10-KPeriod: FY2012

ROYAL CARIBBEAN CRUISES LTD Annual Report, Year Ended Dec 31, 2012

Filed February 25, 2013For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) reported its fiscal year 2012 results, showcasing resilience amidst a challenging global economic environment, particularly in Europe. Despite macroeconomic headwinds and the lingering effects of the Costa Concordia incident, the company demonstrated its ability to manage costs and enhance revenues. Key operational highlights include a 1.5% increase in Net Yields and a 1.4% increase in capacity, reflecting successful strategic initiatives and fleet investments. However, significant impairment charges related to the Pullmantur brand, amounting to $385.4 million, impacted the company's net income, leading to a reported net income of $18.3 million for 2012 compared to $607.4 million in 2011. Excluding these charges, adjusted net income was $432.2 million. The company continues to invest in fleet modernization and expansion, with several new ships on order for delivery through 2016. RCL also maintains a strong liquidity position, with $2.2 billion in cash and available credit facilities as of year-end 2012, and is actively pursuing a refinancing strategy to manage upcoming debt maturities. The company remains focused on cost efficiency, enhancing guest experiences through technological advancements, and expanding its global market penetration, particularly in Asia and Australia.

Financial Highlights

51 data points
Beta

Revenue

$7.69B

32.9% Gross Margin

Net Income

$18.29M

0.2% Net Margin

EPS (Diluted)

$0.08

Total Assets

$19.83B

Cash & Equivalents

$194.85M

Free Cash Flow

$90.23M

Financial Statements
Beta
Revenue$7.69B
Cost of Revenue$5.16B
Gross Profit$2.53B
SG&A Expenses$1.01B
Operating Expenses$7.28B
Operating Income$403.11M
Interest Expense$355.79M
Net Income$18.29M
EPS (Basic)$0.08
EPS (Diluted)$0.08
Shares Outstanding (Basic)217.93M
Shares Outstanding (Diluted)219.46M

Key Highlights

  • 1Reported Net Income of $18.3 million for 2012, significantly impacted by a $385.4 million impairment charge on the Pullmantur brand's goodwill and assets. Excluding this charge, adjusted net income was $432.2 million.
  • 2Total revenues increased by 2.0% to $7.7 billion in 2012, driven by a 1.5% increase in Net Yields and a 1.4% increase in capacity (APCD).
  • 3Strong liquidity position maintained with $2.2 billion in cash and available credit facilities as of December 31, 2012.
  • 4Continued investment in fleet expansion and modernization, with several new ships on order for Royal Caribbean International and TUI Cruises through 2016.
  • 5Focus on cost control and revenue enhancement initiatives, including fleet revitalization programs and new onboard revenue strategies.
  • 6Net Debt-to-Capital ratio stood at 50.0% as of December 31, 2012, indicating a manageable debt leverage.
  • 7Active refinancing strategy in place to manage upcoming debt maturities, with an outlook for continued access to capital markets.

Frequently Asked Questions

The primary reason for the substantial decrease in net income for 2012 was a significant impairment charge of $385.4 million related to the Pullmantur brand. This charge was taken due to deteriorating economic conditions in the Spanish market, which negatively impacted Pullmantur's goodwill, trademarks, trade names, and certain long-lived assets. Additionally, adjustments to deferred tax assets and liabilities for Pullmantur contributed to the lower net income.

RCL maintained a strong liquidity position with $2.2 billion in cash and available credit facilities as of year-end 2012. The company is actively engaged in a refinancing strategy to manage its upcoming debt maturities and has access to significant unsecured credit facilities. RCL also continues to focus on cost efficiency and operational cash flow generation to support its financial health.

RCL's strategies focus on fleet expansion and modernization, with several new ships on order. They are also prioritizing cost control initiatives, enhancing guest experiences through technological investments and revitalized onboard offerings, and expanding global market penetration, particularly in high-growth regions like Asia and Australia. Additionally, the company aims to optimize pricing and onboard revenue through data insights and new initiatives.

For the full year 2013, RCL projected Net Yields to increase between 3% to 5% as reported, and 2% to 4% on a constant currency basis. This positive outlook suggests anticipated strength in passenger demand and pricing power, despite ongoing economic uncertainties.