• Adjusted Earnings Per Share (EPS): $2.71, 9% higher than the midpoint of guidance.
• Net Yield Increase: 5.6% in constant currency compared to Q1 2024.
• Net Cruise Costs (Excluding Fuel): Increased 0.1% in constant currency.
• Adjusted EBITDA Margin: 35%, 360 basis points better than last year.
• Operating Cash Flow: $1.6 billion.
• Full-Year Yield Growth Guidance: 2.6% to 4.6%.
• Full-Year Adjusted EPS Guidance: $14.55 to $15.55, approximately 28% growth.
• Capacity Growth for 2025: Expected to grow 5.5%.
• Second Quarter Capacity Increase: 6% year over year.
• Second Quarter Net Yield Growth: 4.3% to 4.8%.
• Second Quarter Net Cruise Costs (Excluding Fuel): Expected to be up 3.7% to 4.2%.
• Second Quarter Adjusted EPS Guidance: $4 to $4.10.
• Liquidity: Ended the quarter with $4.5 billion.
• Share Repurchase: 1 million shares repurchased during the quarter.
• Credit Rating Upgrade: S&P Global Ratings upgraded to investment grade.

• Warning! GuruFocus has detected 3 Warning Sign with KHC.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Royal Caribbean Group (NYSE:RCL) delivered over 2 million vacations with exceptional guest satisfaction scores in the first quarter.
• The company experienced the best WAVE season in its history, leading to a strong booking position for the remainder of the year and 2026.
• Adjusted earnings per share of $2.71 exceeded guidance by $0.23, driven by better-than-expected revenue and favorable timing of expenses.
• Onboard spending and pre-cruise purchases continue to exceed prior years, driven by increased participation in onboard activities.
• The introduction of new ships like Star of the Seas and Celebrity Xcel is driving strong pricing and load factors, contributing to yield growth.

Negative Points

• There is heightened uncertainty in the macroeconomic environment, which could impact consumer behavior and the broader economy.
• The timing of new ship deliveries in the third quarter presents a headwind of approximately 140 basis points on yield growth.
• Net cruise costs, excluding fuel, are expected to increase in the second and third quarters due to higher dry dock days and timing of expenses.
• The company faces challenges in maintaining price integrity while managing promotional activities to stimulate demand.
• Despite strong bookings, there is a risk of potential pressure on onboard spending and close-in pricing due to macroeconomic uncertainties.

Q & A Highlights

Q: Jason, could you speak to the drivers of the better-than-planned performance in the first quarter and elaborate on business in April? A: Jason Liberty, President, CEO, and Director, explained that the strong first-quarter performance was driven by robust close-in demand, allowing for price increases. The company has seen continuous demand uplift close to the sailing dates, with high-quality customers spending well onboard. Investments in loyalty programs and technology have facilitated easier bookings, contributing to this trend. Despite macroeconomic uncertainties, the value gap between cruise and land-based vacations provides a buffer, and the company remains focused on delivering exceptional vacation experiences.

Q: Naftali, could you walk through the areas of this year's guidance where you embedded expanded assumption ranges tied to the current macro backdrop? A: Naftali Holtz, CFO, noted that the guidance range for yield growth was kept at 100 basis points, reflecting the broader external factors and macroeconomic complexity. Cost control remains a focus, and the company is confident in its long-term strategy to capture a greater share of the $2 trillion vacation market.

Q: Michael, any updated thoughts on the pricing of the Royal Beach Club day pass? A: Michael Bayley, President and CEO of Royal Caribbean International, stated that the Royal Beach Club pricing strategy will be discussed at an upcoming event in New York City. The company is excited about its destination portfolio, with the Royal Beach Club in Nassau being the first to launch.

Q: Jason, if there was going to be pressure from your customer base, do you think the low end of your guidance is now set low enough to capture that? A: Jason Liberty emphasized that the company has taken a conservative position in its guidance, considering current trading and consumer behavior. With 86% of the year already booked, visibility is strong, and there is no significant change in cancellation rates or consumer behavior.

Q: Jason, can you give us some color around what you're seeing for 2026 bookings? A: Jason Liberty mentioned that the booking window for 2026 is about a week shorter due to strong close-in demand. The book position for 2026 is in line with the same time last year, with higher prices and more capacity.

Q: Are you seeing any differences in booking trends between returning customers and new customers? A: Jason Liberty noted that demand from new-to-cruise and first-to-brand customers is exceptionally high. The loyalty program is generating more repeat bookings, but there is strong demand across both new and returning customers.

Q: How are you thinking about capital allocation, particularly regarding share repurchases? A: Naftali Holtz explained that the company is in a strong financial position, with a focus on growth and strategic investments. While share repurchases are considered opportunistically, maintaining a strong balance sheet remains a priority.

Q: How has the value proposition of cruising moved up in consumers' priorities during economic uncertainty? A: Jason Liberty highlighted that value for money has become a higher priority for consumers, but the overall value proposition of cruising remains strong. The ability to offer a comprehensive vacation experience at a known cost provides a buffer against economic uncertainties.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.