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Royal Caribbean (RCL) Q2 Earnings & Revenues Top Estimates

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 and EPS Surprise
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.

Quarterly Highlights

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.

Booking Update

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.

Q3 Outlook

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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