01—Abstract
Summary
Summary of the 10-K filed February 23, 2010. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) in its 2010 10-K filing for the fiscal year ending December 31, 2009, navigates a challenging economic landscape.
The company reported a significant decrease in total revenues to $5.9 billiona from $6.5 billion in the prior year, largely due to reduced ticket prices and onboard spending, exacerbated by the global economic downturn and its impact on discretionary spending. Despite these headwinds, RCL demonstrated resilience through cost-containment initiatives and strategic fleet development, including the debut of its innovative Oasis-class ship, 'Oasis of the Seas'. Looking ahead, the company anticipates a recovery in net yields and projects modest growth in net cruise costs per available passenger cruise day for 2010.
RCL is actively managing its liquidity, having discontinued its quarterly dividend in late 2008 to preserve capital. The company also highlighted its ongoing commitment to international market expansion and product innovation to drive future revenue growth and maintain its competitive position in the global cruise industry.
02—Key points
Key Highlights
- Total revenues decreased by 9.8% to $5.9 billion in 2009, primarily due to lower ticket prices and reduced onboard spending, reflecting the impact of the global economic downturn.
- Net income significantly declined to $162.4 million ($0.75 per diluted share) in 2009 from $573.7 million ($2.68 per diluted share) in 2008.
- The company experienced a decrease in occupancy from 104.5% in 2008 to 102.5% in 2009, with particular pressure noted in the Spanish market.
- RCL took delivery of two new ships in 2009: 'Oasis of the Seas' (Oasis-class) and 'Celebrity Equinox' (Solstice-class), expanding its capacity and introducing innovative features.
- The company implemented cost-containment initiatives and discontinued its quarterly dividend in late 2008 to enhance liquidity.
- RCL expects Net Yields to increase by 3% to 6% and Net Cruise Costs per APCD to be flat to slightly up in 2010, indicating an anticipated recovery.
- Liquidity at the end of 2009 was $0.9 billion, consisting of cash and available credit facilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Royal Caribbean Cruises Ltd kept $0.03.
- Revenue$5.89B100.0%
- Cost of revenue−$4.07B69.1%
- Gross profit$1.82B30.9%
- Operating costs−$1.33B22.6%
- Operating income$488.5M8.3%
- Interest, other & tax−$336.0M5.7%
- Net income$152.5M2.6%
Where FY2009 revenue went
$5.89B- Cost of revenue: $4.07B, 69% of revenue
- SG&A: $762.0M, 13% of revenue
- Net income: $152.5M, 2.6% of revenue
- Other operating costs: $568.2M, 9.6% of revenue
- Interest, other & tax: $336.0M, 5.7% of revenue
Kept 2.6% as net incomeNet income $152.5M · 2.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 23, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $5.89B$6.53B | −9.8% |
| Cost of Revenue | $4.07B$4.40B | −7.6% |
| Gross Profit | $1.82B$2.13B | −14.6% |
| SG&A Expenses | $762.00M$776.52M | −1.9% |
| Operating Expenses | $5.40B$5.70B | −5.2% |
| Operating Income | $488.51M$831.98M | −41.3% |
| Interest Expense | $309.95M$327.31M | −5.3% |
| Net Income | $152.49M$573.72M | −73.4% |
| EPS (Basic) | $0.71$2.69 | −73.6% |
| EPS (Diluted) | $0.71$2.68 | −73.5% |
| Shares Outstanding (Basic) | 213.81M— | — |
| Shares Outstanding (Diluted) | 215.29M— | — |
05—Questions
Frequently Asked Questions
How did the economic environment impact Royal Caribbean's financial performance in 2009?
The global economic downturn significantly impacted Royal Caribbean's performance, leading to reduced consumer discretionary spending. This resulted in lower demand for cruises, decreased ticket prices, and reduced onboard spending, which collectively caused total revenues to fall to $5.9 billion in 2009 from $6.5 billion in 2008. Net income also saw a substantial decrease.
What new ships did Royal Caribbean introduce, and what is their strategic importance?
In 2009, Royal Caribbean introduced two new, highly innovative ships: the Oasis-class 'Oasis of the Seas' and the Solstice-class 'Celebrity Equinox'. These ships represent a significant investment in modernizing the fleet, offering advanced features, and catering to different market segments, which is crucial for attracting passengers and commanding premium pricing.
What steps is Royal Caribbean taking to manage its costs and liquidity?
The company is actively implementing cost-containment initiatives, including renegotiating vendor contracts and focusing on operational efficiencies. To preserve capital and enhance liquidity during the economic challenges, Royal Caribbean discontinued its quarterly dividend in the fourth quarter of 2008.
What is the company's outlook for 2010?
Royal Caribbean projects a recovery in 2010, with an anticipated increase in Net Yields of 3% to 6% compared to 2009. The company also expects Net Cruise Costs per Available Passenger Cruise Day (APCD) to remain relatively flat or increase slightly. This outlook is supported by the growing order book, stabilizing credit markets, and the introduction of new, efficient ships.
06—Continue