Close-in bookings at higher prices, continued strong onboard spending and favorable timing of operating costs led to a narrowed adjusted net loss of $58.9m, or 23 cents/share, and GAAP net loss of $47.9m, or 19 cents/share — better than Wall Street's consensus expectation of a 70-cent/share loss.
Total revenues were $2.9b, higher than Wall Street's $2.82b prediction.
Royal Caribbean experienced particularly strong close-in demand for Caribbean itineraries, which accounted for close to 80% of the quarter's capacity.
2023 EPS guidance goes to $4.40-$4.80
As a result of a record-breaking wave season and accelerating demand, the company raised its 2023 EPS guidance to $4.40-$4.80. This is well above the $3.41 consensus.
Full-year net yields are expected rise 6.25% to 7.25% as reported and 6.75% to 7.75% in constant currency versus 2019. Net cruise costs excluding fuel per APCD are forecast to increase 5.2% to 6.2% as reported and 5.5% to 6.5% in constant currency.
'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,' President/CEO Jason Liberty said, 'Leisure travel continues to strengthen as consumer spend further shifts towards experiences. Demand for our brands is outpacing broader travel due to a strong rebound and an attractive value proposition.'
Besides lifting guidance, Liberty said the company is well on its way to achieving 'Trifecta' goals.
Longer and stronger wave
This year's wave season started earlier and extended further, generating a record level of bookings. These strong booking trends resulted in an acceleration of Royal Caribbean's booked position in relation to prior years. In addition, the company said it is generating significantly more bookings at meaningfully higher prices than in prior years, particularly from North American consumers.
The wave resulted in strong close-in demand at higher prices for the first quarter, and enabled a significant improvement in revenue expectations for all three remaining quarters. Increased yield expectations for the year are predominantly related to higher Q1 load factors and higher prices for all four quarters, especially for Caribbean sailings.
Onboard spending, as well as pre-cruise purchases, continue to exceed 2019 levels driven by greater participation at higher prices. The company expects load factors to reach historical levels by late spring.
Q1 details
Q1 occupancy was 102%.
Net yields were up 5.1% as reported and 5.8% in constant currency, compared to Q1 2019. Part of the improvement, compared to expectations, was due to favorable timing of operating costs. Gross cruise costs per available passenger cruise day rose 8.2% as reported and 8.8% in constant currency — including $2.87 per APCD of lingering transitional costs and structural costs such as full-year operations of Perfect Day at CocoCay and the company's new Galveston cruise terminal.
Net cruise costs excluding fuel were up 5.2% as reported and 5.8% in constant currency.
Q2 guidance
Q2 net yields are expected to increase 9.6% to 10.1% as reported and 10.1% to 10.6% in constant currency, compared to Q2 2019. Net cruise costs excluding fuel per APCD are expected to be up approximately 8.6% as reported and approximately 8.9% in constant currency.
Adjusted EPS is expected in the range of $1.50 to $1.60, above the consensus estimate of 94 cents/share.
Liquidity and capex
As of March 31, the group's liquidity was $3.9b, including cash and cash equivalents and undrawn revolving credit facility capacity.
Scheduled debt maturities for the remainder of 2023, 2024, 2025 and 2026 are $1.8b, $2.3b, $3.7b and $2.8b, respectively.
2023 capital expenditures are expected to be $4.2b.
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