RE: Peel Hunt raises target price27 Jul 2023 13:01
Strong ticket pricing from both North America and Europe itineraries, combined with strength in onboard revenue, led to better-than-expected revenues in the second quarter and the significant increase in the company's full year outlook for revenue and earnings.
Second Quarter 2023:
Gross Margin Yields increased 13.1% As-Reported, and Net Yields increased 12.9% in Constant-Currency (12.6% As-Reported), both compared to the second quarter of 2019.
Gross Cruise Costs per Available Passenger Cruise Day ("APCD") increased 10.9% As-Reported, and Net Cruise Costs ("NCC"), excluding Fuel, per APCD increased 9.0% in Constant-Currency (8.6% As-Reported), both compared to the second quarter of 2019. Favorable timing of operating expenses was offset by the increase in stock compensation expense due to the rise in share price and expected financial performance.
Total revenues were a record $3.5 billion, Net Income was $458.8 million or $1.70 per share, Adjusted Net Income was $491.7 million or $1.82 per share, Adjusted EBITDA was a record $1.2 billion and Operating Cash Flow was $1.4 billion.
Full Year 2023 Outlook:
Net Yields are expected to increase 11.5% to 12.0% in Constant-Currency and As-Reported, compared to 2019.
NCC, excluding Fuel, per APCD is expected to be up approximately 7.0% in Constant-Currency (6.7% As-Reported), compared to 2019. The increase in costs, relative to previous guidance, is driven by an increase in stock compensation expense due to the rise in share price and expected financial performance.
Adjusted Earnings per Share for the full year are expected to be in the range of $6.00 to $6.20 per share.
Third Quarter 2023 Outlook:
Net Yields are expected to increase 13.5% to 14.0% in Constant-Currency (14.0% to 14.5% As-Reported), compared to the third quarter of 2019.
NCC, excluding Fuel, per APCD is expected to increase approximately 11.2% in Constant-Currency and As-Reported, compared to third quarter 2019. Approximately half of the cost increase compared to 2019 is related to structural costs, timing shift of operating expenses from the second quarter, and increase in stock compensation expense.
Adjusted Earnings per Share for the third quarter are expected to be in the range of $3.38 to $3.48 per share.
Second Quarter 2023
The company reported Net Income for the second quarter of $458.8 million or $1.70 per share compared to Net Loss of $(0.5) billion or $(2.05) per share for the same period in the prior year. The company also reported Adjusted Net Income of $491.7 million or $1.82 per share for the second quarter compared to Adjusted Net Loss of $(0.5) billion or $(2.08) per share for the same period in the prior year.
Second quarter revenue significantly exceeded the company's guidance due to higher pricing and higher shipboard revenue across the company's key itineraries, including the Caribbean and Europe. Load factor for the second quarter was 105%.
Gross Cruise Costs per APCD increased 10.9% As
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