Royal Caribbean Group Q2 FY2025 earnings call

• Strong second-quarter results driven by stronger-than-expected close-in demand, expense timing shift, and outperformance of the TUI Cruises joint venture.
• Capacity increased 6%, net yield grew 5.2%, and adjusted earnings per share for Q2 were $4.38, up 36% YOY.
• Bookings have accelerated, particularly for close-in sailings, with 75% of consumers intending to spend the same or more on leisure travel.
• Plan to introduce 7 new ships in the coming years, including Star of the Seas, Celebrity Xcel, and others.
• Expanding private destinations with Royal Beach Club Paradise Island, Royal Beach Club Cozumel, Perfect Day Mexico, etc.
• Leveraging digital innovation to enhance customer engagement, with repeat bookings rising and mobile app usage for onboard purchases increasing.

In the second quarter, Royal Caribbean Group's capacity increased 6% while delivering over 2 million vacations, a 10% year-over-year growth with high guest satisfaction scores. Net yield grew 5.2%, exceeding guidance by 70 basis points, driven by better-than-expected close-in demand. Adjusted earnings per share for the second quarter were $4.38, 36% higher than the previous year and exceeding guidance by $0.33. The TUI Cruises joint venture outperformed, contributing to the strong financial results. Revenue contribution details by specific product segments weren't extensively broken down in absolute terms beyond these overall metrics.

• For 2025, adjusted earnings per share is expected to grow 31% to range from $15.41 to $15.55. Net yield is expected to grow in the range of 3.5% to 4%.
• Third quarter yield growth is expected to be 2% to 2.5%, with adjusted earnings per share for the quarter ranging from $5.55 to $5.65.
• Strong balance sheet with $7.1 billion in liquidity, amended and upsized revolving credit facilities, and expectation of leverage at mid-2 turns by end of 2025.

• Geopolitical uncertainties that could impact consumer demand for leisure travel.
• Operational challenges in ramping up new ships and private destinations, such as timing issues affecting yield.
• Potential impact of fuel price fluctuations on costs.

Q: Could you elaborate on the continued acceleration in demand that you cited for your brands and experiences? Have you seen any change in July booking trends?

A: Jason T. Liberty mentioned strong close-in demand acceleration, consumer confidence with strong jobs and balance sheets, and offense playbook with investments in ships, destinations, and digital innovation. July booking trends show continued strength.

Q: Should we think that 2028 could see earnings growth at least in line with your Perfecta targets?

A: Jason T. Liberty stated that 2028 investments like Perfect Day Mexico, Oasis Class, and river cruising will lead to a significant step change in earnings power, suggesting potential earnings growth in line or higher than Perfecta targets.

Q: Talk about the operational expectation for the Royal Beach Club.

A: Michael W. Bayley said sales are strong, interest is high, construction is on target, with dynamic pricing and a winning product expected to deliver high guest satisfaction. The ramp-up will be thoughtful to ensure guest experience.