Royal Caribbean Q1 Earnings Beat; Guidance Cut

Royal Caribbean Group (NYSE: RCL) reported first-quarter 2026 earnings on April 30 that exceeded expectations, with EPS of $3.48 and adjusted EPS of $3.60. The company narrowed its full-year adjusted EPS guidance after citing higher fuel costs and temporary itinerary disruptions that offset lower non-fuel expenses.

Quarter Results, Demand, and Bookings

Royal Caribbean posted total revenue of $4.5 billion, up 11% year over year. Capacity increased 8%, guest counts rose 12% to 2.5 million, and load factor reached 109%. Net yields improved 3.6% as reported (2.0% in constant currency), while gross margin yields rose 6.9%. Net income was $941 million, with adjusted net income of $1.0 billion and adjusted EBITDA of $1.7 billion.

Following a record WAVE bookings season, demand moderated in March and early April for Mediterranean and West Coast Mexico itineraries due to geopolitical tensions but has since surpassed the prior-year pace.

Guidance Revision and Fuel Cost Impact

Royal Caribbean lowered its full-year 2026 adjusted EPS guidance to a range of $17.10 to $17.50 from $17.70 to $18.10, projecting about 10% revenue growth. The company expects net yields to rise 2.3% to 3.3% as reported (1.5% to 2.5% constant currency) and net cruise costs excluding fuel per available passenger cruise day (APCD) to increase about 0.5% as reported (flat in constant currency).

Management said fuel costs for 2026, calculated at current at-the-pump prices net of hedging, are expected to total approximately $1.3 billion, representing a $0.62-per-share headwind to prior guidance. About 59% of remaining 2026 fuel consumption is hedged at below-market rates. For the second quarter, fuel expense is forecast at $346 million on consumption of roughly 423,000 metric tons, with about 60% hedged through swaps.

The company returned approximately $1.1 billion to shareholders in the quarter, including $836 million in share repurchases and $270 million in dividends. Lower non-fuel costs, strong joint-venture performance, and buybacks helped offset part of the fuel cost impact.

Management described the guidance revision as the net effect of higher fuel costs and temporary itinerary disruptions offset by stronger revenue, lower non-fuel costs, joint-venture results, and share repurchases. "These results were better than the company's guidance due to more favorable revenue, lower costs, and better performance from joint ventures," the company said in its press release.