Royal Caribbean Cruises Ltd. RCL reported solid second-quarter 2022 results, with earnings and revenues beating the Zacks Consensus Estimate and rising year over year. Following the robust results, the company’s shares moved up 4.3% in the pre-market trading session.
Jason Liberty, president and chief executive officer of Royal Caribbean Group, stated, "Consumers' propensity to travel and cruise remains strong. We continue to see a robust and accelerating demand environment for cruising and onboard spend. Cruising remains a very attractive value proposition for vacationers, and today we have an opportunity to further close the value gap to other land-based vacation offerings."
Q2 Earnings & Revenues
The company reported an adjusted loss per share of $2.08, narrower than the Zacks Consensus Estimate of a loss of $2.23. In the prior-year quarter, it had reported an adjusted loss per share of $5.06 per share.
Royal Caribbean Cruises Ltd. Price, Consensus and EPS Surprise
Royal Caribbean Cruises Ltd. price-consensus-eps-surprise-chart | Royal Caribbean Cruises Ltd. Quote
Quarterly revenues of $2,184.2 million beat the consensus mark of $2,163 million. In the prior-year quarter, the company had reported revenues of $50.9 million. The upside was primarily driven by strong demand for cruising and acceleration in booking volumes.
During the second quarter of 2022, passenger ticket revenues amounted to $1,418.2 million, up from the prior-year quarter’s revenues of $22.8 million. Onboard and other revenues increased to $766 million from $28.1 million reported in the year-ago quarter.
Total cruise operating expenses during the quarter came in at $1,690.9 million compared with $424.8 million reported in the prior-year quarter.
Other Financial Information
As of Jun 30, 2022, the company had cash and cash equivalents of approximately $2,102.2 million compared with $1,968.5 million as of Mar 31, 2022. As of Jun 30, its long-term debt was nearly $17.7 billion compared with $19.9 billion as of Mar 31, 2022.
During the quarter, booking volumes for 2022 sailings were up 30% from 2019 levels. The company noted better than expected load factors owing to a rise in close-in bookings. Also, it stated that pricing (including and excluding FCCs) for the second half of 2022 remains elevated from 2019 levels. The company reported a rise in pre-cruise onboard purchases (at higher prices) on a year-over-year basis.
However, the company noted a setback in its load factor with respect to its European-based itineraries. The company anticipates the combination of COVID-19 and the Russia-Ukraine war to affect operations during the third quarter of 2022.
As of Jun 30, 2022, the company had nearly $4.2 billion in customer deposits. During the quarter, the company witnessed a rise in new bookings and fewer FCC redemptions. Given the full fleet resumption and load factors (at approximately 90%), the company expects customer deposits to return to typical seasonality in the upcoming periods.
For the third quarter of 2022, the company anticipates total revenues in the range of $2.9-$3.0 billion. The company expects depreciation and amortization expenses to be approximately $360 million for the third quarter of 2022. Net interest expenses for the third quarter are expected to be in the range of $310-320 million.
Adjusted EBITDA is expected to lie in the range of $700-$750 million. The company expects adjusted earnings per share (EPS) in the third quarter to lie in the range of $0.05-$0.25.
Zacks Rank & Key Picks
Royal Caribbean has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Consumer Discretionary sector are G-III Apparel Group, Ltd. GIII, MGM Resorts International MGM and Vail Resorts, Inc. MTN.
G-III Apparel sports a Zacks Rank #1. GIII has a trailing four-quarter earnings surprise of 97.5%, on average. The stock has declined 25.6% in the past year.
The Zacks Consensus Estimate for GIII’s current financial year sales and EPS indicates growth of 13.8% and 8.2%, respectively, from the year-ago period’s reported levels.
MGM Resorts carries a Zacks Rank #2 (Buy). MGM has a trailing four-quarter earnings surprise of 212.5%, on average. Shares of the company have declined 18.2% in the past year.
The Zacks Consensus Estimate for MGM’s current financial year sales and EPS suggests growth of 27.6% and 240.3%, respectively, from the year-ago period’s reported levels.
Vail Resorts carries a Zacks Rank #2. MTN has a trailing four-quarter earnings surprise of 1.4%, on average. The stock has increased 24.3% in the past year.
The Zacks Consensus Estimate for MTN’s current financial year sales and EPS indicates growth of 31.9% and 168.4%, respectively, from the year-ago period’s reported levels.
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