Core Points - Royal Caribbean Group has amended and increased its two unsecured revolving credit facilities by $2.28 billion, raising the total commitments to $6.35 billion [1] - The maturity of the three-year facility has been extended from October 2026 to October 2030, while the other facility matures in October 2028 [1] - The CFO highlighted that this upsizing reflects the strength of the company's credit profile and the support from lending partners, enhancing financial flexibility for strategic growth initiatives [2] Company Overview - Royal Caribbean Group is a leader in the vacation industry with a global fleet of 67 ships across five brands, serving millions of guests annually [2] - The company operates brands including Royal Caribbean, Celebrity Cruises, and Silversea, and is expanding its land-based vacation experiences [2] - Royal Caribbean Group also holds a 50% joint venture interest in TUI Cruises, which operates German brands Mein Schiff and Hapag-Lloyd Cruises [2]

Core Points - Royal Caribbean Group declared a quarterly dividend of $0.75 per common share, payable on July 3, 2025, to shareholders of record as of June 4, 2025 [1] Company Overview - Royal Caribbean Group is a leader in the vacation industry with a global fleet of 67 ships across five brands, serving millions of guests annually [2] - The company operates brands including Royal Caribbean, Celebrity Cruises, and Silversea, and is expanding its land-based vacation experiences [2] - Royal Caribbean Group holds a 50% joint venture interest in TUI Cruises, which operates German brands Mein Schiff and Hapag-Lloyd Cruises [2] - The company is known for its history of innovation and commitment to delivering exciting new products and guest experiences in leisure travel [2]

Core Insights - Royal Caribbean and Norwegian Cruise Line have shown contrasting financial performances, with Royal Caribbean reporting better-than-expected growth while Norwegian Cruise Line experienced declines [1][2]. Financial Performance - Royal Caribbean's revenue increased by 7% in the first quarter, with adjusted earnings soaring 57% to $2.71 per share, surpassing Wall Street expectations of $2.53 [3]. - In contrast, Norwegian Cruise Line's revenue declined by 3%, and adjusted earnings plummeted 56%, impacted by maintenance work and foreign exchange losses [4]. Key Metrics Comparison - Royal Caribbean's net yield was 4.7%, significantly higher than Norwegian Cruise Line's 1.2%. Additionally, Royal Caribbean's load factor was 109%, compared to NCL's 101.5% [5]. - Over the past four quarters, Royal Caribbean's net margin stood at 19.4%, more than double NCL's 9.1% [6]. Market Valuation - Royal Caribbean trades at a trailing P/E multiple of 19, while Norwegian Cruise Line trades at 10. The 2025 P/E for Royal Caribbean is 15 compared to NCL's 9, and for 2026, it is 13 versus NCL's 7 [9]. - Royal Caribbean's enterprise value is 4.9 times its trailing revenue, more than double NCL's 2.4 times, reflecting its historically superior growth rates and margins [9]. Stock Performance - Year-to-date, Royal Caribbean's stock is flat, while Norwegian Cruise Line is down 32%. Over one year, Royal Caribbean is up 67%, while NCL is up 8%. In three years, Royal Caribbean has gained 196%, whereas NCL is down 13%. Over five years, Royal Caribbean has increased by 464%, compared to NCL's 26% [10]. Investment Perspective - The analysis suggests that paying a premium for a superior operator like Royal Caribbean is justified, despite some arguments for Norwegian Cruise Line as a value play. The long-term prospects for the cruising industry remain promising [11].

Financial Performance - Net Income attributable to Royal Caribbean Cruises Ltd. for Q1 2025 was $730 million, up from $360 million in Q1 2024, representing a 102.8% increase [154]. - Adjusted Net Income for Q1 2025 was $744 million, compared to $478 million in Q1 2024, reflecting a 55.7% increase [154]. - Total revenues increased by $271 million in Q1 2025 compared to Q1 2024, driven by higher capacity, ticket prices, and onboard spending [156]. - Total revenues for Q1 2025 increased by $271 million to $3.999 billion, up from $3.728 billion in Q1 2024 [170]. - Passenger ticket revenues rose by $202 million, or 7.9%, to $2.744 billion, accounting for 68.6% of total revenues in Q1 2025 [170]. - Onboard and other revenues increased by $69 million, or 5.8%, to $1.255 billion, representing 31.4% of total revenues in Q1 2025 [170]. - Operating income for Q1 2025 was $945 million, a 26% increase from $750 million in Q1 2024 [170]. - Adjusted EBITDA for Q1 2025 was $1.402 billion, compared to $1.174 billion in Q1 2024, marking a 19.4% increase [163]. - The company carried 2,241,673 passengers in Q1 2025, an increase from 2,054,382 passengers in Q1 2024 [163]. - The occupancy rate for Q1 2025 was 108.8%, up from 107.0% in Q1 2024 [163]. Cash Flow and Financing - Net cash provided by operating activities was $1.6 billion for Q1 2025, an increase of $0.3 billion compared to $1.3 billion in Q1 2024 [176]. - Net cash used in financing activities was $1.2 billion in Q1 2025, compared to $1.1 billion in Q1 2024, primarily due to dividend payments and treasury stock purchases [178]. - A cash dividend of $0.75 per share was declared during the quarter ended March 31, 2025, and paid in April 2025 [194]. - The company is in compliance with financial covenants as of March 31, 2025, and expects to remain compliant for at least the next twelve months [193]. - The company anticipates sufficient financial resources to fund obligations for at least the next twelve months, though future liquidity requirements remain uncertain [192]. Capital Expenditures and Investments - As of March 31, 2025, the aggregate expected cost of ships on order is $7.9 billion, with $1.0 billion already deposited [180]. - Total anticipated capital expenditures for 2025 are approximately $5 billion, primarily for existing ships on order and land-based destination initiatives [181]. - Material cash requirements total $12.31 billion through 2029, including $4.91 billion for interest on debt and $5.81 billion for ship purchase obligations [182]. - As of March 31, 2025, the company has $6.1 billion of committed financing for ships on order [189]. - Liquidity as of March 31, 2025, is $4.5 billion, comprising $0.4 billion in cash and cash equivalents and $4.1 billion in undrawn revolving credit facility capacity [190]. Strategic Goals - The company targets a 20% compound annual growth rate in Adjusted EPS by the end of 2027 under its Perfecta Program [151]. - The company aims for a Return on Invested Capital (ROIC) of 17% or higher by the end of 2027 [151]. - The company continuously considers opportunities for building additional ships and potential acquisitions, which would be financed through various means including additional debt [186]. - Approximately 36.5% of the aggregate ship costs are exposed to fluctuations in the Euro exchange rate as of March 31, 2025 [180]. Operational Highlights - Total cruise operating expenses rose by $23 million in Q1 2025 compared to the same period in 2024, primarily due to increased capacity [156]. - In February 2025, TUI Cruises, a 50% joint venture, took delivery of Mein Schiff Relax [156]. - In March 2025, the company completed an exchange of approximately $213 million in Convertible Senior Notes for about 3 million shares of common stock and $214 million in cash [156]. - Available Passenger Cruise Days (APCD) is used to evaluate capacity and revenue performance, excluding canceled cruise days [142]. - Constant Currency is monitored to assess revenue and expenses in relation to currency exchange rate fluctuations [143].

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $2.71 for the first quarter, which was $0.23 higher than guidance, driven by better revenue and favorable timing of expenses [10][21] - Yields grew by 5.6% in constant currency compared to the first quarter of 2024, exceeding initial guidance by 60 basis points [21] - Adjusted EBITDA margin was 35%, which is 360 basis points better than the previous year [22] Business Line Data and Key Metrics Changes - Bookings in the first quarter outpaced last year across all products, resulting in the best wave season in the company's history [10][11] - Onboard spending and pre-cruise purchases exceeded prior years, driven by increased participation in onboard activities and experiences at higher prices [11][12] - The Caribbean accounted for 57% of deployment this year and 49% of capacity in the second quarter [22] Market Data and Key Metrics Changes - The company expects capacity to grow by 5.5% in 2025, supported by the introduction of new ships [15] - Europe is projected to account for 15% of capacity for the year, while Alaska is expected to account for 6% [24] - The company reported that 7 out of 10 consumers intend to spend the same or more on leisure travel over the next twelve months [12] Company Strategy and Development Direction - The company is focused on delivering exceptional vacation experiences, optimizing revenue, managing costs, and executing long-term strategies [7][8] - The introduction of seven new ships over the next three years is expected to enhance customer experiences and drive growth [18] - The company aims for a 20% compound annual growth rate in adjusted earnings per share through 2027 [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged heightened uncertainty in the macro landscape but emphasized strong consumer demand for cruising experiences [6][7] - The company remains confident in its growth strategy and the opportunity to capture a larger share of the $2 trillion vacation market [7][15] - Recent booking trends and disciplined cost management position the company well for strong earnings growth despite macroeconomic uncertainties [15][28] Other Important Information - The company ended the quarter with $4.5 billion in liquidity and received an investment-grade credit rating upgrade from S&P Global Ratings [30][31] - The company repurchased 1 million shares under its $1 billion share repurchase program [31] Q&A Session Summary Question: Drivers of better than planned performance in Q1 - Management noted strong close-in demand and the ability to raise pricing during this period, alongside high-quality customers spending well on the ship [38][39] Question: Areas of guidance expansion due to macro backdrop - Management expanded guidance ranges to account for broader external factors while maintaining confidence in long-term growth strategies [46][48] Question: Pricing strategy for new ships and potential headwinds - New ships entering service later in the year may create a headwind due to lower average passenger cruise days initially [54][56] Question: Onboard spending and consumer behavior - Management indicated that consumer spending remains strong, with no significant trade-down behavior observed among loyalty program members [78][79] Question: Capital allocation and share repurchase strategy - The company is focused on maintaining a strong balance sheet while also returning capital to shareholders through dividends and share repurchases [92][94]

Core Viewpoint - Royal Caribbean Cruises Ltd. (RCL) reported mixed first-quarter 2025 results, with adjusted earnings exceeding expectations while revenues fell short, although both metrics showed year-over-year growth [1][3]. Financial Performance - Adjusted earnings per share (EPS) for Q1 2025 were $2.71, surpassing the Zacks Consensus Estimate of $2.53 by 7.1%, compared to $1.77 in the prior-year quarter [3]. - Quarterly revenues reached $4 billion, missing the consensus mark by 0.2%, but up 7.3% from $3.72 billion year-over-year [3]. - Passenger ticket revenues increased to $2.74 billion from $2.54 billion in the prior-year quarter, aligning with estimates [4]. - Onboard and other revenues rose to $1.26 billion from $1.19 billion year-over-year, exceeding estimates [4]. - Total cruise operating expenses were $2.08 billion, up 1.1% year-over-year, below estimates [4]. Cost and Yield Metrics - Net yields increased by 5.6% on a constant currency basis and 4.7% on a reported basis compared to Q1 2024 [5]. - Net cruise costs, excluding fuel, per Available Passenger Cruise Day (APCD) decreased by 0.1% on a constant currency basis and 0.3% on a reported basis year-over-year [5]. Balance Sheet and Cash Flow - As of March 31, 2025, cash and cash equivalents were $386 million, slightly down from $388 million at the end of 2024 [6]. - Long-term debt decreased to $17.99 billion from $18.47 billion at the end of 2024, with the current portion of long-term debt also declining [6]. Booking Trends - The company experienced strong booking trends during the WAVE season, with April bookings surpassing the same period last year [7]. - Customer deposits as of March 31, 2025, were $6.33 billion, up from $5.5 billion in the prior-year period [8]. Management Outlook - Management expressed optimism regarding ongoing consumer enthusiasm for new offerings, which is expected to drive yield growth throughout 2025 [9]. - For Q2 2025, the company anticipates adjusted EPS between $4 and $4.10, with net yields projected to increase by 4.4-4.9% on a reported basis [10][11]. - For the full year 2025, adjusted EPS is expected to be between $14.55 and $15.55, an increase from previous expectations [12].

Q1 2025 EARNINGS CALL This presentation includes certain adjusted financial measures defined as non-GAAP financial measures under Securities and Exchange Commission rules, which we believe provide useful information to investors as a supplement to our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles, or U.S. GAAP. The presentation of adjusted financial information is not intended to be considered in isolation or as a substitute f ...

Core Insights - Royal Caribbean reported $4 billion in revenue for Q1 2025, a year-over-year increase of 7.3% and an EPS of $2.71 compared to $1.77 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $4.01 billion, resulting in a surprise of -0.17%, while the EPS exceeded expectations by +7.11% [1] Financial Performance Metrics - Available Passenger Cruise Days (APCD) were reported at 12,657.99 days, slightly below the average estimate of 12,680.56 days [4] - Net Yields stood at $258.83, slightly above the average estimate of $257.86 [4] - The occupancy rate was 108.8%, exceeding the average estimate of 107.7% [4] - Passenger Cruise Days totaled 13,768.33 days, compared to the estimated 13,646.2 days [4] - Net Cruise Costs Excluding Fuel per APCD were $129.54, lower than the average estimate of $131.66 [4] - Net Cruise Costs per APCD were reported at $151.44, below the average estimate of $153.69 [4] - The number of passengers carried was 2.24 million, slightly above the average estimate of 2.23 million [4] - Onboard and other revenues reached $1.26 billion, matching the average estimate and reflecting a year-over-year change of +5.8% [4] - Passenger ticket revenues were $2.74 billion, consistent with the average estimate and representing an 8% year-over-year increase [4] Stock Performance - Royal Caribbean shares returned +5.3% over the past month, outperforming the Zacks S&P 500 composite, which changed by -0.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $2.71 for the first quarter, which was $0.23 higher than guidance, driven by better revenue and favorable timing of expenses [10][21] - Yields grew by 5.6% in constant currency compared to the first quarter of 2024, exceeding initial guidance by 60 basis points [21] - Adjusted EBITDA margin was 35%, which is 360 basis points better than the previous year [22] Business Line Data and Key Metrics Changes - Bookings for 2025 are outpacing last year, with the best wave season in the company's history [10][11] - Onboard spending and pre-cruise purchases have exceeded prior years, driven by increased participation in onboard activities [11][12] - The Caribbean represents 57% of the company's deployment for the year, with 49% of capacity in the second quarter [22][23] Market Data and Key Metrics Changes - The company is seeing strong demand across all commercial channels, particularly in direct-to-consumer channels [11] - Europe is expected to account for 15% of capacity for the year, while Alaska will account for 6% [23] - Consumer sentiment around leisure vacations remains positive, with 70% of surveyed consumers intending to spend the same or more on leisure travel over the next twelve months [12][13] Company Strategy and Development Direction - The company aims for a 20% compound annual growth rate in adjusted earnings per share through 2027, focusing on moderate capacity and yield growth along with strong cost control [16][24] - Investments are being made in new ships and exclusive destinations to enhance guest experiences and drive loyalty [18][19] - The company is focused on maintaining price integrity while optimizing revenue through a global yield management platform [64] Management's Comments on Operating Environment and Future Outlook - Management acknowledges heightened macroeconomic uncertainty but remains confident in the company's ability to deliver strong financial performance [6][7] - The company is well-positioned to capitalize on the growing $2 trillion vacation market, with a strong balance sheet and cash flow generation [7][15] - Recent booking trends and disciplined cost management are expected to support another year of strong earnings growth [15][28] Other Important Information - The company ended the quarter with $4.5 billion in liquidity and received an investment-grade credit rating upgrade from S&P Global Ratings [30][31] - Share repurchase programs are ongoing, with $1 billion authorized for repurchases, and the company has repurchased 1 million shares [31][32] Q&A Session Summary Question: Drivers of better than planned performance in Q1 - Management noted strong close-in demand and the ability to raise pricing during this period, alongside high-quality customer spending [38][39] Question: Areas of guidance expansion due to macro backdrop - Management expanded guidance ranges to account for broader external factors while maintaining confidence in long-term growth strategies [46][48] Question: Pricing strategy for new ships and potential headwinds - New ships entering service later in the year may create a temporary headwind due to lower average passenger cruise days [54][56] Question: Onboard spending and close-in pricing outlook - Management remains optimistic about consumer spending and has not seen significant changes in cancellation rates or customer behavior [60][62] Question: Capital allocation and share repurchase strategy - The company is focused on maintaining a strong balance sheet while also returning capital to shareholders through dividends and share repurchases [92][94]

Core Viewpoint - Royal Caribbean reported quarterly earnings of $2.71 per share, exceeding the Zacks Consensus Estimate of $2.53 per share, and showing a significant increase from $1.77 per share a year ago, indicating strong performance in the cruise industry [1][2] Financial Performance - The company achieved revenues of $4 billion for the quarter ended March 2025, slightly missing the Zacks Consensus Estimate by 0.17%, but up from $3.73 billion year-over-year [2] - Over the last four quarters, Royal Caribbean has surpassed consensus EPS estimates four times and topped revenue estimates two times [2] Stock Performance - Royal Caribbean shares have declined approximately 6.2% since the beginning of the year, compared to a 6% decline in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.92 on revenues of $4.52 billion, and for the current fiscal year, it is $14.88 on revenues of $17.96 billion [7] - The trend of estimate revisions for Royal Caribbean is mixed, which may change following the recent earnings report [6] Industry Context - The Leisure and Recreation Services industry, to which Royal Caribbean belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]