerated above historical trends at higher prices
Shares of Royal Caribbean Group sailed toward a two-month high Thursday, after the cruise operator reported a much narrower-than-expected loss and raised its full-year profit outlook, as demand for leisure travel continued to strengthen.
"We knew that demand for our business was strong and strengthening, but we have been pleasantly surprised with how swiftly demand further accelerated well above historical trends and at higher rates," said Chief Executive Officer Jason Liberty. "Leisure travel continues to strengthen as consumer spend further shifts towards experiences."
The stock (RCL) ran up 7.2% in morning trading, putting them on track for the highest close since March 8. This marked the fourth-straight quarter the company beat bottom-line expectations, and the fourth-straight time stock advanced the day results were reported, with an average gain of 7.8%, including the current rally.
Also read:Norwegian Cruise Line stock surges after revenue more than triples, beats forecasts
Royal Caribbean reported before the opening bell a net loss that narrowed to $47.9 million, or 19 cents a share, from $1.17 billion, or $4.58 a share, in the same period a year ago.
Excluding nonrecurring items, the adjusted per-share loss of 23 cents was one-third of the FactSet loss consensus of 69 cents.
Revenue soared 172.4% to $2.89 billion, above the FactSet consensus of $2.82 billion, as passenger ticket revenue jumped 190.9% to $1.90 billion and onboard and other revenue grew 142.7% to $988.6 million.
That topped results from the first quarter of 2019, when total revenue was $2.44 billion, with passenger ticket revenue of $1.71 billion and onboard and other revenue of $729.8 million.
Load factors were 102% and net yields were up 5.1% from the first quarter of 2019.
"[W]hat has transpired was a record-breaking extended Wave season that translated into robust bookings and meaningfully better prices," CEO Liberty said on a post-earnings conference call with analysts, according to a FactSet transcript. (Wave season refers to the peak cruise-promotion season, which occurs during the first quarter of the calendar year.)
He said the acceleration of demand and strong execution by the company's employees translates to higher earnings expectations for the year.
For 2023, the company raised its guidance ranges for adjusted earnings per share to $4.40 to $4.80 from $3.00 to $3.60, which compares with the current FactSet consensus of $3.42 and 2019 EPS of $9.54.
The guidance for net yield growth was raised to between 6.25% and 7.25% from between 2.5% and 4.5%.
Royal Caribbean's stock has soared 34.9% year to date through Wednesday, while the S&P 500 index has gained 5.7%. In comparison, Carnival shares have gained 16.4% this year and Norwegian's stock has advanced 13.4%.
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May 04, 2023 11:49 ET (15:49 GMT)
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