Royal Caribbean Cruises (RCL) reported its fourth-quarter earnings with mixed results as the company missed Wall Street expectations of $3.36 billion in revenue, posting only $3.3 billion. The company did beat Wall Street expectations with reported adjusted earnings of $1.25 per share for the quarter, ahead of estimates of $1.13 per share. The company released its forecast for the fiscal year, claiming 2024 adjusted profits between $9.50 and $9.70 per share.
Royal Caribbean CFO Naftali Holtz joins Yahoo Finance to discuss the company's quarterly results, US and international travel demand, and overall performance moving forward.
Holtz comments on international demand through geopolitical events: "We see continued strong demand across the board. Obviously the American consumer has been exceptionally strong, we continue to see that in some of our Caribbean itineraries. But even when we look into other areas around the world when we sell and the guests that we are sourcing from, we [are] seeing really strong booking trends, again, volume and prices across all our key itineraries, Caribbean, Europe, Alaska, etc... It really just speaks to the demand from across the board."
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JULIE HYMAN: Royal Caribbean predicting smooth sailing ahead after reporting fourth quarter earnings today. The cruise line operator predicting earnings per share will grow at least 40% this year. Naftali Holtz, Royal Caribbean's CFO, is joining us now.
Naftali, thank you for being here. I want to talk about the year and the demand that you're seeing here, because the shares have been sort of up and then down today. And I have seen analysts express some concern that it's going to be tough as the year goes on to just match the demand that you have been seeing thus far. Can you talk me through the trajectory you're expecting for growth for this year?
NAFTALI HOLTZ: Hi, Julie. First, great to be with you. I think as you noted, we just finished reporting our earnings. And I think 2023 can only be described as an exceptional year. We saw acceleration of demand. And it really accelerated through the year. And we ended the year very, very strongly with yield growth more than 3 and 1/2 times what we initially expected, earnings double what we expected at the beginning of the year.
And the momentum continued into 2024. And we are now experiencing a record wave period. And the last-- the best five weeks booking weeks in the company's history were actually since the last earnings call. And that is really talking to the strength of our brands, the demand for our vacation and just the health of the consumer. So we're seeing it across the board. We're seeing it in interest in our vacations, in booking trends, in pricing, and just the behavior on the ships once the customers are coming online.
So we're seeing an exceptional demand. And we're very excited to continue to grow yields this year and revenue and earnings, 40% year-over-year.
JOSH LIPTON: So, Naftali, demand sounds strong. I am interested to hear about what you're seeing internationally, Naftali, kind of the trends there, especially given that of course, the geopolitical conflicts we're seeing.
NAFTALI HOLTZ: Yeah. We see continued strong demand actually across the board. Obviously, the American consumer has been exceptionally strong, and we continue to see that in some of our Caribbean itineraries. But even when we look into other areas around the world, where we sell and the guests that we're sourcing from, we're seeing really strong booking trends, again, volume and prices across all our key itineraries-- Caribbean, Europe, Alaska, et cetera. So it's really broad-based and really just speaks to demand across the board.
JULIE HYMAN: And you all have said, and you said today in the conference call, that the impact of what's going on in the Red Sea in particular is not that-- it's not a huge impact for Royal Caribbean. Is that just-- I mean, for lack of a better word, is that just luck that you don't happen to have a lot of cruises moving through that area?
NAFTALI HOLTZ: Well, like last week or last year, when, obviously, the conflict started in the Middle East, we actually repositioned several ships from the region. So we don't have any ships sailing there. So that already happened last year. So really what is remaining is a few ships, smaller ones, that need to cross the Suez Canal in the spring and the fall seasons. And we continue to watch that. And, of course, the safety of our customers is our top priority. And we will make we continue to monitor the situation and make adjustments as needed.
But, you know, our guidance and the way we run the business is not for a perfect environment. And so we plan for a lot of things throughout the year. And it's already included in our guidance for the year.
JOSH LIPTON: And, Naftali, when I think about your competition, I mean, of course, it's other cruise operators, it's also, Naftali, just, you know, traditional land-based vacation. What are the trends you're seeing there? Are you all taking share?
NAFTALI HOLTZ: Yeah. Our focus is actually not on what the other cruise lines are doing. Our opportunity and what we think, is for us growth opportunity for the years to come is really stealing share from the land-based vacations. So the way we design our ships, our experiences is really geared towards attracting the consumer and competing with land-based vacation.
So we believe that we have continued to do that. I mean, Icon of the Seas just came last week really, this is going to be the ultimate vacation experience anywhere on the planet. So we continue to see that strength. And we want to keep stealing share from land-based vacation. And we believe we have the right products in the market to make sure that the consumers are going into our ecosystem.
There is a pretty significant gap to land-based vacation in terms of pricing. And we think that that's another opportunity. So the value proposition is just remarkable. And with the experiences we have, we think we can continue to steal share from them.
JULIE HYMAN: Naftali, are you on the Icon right now, or are you on-- which ship are you on right now?
NAFTALI HOLTZ: Yeah. So I actually was on Icon last week with a family. It was an exceptional experience.
JULIE HYMAN: Well, I want to ask you--
NAFTALI HOLTZ: Right now, I'm on Celebrity Summit. She will-- she will go into a seven-night Caribbean. But, you know, Icon is just remarkable. And so we're very, very excited on to make sure that we deliver the best vacations here to our customers.
JULIE HYMAN: I want to dig-- I want to ask you about Icon a little bit more, because, obviously, there was a lot of excitement about that ship, it being the largest, right, that is ever sailed. What does that bring to the experience? You know, why is sort of bigger better in this case? And what do you expect from a revenue and earnings perspective is that ship going to do for you?
NAFTALI HOLTZ: Yeah. It's really what I said, it's the ultimate family vacation. And there's something for everybody to do. If you have a young family, maybe you're more interested in the surfside neighborhood, which is more for young families, or maybe just the adult-only section hideaway. So there's really an amazing experiences for everybody. It just takes it to the next level.
The amount of food and beverage venues, the pools, just the activities that we have, the aqua dome, which is and my family's favorite. It's just taking it to the next level. And that's really the way we've designed those experiences.
Every ship we bring-- and, obviously, Icon is just kind of taking it to the next level-- is expected to deliver tremendous financial results and accretive to our company as we continue to grow the business. So we're very excited to make sure that we deliver on the experiences and, obviously, delivering great financial results.
JOSH LIPTON: Naftali, it was great to have you on the show today. Thank you so much for your time and insight.
