01—Abstract
Summary
Summary of the 10-Q filed July 29, 2009. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) reported a net loss of $35.1 milliona ($0.16 per diluted share) for the second quarter ended June 30, 2009, a significant downturn compared to a net income of $84.7 million ($0.40 per diluted share) in the same period of 2008.
This decline was driven by a 14.8% decrease in total revenues to $1.3 billionb, largely due to reduced ticket prices, lower onboard spending, and the adverse impact of foreign currency fluctuations. Despite these challenges, the company managed to reduce total cruise operating expenses by 11.5% and marketing, selling, and administrative expenses by 3.0%, partly due to cost-saving initiatives and lower fuel prices. Capital expenditures remained substantial, with a focus on new ship deliveries, including the highly anticipated 'Oasis of the Seas' scheduled for Q4 2009.
02—Key points
Key Highlights
- Reported a net loss of $35.1 million for Q2 2009, a sharp contrast to a net profit of $84.7 million in Q2 2008.
- Total revenues declined by 14.8% to $1.3 billion, primarily due to price discounting and reduced onboard spending.
- Net Yields decreased significantly by 17.9%, reflecting the challenging economic environment.
- Total cruise operating expenses were reduced by 11.5% year-over-year due to cost controls and lower fuel prices.
- The company is preparing for the delivery of 'Oasis of the Seas' in Q4 2009, a key growth initiative.
- Despite the loss, the company remains in compliance with all debt covenants.
- Shareholders' equity increased to $7.05 billion from $6.80 billion at the end of 2008, partly due to comprehensive income.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2009, Royal Caribbean Cruises Ltd lost $0.03.
- Revenue$1.35B100.0%
- Cost of revenue−$965.4M71.6%
- Gross profit$383.6M28.4%
- Operating costs−$328.5M24.4%
- Operating income$55.1M4.1%
- Interest, other & tax−$91.3M6.8%
- Net income−$36.3M2.7%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2009filed July 29, 2009Financial Statements
| Revenue | $1.35B |
| Cost of Revenue | $965.43M |
| Gross Profit | $383.58M |
| SG&A Expenses | $190.59M |
| Operating Income | $55.06M |
| Interest Expense | $69.52M |
| Net Income | -$36.28M |
| EPS (Basic) | $-0.17 |
| EPS (Diluted) | $-0.17 |
| Shares Outstanding (Basic) | 213.78M |
| Shares Outstanding (Diluted) | 213.78M |
05—Questions
Frequently Asked Questions
What is the primary reason for the company's loss in the second quarter of 2009?
The primary reason for the net loss of $35.1 million in the second quarter of 2009 was a significant decrease in total revenues, down 14.8% to $1.3 billion. This revenue decline was largely attributed to lower ticket prices, reduced onboard spending, and adverse foreign currency movements, indicating a challenging demand environment.
How has the company managed its costs in the face of declining revenues?
Royal Caribbean implemented cost management strategies, resulting in an 11.5% decrease in total cruise operating expenses and a 3.0% reduction in marketing, selling, and administrative expenses compared to the prior year's second quarter. Factors contributing to this included lower fuel costs, reduced commissions, and general cost-saving initiatives.
What are the company's major capital commitments and how are they being financed?
The company has significant capital commitments for new ship construction, with an aggregate cost of approximately $6.5 billion for six ships on order. Financing for these vessels is being secured through a combination of committed unsecured bank financing arrangements, export credit agency guarantees, and potentially drawing on existing credit facilities and future cash flows. The delivery of 'Oasis of the Seas' in Q4 2009 is a major upcoming capital event.
What is the company's outlook for the remainder of 2009?
For the full year 2009, the company forecasts Net Yields to decrease approximately 14% and Net Cruise Costs per APCD to decrease approximately 10% compared to 2008. They expect full-year earnings per share to be in the range of $0.70 to $0.80, assuming current fuel prices.
06—Continue