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Royal Caribbean lifts profit outlook on accelerating cruise demand

Since Royal Caribbean's Feb. 1 update, wave season has exceeded expectations, CEO Jason Liberty said, resulting in the improved guidance
Royal Caribbean Group raised its profit outlook, citing demand for cruises that's exceeded expectations and said it will meet its Trifecta goals in 2024.

Adjusted full-year earnings per share are now expected in a range of $9.90 to $10.10, up from the $9.50 to $9.70 forecast just three weeks ago.

Following the announcement, RCL shares rose more than 6%, to $122, in after-hours trading Wednesday.

Since its fourth quarter earnings report on Feb. 1, wave season has exceeded expectations, CEO Jason Liberty said, with the five best wave booking weeks in company history all occurring since the start of the year.

Bookings in back half up more than the front half

Bookings have been 'significantly higher' than during the same period last year, with the back half of the year up by more than the front half. For 2024, all four quarters and all key products are booked ahead of the same time last year in both rate and volume.

Spending for on-board purchases continues to exceed prior years driven by greater participation at higher prices, which Royal Caribbean said indicates quality and healthy future demand.

Net yield guidance up 100 basis points

The EPS guidance went up on an increase in constant currency net yield growth of approximately 100 basis points compared to the Feb. 1 guidance.

Approximately 15 cents of the full-year increase in adjusted EPS is driven by an improved revenue outlook for the first quarter.

Hitting the Trifecta early

Liberty added the company expects to achieve all Trifecta goals in 2024, one year early. 

Those are increasing adjusted EBITDA per available passenger cruise day to triple digits, to exceed the prior record of $87 in 2019; raising adjusted EPS to double digits, to exceed the 2019 record of $9.54; and achieving return on invested capital in the teens, topping 2019's 10.5%. 

Analysts had asked if yield projections were too modest

When Royal Caribbean issued its Feb. 1 guidance, financial analysts cited the strength of Icon of the Seas' performance in questioning if the company's yield growth projections were too modest.

RCL shares had closed down that day