Royal Caribbean Q3 Earnings Beat, Full Year Guidance Raised

Royal Caribbean Group reported third quarter results above expectations on Tuesday and raised its full year earnings guidance, as cruise demand held up despite higher fuel costs linked to the run up in oil prices this year.

The Miami based company posted adjusted earnings of $6.57 a share, ahead of the $6.38 consensus estimate from analysts polled by FactSet. Revenue rose 9 percent from a year earlier to $5.59 billion, in line with expectations. Diluted earnings per share were $6.45, up from $5.74 a year ago, and net income was $1.73 billion.

Guidance raised on steady demand

Royal Caribbean raised its full year adjusted earnings guidance to between $17.85 and $17.95 a share. Wall Street had been forecasting $17.79 a share. Adjusted EBITDA for the quarter was $2.54 billion, a margin of 45.4 percent, and the load factor across the fleet was 112 percent.

Chief executive Jason Liberty said demand for the company's vacation experiences remains strong, and that bookings for 2027 are pacing ahead of historical levels at higher rates, according to the company's earnings release.

Shares jumped 4 percent to $291.74 in trading ahead of Tuesday's opening bell, Barron's reported. The stock was up 0.6 percent for the year through Monday's close, while rivals Carnival and Norwegian were down 12 percent and 32 percent over the same period, Barron's said.

More detail from the release

The company release put adjusted net income at $1.76 billion, up from $1.58 billion a year earlier, on net income attributable to Royal Caribbean of $1.73 billion, up from $1.58 billion. Capacity grew 8 percent in the quarter, and reported net yields rose 0.9 percent, helped by close in demand in Europe and the Caribbean, according to coverage of the results. The operating margin was 33.5 percent, in line with the same quarter last year. The company carried about 2.68 million passengers during the quarter. Liberty said 2027 is the final year of the company Perfecta target period, and that the company remains on track, based on the forward fuel curve, to reach its Perfecta goal of 20 percent adjusted earnings per share compound annual growth from 2024 through 2027. One item investors are still watching is the timing of the company Sandals partnership, which depends on regulatory approval and a closing date, along with the shift of some third quarter costs into the fourth quarter that helped the latest numbers.