01—Abstract
Summary
Summary of the 10-K filed February 23, 2017. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) reported a strong performance for the fiscal year ended December 30, 2016, with net income of $1.3 billiona, a significant increase from the previous year.
The company's Adjusted Net Income also saw substantial growth, reaching $1.3 billionb, or $6.08 per diluted share, reflecting its "Double-Double" program's progress towards doubling 2014 Adjusted EPS and achieving double-digit Return on Invested Capital by the end of 2017. Total revenues grew by 2.4% to $8.5 billion, driven by increases in both passenger ticket revenues and onboard and other revenues. The company continues to invest in fleet expansion and modernization, with new ships like Harmony of the Seas and Ovation of the Seas contributing to capacity growth and improved yields.
RCL also demonstrated effective cost management, with total cruise operating expenses decreasing year-over-year, primarily due to lower fuel costs. Furthermore, the company returned value to shareholders through a $500 millionc share repurchase program and an increased common stock dividend. Looking ahead, RCL anticipates continued growth in Net Yields and aims to maintain cost controls through its "Double-Double" program.
Strategic fleet deployment, including a focus on the Caribbean and Asia Pacific markets, and ongoing revenue enhancement initiatives are expected to support future performance. The company's strong operational execution and strategic investments position it well for continued success in the cruise vacation industry.
02—Key points
Key Highlights
- Reported Net Income of $1.3 billion and Adjusted Net Income of $1.3 billion ($6.08 per diluted share) for the fiscal year ended December 30, 2016, marking significant year-over-year growth.
- Achieved a 2.4% increase in total revenues, reaching $8.5 billion, driven by higher passenger ticket and onboard revenues.
- Continued fleet expansion with the delivery of two new ships in 2016 (Harmony of the Seas and Ovation of the Seas), contributing to capacity growth and improved yields.
- Demonstrated effective cost management with a decrease in total cruise operating expenses, largely attributed to reduced fuel costs.
- Returned capital to shareholders through a completed $500 million share repurchase program and an increased common stock dividend.
- Anticipates continued growth in Net Yields and aims for financial targets under its "Double-Double" program, indicating a focus on profitability and shareholder value.
- Strategic fleet deployment and revenue-enhancing initiatives are in place to support future growth, with a particular focus on the Caribbean and Asia Pacific markets.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Royal Caribbean Cruises Ltd kept $0.15.
- Revenue$8.50B100.0%
- Cost of revenue−$5.02B59.0%
- Gross profit$3.48B41.0%
- Operating costs−$2.00B23.6%
- Operating income$1.48B17.4%
- Interest, other & tax−$193.8M2.3%
- Net income$1.28B15.1%
Where FY2016 revenue went
$8.50B- Cost of revenue: $5.02B, 59% of revenue
- Net income: $1.28B, 15% of revenue
- SG&A: $1.11B, 13% of revenue
- Other operating costs: $894.9M, 11% of revenue
- Interest, other & tax: $193.8M, 2.3% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 23, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $8.50B$8.30B | +2.4% |
| Cost of Revenue | $5.02B$5.10B | −1.6% |
| Gross Profit | $3.48B$3.20B | +8.8% |
| SG&A Expenses | $1.11B$1.09B | +2.0% |
| Operating Expenses | $7.02B$7.42B | −5.5% |
| Operating Income | $1.48B$874.90M | +68.8% |
| Interest Expense | $307.37M$277.73M | +10.7% |
| Net Income | $1.28B$665.78M | +92.8% |
| EPS (Basic) | $5.96$3.03 | +96.7% |
| EPS (Diluted) | $5.93$3.02 | +96.4% |
| Shares Outstanding (Basic) | 215.39M219.54M | −1.9% |
| Shares Outstanding (Diluted) | 216.32M220.69M | −2.0% |
05—Questions
Frequently Asked Questions
What was Royal Caribbean's financial performance in 2016?
In fiscal year 2016, Royal Caribbean Cruises Ltd. reported a net income of $1.3 billion and adjusted net income of $1.3 billion, or $6.08 per diluted share. Total revenues increased by 2.4% to $8.5 billion. This performance reflects strong operational execution and progress towards the company's "Double-Double" program goals.
How is the company investing in its fleet and future growth?
RCL is actively investing in its fleet through new ship deliveries, such as Harmony of the Seas and Ovation of the Seas in 2016, which contribute to capacity growth and improved yields. The company also has several new ships on order for Royal Caribbean International and Celebrity Cruises, indicating a commitment to modernization and expansion.
What initiatives are in place to manage costs and improve profitability?
The company focused on cost efficiency in 2016, leading to a decrease in total cruise operating expenses, primarily driven by lower fuel costs. RCL continues to implement cost containment initiatives and aims for flat Net Cruise Costs excluding fuel on a constant currency basis in 2017, demonstrating a strong focus on managing operating expenditures.
How is Royal Caribbean returning value to shareholders?
Royal Caribbean demonstrated its commitment to shareholder returns by completing a $500 million share repurchase program and announcing a 28% increase to its common stock dividend in September 2016. The company aims to further enhance shareholder value through its "Double-Double" program targets for Adjusted EPS and Return on Invested Capital.
06—Continue