Royal Caribbean Cruises Ltd. ( RCL Quick Quote RCL - Free Report) reported mixed third-quarter 2022 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. Following the results and downbeat outlook, the company’s shares declined 6.4% in the pre-market trading session.
Jason Liberty, president and CEO of Royal Caribbean Group, stated, "The combination of our leading global brands, the best and most innovative fleet in the industry, our nimble global sourcing platform and the very best people have delivered a successful return of our business to full operations and positions us well to deliver record yields and adjusted EBITDA in 2023.”
Q3 Earnings & Revenues
The company reported adjusted earnings per share of 26 cents, beating the Zacks Consensus Estimate of 23 cents. In the prior-year quarter, it had reported an adjusted loss per share of $4.91 per share.
Quarterly revenues of $2,993.1 million missed the consensus mark of $3,005 million. In the prior-year quarter, the company had reported revenues of $457 million. The upside was primarily driven by strong demand for cruising and acceleration in booking volumes.
Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise
During the third quarter of 2022, passenger ticket revenues amounted to $2,021 million, up from the prior-year quarter’s revenues of $280.2 million. Onboard and other revenues increased to $972.1 million from $176.8 million reported in the year-ago quarter.
Total cruise operating expenses during the quarter came in at $1,956.3 million compared with $813.7 million reported in the prior-year quarter.
Other Financial Information
As of Sep 30, 2022, the company had cash and cash equivalents of approximately $1,566.2 million compared with $2,701.8 million as of Dec 31, 2021. As of Sep 30, its long-term debt was nearly $19.4 billion compared with $18.8 billion as of Dec 31, 2021.
Booking volumes in third-quarter 2022 were much higher than in the same period in 2019. Booking was driven by the easing of testing and vaccination protocols. Booking volumes for 2023 doubled during the third quarter compared with the second quarter.
As of Sep 30, 2022, the company had nearly $3.8 billion in customer deposits. In the third quarter, roughly 95% of total bookings were new versus FCC redemptions.
The company announced a three-year financial performance initiative called Trifecta Program. Under this program, by the end of 2025, the company expects to achieve a triple-digit adjusted EBITDA per APCD, exceeding the earlier record adjusted EBITDA per APCD of $87 in 2019. The company also expects to achieve double-digit adjusted earnings per share, exceeding the earlier record adjusted earnings per share of $9.54 in 2019. Lastly, the company anticipates achieving a return on invested capital in the teens by the end of 2025.
For the fourth quarter of 2022, the company anticipates total revenues to be nearly $2.6 billion. The company expects depreciation and amortization expenses in the range of $355 to $365 million. Net interest expenses for the fourth quarter are expected to be in the range of $355-365 million.
Adjusted EBITDA is expected to lie in the range of $355-$400 million. The company expects adjusted loss per share (EPS) in the fourth quarter to be in the range of $1.30-$1.50. The Zacks Consensus Estimate for fourth-quarter loss is pegged at 60 cents.
Zacks Rank & Key Picks
Royal Caribbean has a Zacks Rank #3 (Hold).
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