Royal Caribbean stock gains on bottom line beat, bullish forecast

Royal Caribbean Cruises (NYSE:RCL) shares rose sharply on Tuesday after the cruise operator reported a lighter than anticipated quarterly loss and signaled of “record-breaking” demand to start 2023. 


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The Miami-based cruise company posted a $1.12 loss for the fourth quarter, exceeding expectations by $0.22. Meanwhile, a 164.7% jump in revenue from the prior year to $2.6B only narrowly missed estimates. The company saw total revenues per passenger cruise day up 3.5% from the prior year.

“Fourth quarter results reflect the continued strong demand for our vacation experiences and our teams’ ability to manage costs in a complicated environment while staying focused on delivering the best vacation experiences expected by our guests,” CFO Naftali Holtz said. “The benefit from multiple actions we have taken during the last few years to improve margins continue to yield results, as we focus on executing our proven formula of moderate yield growth and strong cost controls.”

Moving forward, the company forecast continued strong demand to outstrip 2019 levels and record EBITDA for 2023.

“We are experiencing a record-breaking WAVE season, resulting in a booked position approaching previous record highs and at higher prices. This, along with the normalization of our booking window, provides the visibility for us to provide annual guidance, which is in line with our Trifecta program,” CEO Jason Liberty commented. “The combination of our industry-leading global brands, most innovative fleet, nimble sourcing and our continued focus on profitability positions us well to deliver record yields and Adjusted EBITDA in 2023.”

He added that the seven biggest booking weeks in the company’s history have occurred since November 2022. North America based itineraries are booked in line with 2019 for the full year. The company expects to exceed prior record Adjusted EBITDA, achieved in 2019.

For the full-year, adjusted EPS in the range of $3 to $3.60 suggests upside to the $3.23 consensus. Total revenues per passenger cruise day are expected to be up in the mid-to-high single digit range as compared to 2019. For Q1, management expects an adjusted loss per share between $0.65 and $0.85. Analysts had anticipated an $0.85 per share loss.

“Leisure travel strength continues as consumer spend is shifting towards experiences, with cruising remaining an attractive value proposition,” Liberty concluded. “The quality demand trends further exhibit the strength of our brands and the growing propensity to cruise.”

Shares of Royal Caribbean Cruises (RCL) rose 4.94% in premarket trading on Tuesday.

Dig into the details of the earnings report.

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