Royal Caribbean would have not hit the brakes on expansion during the Great Recession, knowing what it knows now, a company executive says.
Like most businesses, the New York-listed cruise major pulled back on future growth plans during a frightening economic downturn that saw its stock fall 86% to $6 by February 2009.
"There's definitely regret that we have in terms of our pullback on our growth," chief financial officer Jason Liberty said during today's second-quarter earnings call.
"We would all be talking about higher earnings numbers today if we hadn't slowed down our growth on our investment efforts in expanding our global footprint, investing in different projects that would have put us in even a stronger position than we are today."
A 'do-over', perhaps?
Liberty was responding to a question from William Blair analyst Sharon Zackfia, who asked if Royal Caribbean would have done a "do-over" in its approach to the recession.
In 2008, chief executive Richard Fain battened down the company's hatches, looking to ride out the worst global global economic storm since the Great Depression.
"To preserve liquidity, we have discontinued our quarterly dividend commencing in the fourth quarter of 2008, curtailed our non-shipbuild capital expenditures, and currently do not have plans to place further newbuild orders," Fain wrote in that year's annual report.
But today, the Miami-based company — and the entire cruise industry — is sailing full steam ahead as consumers flock to massive ships offering great fun at affordable prices.
"We now operate a very global and diverse business that sources guests from different parts of the world but also different segments," he said.
"We also have itineraries that go to a thousand different places, so that what's available to our guests is a much more diverse.
"I would say it's fortunate that we're still quite a value compared to land-based vacations."
'Much stronger balance sheet'
And Royal Caribbean's numbers don't lie.
Since the downturn, Royal Caribbean's share price has skyrocketed to $112.42 and its fleet has grown to 61 ships under six brands from 38 ships under five brands amid a much better economy.
It also has 15 ships on order through 2025.
"We also have a much stronger balance sheet, much stronger liquidity position, and I think we would evaluate our sets of plans in case there was a change in the winds," he said.
Royal Caribbean today reported an adjusted profit of $532.7m for the second quarter, compared to $482.2m during the same three-month period last year.
Those results allowed for earnings per share of $2.54, beating Wall Street's estimate of $2.45 and trumping 2018's figure of $2.27.
Fain today said he was "elated" with those results.
