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ROYAL CARIBBEAN CRUISES LTD (RCL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered $3.999B revenue, diluted EPS $2.70 and Adjusted EPS $2.71; EPS beat prior guidance on stronger close‑in pricing and lower costs from timing, while revenue was essentially in line .
  • FY25 Adjusted EPS guidance raised to $14.55–$15.55 (≈28% YoY growth), driven by Q1 revenue outperformance plus FX and fuel tailwinds; Q2 2025 EPS guided to $4.00–$4.10 with net yields up ~4.4–4.9% as‑reported .
  • Bookings remained strong in April with continued close‑in demand; load factor was 108.8% in Q1 and guests/PCDs grew YoY, reinforcing volume and pricing strength .
  • Capital allocation supports equity story: investment‑grade upgrade by S&P, $1.0B buyback authorization (initiated), dividend raised to $0.75/share; converts exchange reduced diluted share count by ~1.0M .

What Went Well and What Went Wrong

  • What Went Well

    • Close‑in demand and pricing strength drove EPS beat: “We saw better‑than‑expected close‑in bookings across all itineraries” and Adjusted EPS was $0.23 above guidance, aided by ~$0.08 favorable timing of expenses .
    • Yield and margin expansion: Net yields +5.6% CC, Adjusted EBITDA margin 35.1% vs 31.5% last year; load factor 108.8% .
    • Capital markets milestones: upgraded to investment grade, buybacks and convert exchanges lowered cost of capital and share count; “recapturing a portion of our Covid‑era share dilution” .

  • What Went Wrong

    • Cost timing shifts: Q2 NCC ex‑fuel guided up 4.1–4.6% (≈140 bps from Q1 timing), and FY cost cadence heavier in Q2/Q3, creating quarterly margin noise .
    • Fuel remains a sensitivity despite hedging: Q2 fuel expense guide $286M at 428k MT; a 10% fuel price move impacts ~$14M in Q2 [$42M remainder of year] .
    • New ship timing headwind for Q3 yields: late‑Aug STAR OF THE SEAS limits Q3 APCDs and ramp load factor, ~150 bps yield headwind (third‑quarter skew to like‑for‑like) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$4,886 $3,761 $3,999
Diluted EPS ($)$4.21 $2.02 $2.70
Adjusted EPS ($)$5.20 $1.63 $2.71
Operating Income ($USD Millions)$1,634 $624 $945
Adjusted EBITDA ($USD Millions)$2,148 $1,098 $1,402
Adjusted EBITDA Margin (%)44.0% 29.2% 35.1%

Q1 2025 actuals vs Wall Street consensus (S&P Global):

MetricConsensusActualSurprise
EPS ($)2.53*2.70 +$0.17*
Revenue ($USD Billions)4.02*4.00 −$0.02*
EBITDA ($USD Billions)1.33*1.40 +$0.07*

Values retrieved from S&P Global.*

KPIs

KPIQ3 2024Q4 2024Q1 2025
Passengers Carried2,310,220 2,159,429 2,241,673
Passenger Cruise Days (PCD)14,785,828 13,678,795 13,768,332
APCD13,316,981 12,716,724 12,657,992
Occupancy (Load factor)111.0% 107.6% 108.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY 2025$14.35–$14.65 $14.55–$15.55 Raised
Net Yields (Constant Currency)FY 20252.5%–4.5% 2.6%–4.6% Slightly raised
NCC ex Fuel per APCD (CC)FY 20250.0%–1.0% (0.1%)–0.9% Slightly lowered
Depreciation & AmortizationFY 2025$1.715–$1.725B $1.710–$1.720B Maintained (minor)
Net Interest (ex loss on extinguishment)FY 2025$935–$945M $940–$950M Maintained
Capacity Change vs 2024FY 20255.4% 5.5% Maintained (minor)
Adjusted EPSQ2 2025—$4.00–$4.10 New guide
Net Yields (as‑reported)Q2 2025—4.4%–4.9% New guide
NCC ex Fuel per APCD (as‑reported)Q2 2025—4.1%–4.6% New guide
Fuel ExpenseQ2 2025—$286M; 428k MT; 59% hedged New detail
Dividend2025Reinstated and raised multiple times$0.75/share (declared Feb 12) Raised
Share Repurchase2025—$1.0B authorization; $100M initiated New program

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current (Q1 2025)Trend
Close‑in demand & pricingElevated close‑in demand, pricing up across itineraries “Best five booking weeks” to start 2025; yields guided higher April bookings outpaced last year; strong close‑in demand driving beats Strengthening
AI/digital & pre‑cruiseAI‑enabled yield mgmt; pre‑cruise purchases > double onboard 300+ digital capabilities; app chat adoption ↑ “Disruptive tech” across pricing, loyalty; pre‑cruise spend high Expanding
New ships & destinationsIcon/Utopia/Silver Ray launches; announce Perfect Day Mexico STAR (Q3), Xcel (Q4), River (2027), Beach Clubs STAR late‑Aug ramp; Xcel Nov; Royal Beach Club opening by YE Pipeline building; near‑term Q3 headwind
Macro/geopoliticalHurricane impact; maintained price integrity FX/fuel headwinds cited in guide Wider guidance ranges to reflect macro complexity Managing uncertainty
Capital allocationUnsecured balance sheet; convert exchanges Leverage low ~3x; dividend reinstated Investment grade; $1B buyback; converts exchange reduced dilution More shareholder return
Regional mixEurope/Alaska strength; Caribbean private destinations Caribbean ~57%; Alaska 6%; Europe 15% Q2 capacity: Carib 49%, Europe 20%, Alaska 9% Healthy mix; Carib lead

Management Commentary

  • “Our strong first quarter results are a testament to the enduring appeal and attractive value proposition of our leading brands... we remain focused on optimizing revenue and managing costs” — Jason Liberty, CEO .
  • “We continued to opportunistically reduce debt, while lowering cost of capital and recapturing a portion of our Covid‑era share dilution” — Naftali Holtz, CFO .
  • On demand: “Bookings for 2025 have remained on track... continued strength in close‑in bookings” — Jason Liberty .
  • On Q1 drivers: “Adjusted EPS... 9% higher than midpoint; driven by better close‑in pricing and $0.08 favorable timing” — Naftali Holtz .

Q&A Highlights

  • Close‑in demand momentum and EPS upside: Management emphasized stronger close‑in demand elevating pricing and onboard spend; models don’t fully embed further acceleration, offering upside if trends persist .
  • Guidance ranges widened for macro complexity: Yield range maintained/slightly raised; EPS range expanded to reflect uncertainties while keeping price integrity focus .
  • New ship delivery timing: Q3 yield headwind ~140–150 bps due to late STAR OF THE SEAS entry and ramp load factors; Q4 sees partial offset and Xcel launch .
  • Capital returns: Competitive dividend and opportunistic buybacks within investment‑grade constraints; $1B authorization in place and initiated .
  • Loyalty and digital: Loyalty members ~40% of bookings, spending ~25% more per trip; pre‑cruise purchases drive higher onboard spend .

Estimates Context

  • Q1 2025 EPS beat: Actual $2.70 vs S&P consensus $2.53*, supported by stronger pricing and timing of expenses .
  • Q1 2025 revenue was essentially in line/slightly below: $3.999B vs $4.016B consensus*, with margin levers (cost timing, below‑the‑line items) driving EPS beat .
  • EBITDA beat: Actual $1.402B vs $1.332B consensus*, consistent with margin strength and yields .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EPS power accelerating with raised FY25 guide ($14.55–$15.55) and robust Q2 setup (EPS $4.00–$4.10; yields up ~4.4–4.9% as‑reported), despite cost timing headwinds in Q2/Q3 .
  • Demand remains resilient; April bookings and load factors strong at higher rates, providing pricing flexibility and potential intra‑quarter upside vs current guidance .
  • Near‑term watch: Q3 yield headwind (~150 bps) from late STAR delivery/ramp; Q4 benefits from full‑quarter STAR and Xcel launch, plus fewer dry docks .
  • Structural margin drivers intact: Private destinations (Royal Beach Club Paradise Island in Dec), AI/digital revenue management, and loyalty engagement underpin sustained yield/margin expansion .
  • Capital allocation turning more shareholder‑friendly within investment‑grade guardrails: $0.75 dividend and buybacks initiated, alongside liability management (convert exchanges) .
  • Fuel and FX hedging mitigate volatility, but remain sensitivities (10% fuel ≈ $14M in Q2); positioning remains balanced with ~59% 2025 fuel hedged .
  • Narrative catalysts: continued close‑in demand strength, successful STAR/Xcel ramps, Royal Beach Club opening, and potential incremental guidance moves if momentum persists .