Leisure Consumer Space Analysis - Bank of America Securities provided a cross-sector analysis of the leisure consumer space, highlighting that while performance trends vary by category, segments like cruises and premium travel are showing steady performance, while value-focused areas are experiencing weakness [1] - In the lodging sector, aggregated credit and debit card data for April indicated a 3% year-over-year decline in spending, consistent with March figures [1] Las Vegas Room Rates - The Las Vegas room rate survey indicated a weakness, with forward rates down 11% [2] Hotel Performance Insights - Analysts noted that Bank of America's card data skews towards leisure spending, aligning with comments from Hilton Worldwide Holdings Inc., Hyatt Hotels Corporation, and Marriott International, all of which reported softer low-end RevPAR trends [3] Ski Industry Performance - Vail Resorts reported a 3% drop in ski visits this season, underperforming the overall industry, which saw a 2% increase [4] - Despite a decline in the number of passes sold, total dollars collected are up through April 20, with Memorial Day being a key trigger for pass sales, although an increase in web traffic has not yet been observed [5] Cruise Industry Trends - Spending in the cruise segment has slowed from strong double-digit growth late last year to flat year-over-year in April, attributed to economic uncertainty and the timing of Easter [5][6] - Norwegian Cruise Line Holdings flagged a slowdown in booking activity, particularly for longer European sailings, while Royal Caribbean Cruises maintained its full-year 2025 net yield guidance unchanged [6] - Overall, cruise operators remain well booked for 2025 and have time to secure additional bookings for 2026 as the year progresses [7]

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]

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].

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]

Royal Caribbean Cruises Ltd. (RCL) and Carnival Corporation & plc (CCL) are the two giants of the cruise industry, with market caps of $48.5 billion and $22.6 billion, respectively. Both stocks have outperformed the industry in the past year.With the demand for the cruise industry on the rise, find out which stock has more upside potential right now. Let us take a closer look at both companies' fundamentals, earnings growth and valuation.Thesis on RCLRoyal Caribbean is benefiting from robust cruise demand, ...

Financial Data and Key Metrics Changes - The company reported a net income exceeding guidance by more than $170 million, driven by strong demand and a 7.3% yield increase, surpassing last year's 17% yield improvement [6][20] - EBITDA reached $1.2 billion, marking a nearly 40% year-over-year increase, with operating income nearly doubling [7][19] - Operating and EBITDA margins improved over 400 basis points year-over-year, now surpassing 2019 levels [7][9] Business Line Data and Key Metrics Changes - Both ticket and onboard spending outperformed expectations, indicating strong consumer demand [6][20] - Customer deposits increased by over $300 million compared to the prior year, reflecting improved ticket prices and pre-cruise onboard sales [22] Market Data and Key Metrics Changes - The company is experiencing historical high prices across all core programs for 2025, with booking volumes for 2026 sailings also reaching an all-time high [10] - European brands continue to outperform year-over-year on both price and occupancy [20] Company Strategy and Development Direction - The company is focused on enhancing its marketing campaigns to drive broader consideration for cruise travel and maintain momentum [10][12] - Strategic investments include the expansion and renovation of Denali Lodge and the Aida Evolution program, aimed at enhancing guest experiences and operational efficiency [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged heightened macroeconomic and geopolitical volatility but expressed confidence in achieving strong results due to robust demand and effective execution [9][15] - The company is well-positioned for future growth, with a focus on maintaining investment-grade leverage metrics and reducing debt [17][18] Other Important Information - The company has successfully refinanced $5.5 billion of debt, resulting in significant interest expense savings [25][26] - The sale of Seabourn Sojourn was executed in the best interest of shareholders, consolidating the fleet while maintaining a strong luxury offering [15][106] Q&A Session Summary Question: Can you provide more color on consumer demand trends since Q4? - Management noted that Wave season was a success, with record bookings and strong pricing, indicating robust consumer demand [30] Question: Is there potential upside to the yield guidance for the rest of the year? - Management confirmed that strong Q1 performance and ongoing onboard spending trends suggest potential for upside in yield guidance [42][44] Question: Are there any material differences in bookings for 2026 by brand? - Management indicated no significant concerns across brands, with a strong foundation for 2026 bookings [51] Question: What cost levers are available if demand weakens? - Management highlighted the absence of hedging on commodities as a natural hedge, allowing flexibility in cost management [87] Question: How is the company approaching capital allocation beyond debt paydown? - Management stated that immediate debt paydown is the priority, but future considerations will include investments in growth opportunities [117]

Carnival (CCL) Q1 2025 Earnings Call March 21, 2025 10:00 AM ET Company Participants Beth Roberts - Senior Vice President and Investor RelationsJosh Weinstein - President, CEO, Chief Climate Officer & DirectorDavid Bernstein - CFO & CAORobin Farley - Managing DirectorSteven Wieczynski - Managing DirectorPatrick Scholes - Managing Director - Lodging & Leisure Equity ResearchDavid Katz - Managing DirectorLizzie Dove - Vice President Equity Research Conference Call Participants Benjamin Chaiken - Equity Analys ...

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 increased by 20.5% year-over-year to almost $1.4 billion, driven by higher capacity and revenue per passenger cruise day (PCD) [16] - Adjusted gross margin rose by 19.5% year-over-year to nearly $870 million, resulting in a net yield of $507, which is 7.4% higher than Q4 2023 [17] - Adjusted EBITDA for Q4 totaled $306 million, up 39.7% from the previous year, with net income for Q4 2024 at $104 million compared to a loss of $594 million in Q4 2023 [18] - Adjusted net income attributable to Viking Holdings Limited for Q4 2024 was $200 million, with adjusted EPS at $0.45, and for the full year 2024, adjusted EPS was $1.86 [19] Business Line Data and Key Metrics Changes - In the river segment, capacity PCDs increased by 3.7% year-over-year, with adjusted gross margin growing by 15.8% to $1.6 billion and net yield up 11.7% to $533 [21] - For the ocean segment, capacity PCDs increased by 6.2% year-over-year, with adjusted gross margin rising by 12.1% to $1.5 billion and net yield increasing by 5% to $522 [23] Market Data and Key Metrics Changes - As of February 23, 2025, Viking was 88% booked for the year with $5.3 billion in advance bookings, which is 26% higher than the same point in 2024 [27] - For ocean cruises, advanced bookings reached $2.4 billion, 30% higher than the previous year, with operating capacity up 18% year-over-year [41] - For river cruises, advanced bookings were nearly $2.6 billion, 24% higher than last year, with operating capacity up 7% year-over-year [43] Company Strategy and Development Direction - Viking aims to grow its core capacity by 12% in 2025 with the delivery of 10 river ships and one ocean ship, emphasizing a leadership position in the river cruise market [28] - The company focuses on maintaining high customer satisfaction and operational efficiency, leveraging its unique fleet design and in-house operations to enhance profitability [30][36] - Viking is committed to expanding its market presence, including a focus on the Chinese market with tailored offerings for Chinese-speaking guests [88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for core products, with a positive outlook for 2025 despite macroeconomic uncertainties [27][84] - The company highlighted the resilience of its high-end customer demographic, which is less impacted by economic downturns compared to average consumers [106] - Management noted that they are prepared to adapt their booking strategies based on market conditions, emphasizing the importance of analyzing booking curves [44][85] Other Important Information - Viking became a publicly traded company on the New York Stock Exchange on May 1, 2024, and received the 2024 North America IPO of the Year award [12] - The company ended 2024 with total cash and cash equivalents of $2.5 billion and an undrawn revolver of $375 million, with a net leverage ratio of 2.4 times [24] Q&A Session Summary Question: Why hasn't 2026 been added to the booking curve charts? - Management focused on 2024 performance and 2025 bookings, with 2026 bookings currently ahead of 2025 at the same point in time [53][54] Question: How will Viking respond to new competition from Royal Caribbean? - Viking holds a strong market share of 52% and has a large order book, which positions it well against new entrants [57][58] Question: What are the current demand trends by region? - Management reported strong demand for 2025, with 88% of capacity sold and positive trends in both river and ocean segments [64] Question: Are there any barriers to entry for new competitors? - Viking has secured valuable docking rights in key locations, which serve as significant barriers to entry for new competitors [77][78] Question: How does Viking manage booking curves in uncertain macro environments? - Viking's strong database allows for direct demand generation, providing flexibility to adapt to market conditions [84][85] Question: What are the priorities for growth in the next 3 to 5 years? - Viking is focusing on expanding its presence in Egypt and China, with plans for additional river vessels in these markets [88][89] Question: How does Viking plan to enhance customer interaction through technology? - The company is investing in technology for online booking and customer interaction, aiming to stay ahead of industry trends [123][124]