Net income was $1.1b, or $3.85 adjusted earnings per share, while US GAAP net income was $1b or $3.65 per share, above Wall Street's $3.48 expectation and better than guidance.
Total revenues were $4.2b, higher than Wall Street's $4.05b forecast.
Full-year guidance goes to $6.58 to $6.63
Royal Caribbean Group raised its full-year profit forecast to a range of $6.58 to $6.63, driven by strong demand and continued strength in on-board spending. This, too, is above the $6.15 Wall Street consensus.
'Looking ahead, we see accelerating demand as we build the business for 2024. Our booked load factors are higher than all prior years and at higher rates, further supporting our trajectory towards the Trifecta goals,' Royal Caribbean Group President/CEO Jason Liberty said.
Q3 details
Net yields increased 16.7% in constant currency and 16.9% as reported compared to Q3 2019. Net cruise costs, excluding fuel, per available passenger cruise day rose 10.3% in constant currency/10.1% as reported, versus 2019.
Royal Caribbean said bookings remained strong throughout the quarter, significantly exceeding 2019 levels. Closer-in demand for 2023 sailings exceeded expectations, contributing to higher load factors at higher prices and higher on-board revenue.
109.7% occupancy
Occupancy was 109.7%.
Spending on board and pre-cruise continues to significantly exceed 2019 levels driven by greater participation at higher prices. As of Sept. 30, the Group’s customer deposit balance was at $5b.
Full-year outlook includes Israel impact
Net yields are expected to increase 12.9% to 13.4% constant currency/12.4% to 12.9% as reported, compared to 2019. Net cruise costs, excluding fuel, per APCD are forecast to be up 7% to 7.5% in constant currency/6.5% to 7% as reported, from 2019.
This includes approximately 30 basis points of impact due primarily to reduced APCDs on canceled Israel and related sailings.
Fuel costs and foreign exchange rates are negatively impacting EPS by 18 cents, compared to prior guidance. Sailings impacted by the Israel conflict are expected to impact the year by approximately 3 cents per share.
Q4 EPS forecast $1.05 to $1.10
Q4 net yields are expected to be up 16.2% to 16.7% in constant currency/15% to 15.5% as reported, compared to Q4 2019. Net cruise costs, excluding fuel, per APCD are expected to increase 3.9% to 4.4% in constant currenct/3.3% to 3.8% as reported, from 2019.
Fuel pricing and foreign exchange rates are negatively impacting EPS by 15 cents versus previous expectations. Impacted sailings related to Israel deployment are negatively impacting the quarter by approximately 3 cents.
Q4 adjusted EPS is expected in the range of $1.05 to $1.10, compared to Wall Street's $1.05 consensus.
2024 outlook
Demand for 2024 has continued to accelerate, with bookings significantly and consistently outpacing 2019 levels. Booked load factors and rates are higher than all prior years while the booking window has continued to extend.
Royal Caribbean described the market response its new and existing ships, and the expansion of Perfect Day at CocoCay and the new Hideaway Beach, as 'excellent.'
Fuel expense
Q3 bunker pricing net of hedging was $668 per metric ton and consumption was 408,000 metric tons. Based on today's fuel prices, Royal Caribbean included $300m of fuel expense in its Q4 guidance at a forecasted consumption of 413,000 metric tons, which is 54% hedged via swaps.
Forecasted consumption is 54%, 60%, 39% and 3% hedged via swaps for the remainder of 2023, 2024, 2025 and 2026, respectively.
The annual average cost per metric ton of the hedge portfolio is approximately $576, $509, $479 and $778 for 2023, 2024, 2025 and 2026, respectively. The higher average cost in 2026 is driven by only MGO consumption hedged that year.
See also 'Jason Liberty on $9-plus EPS in 2024, Israel, impact on Europe, new-to-cruise clout'
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