01—Abstract
Summary
Summary of the 10-Q filed April 29, 2010. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) reported a strong first quarter for 2010, demonstrating a significant turnaround from the previous year.
Total revenues increased by 12.1% to $1.5 billiona, driven by a 9.1% increase in capacity and improved occupancy rates. Notably, the company returned to profitability, posting a net income of $87.4 million, or $0.40 per diluted share, a stark contrast to a net loss of $36.2 million in the first quarter of 2009. This performance was bolstered by a one-time gain of $85.6 million from a legal settlement with Rolls Royce.
Operationally, Net Yields saw a healthy increase of 2.6%b, indicating better pricing power and onboard spending. The company also improved its cost management, with Net Cruise Costs per Available Passenger Cruise Day (APCD) decreasing by 2.2%. RCL is strategically positioning itself for future growth with the upcoming delivery of new ships, including the 'Allure of the Seas' and 'Celebrity Eclipse,' and is managing its debt effectively, with Net Debt-to-Capital ratio showing a slight decrease.
02—Key points
Key Highlights
- Total revenues increased 12.1% to $1.5 billion in Q1 2010 from $1.3 billion in Q1 2009.
- The company returned to profitability with a net income of $87.4 million ($0.40/share diluted) in Q1 2010, compared to a net loss of $36.2 million (-$0.17/share diluted) in Q1 2009.
- A significant one-time gain of $85.6 million from a settlement with Rolls Royce contributed to the improved net income.
- Net Yields increased by 2.6% to $153.12, reflecting improved pricing and onboard spending.
- Net Cruise Costs per APCD decreased by 2.2%, indicating effective cost management.
- Capacity increased by 9.1%, driven by new ship deliveries such as 'Oasis of the Seas' and 'Celebrity Equinox'.
- Customer deposits increased significantly, showing improved booking trends and advance payments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2010, Royal Caribbean Cruises Ltd kept $0.05.
- Revenue$1.49B100.0%
- Cost of revenue−$1.03B69.0%
- Gross profit$460.4M31.0%
- Operating costs−$368.6M24.8%
- Operating income$91.8M6.2%
- Interest, other & tax−$11.9M0.8%
- Net income$79.8M5.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2010filed April 29, 2010Financial Statements
Q1 FY2010 against Q1 FY2009
| Line item | Q1 FY2010Q1 FY2009 | Change |
|---|---|---|
| Revenue | $1.49B$1.33B | +12.1% |
| Cost of Revenue | $1.03B$952.34M | +7.7% |
| Gross Profit | $460.38M$373.27M | +23.3% |
| SG&A Expenses | $211.05M$189.16M | +11.6% |
| Operating Income | $91.75M$44.25M | +107.3% |
| Interest Expense | $91.53M$79.46M | +15.2% |
| Net Income | $79.84M-$36.24M | +320.3% |
| EPS (Basic) | $0.37$-0.17 | +317.6% |
| EPS (Diluted) | $0.37$-0.17 | +317.6% |
| Shares Outstanding (Basic) | 214.31M213.69M | +0.3% |
| Shares Outstanding (Diluted) | 216.97M213.69M | +1.5% |
05—Questions
Frequently Asked Questions
What was the primary driver for the increase in revenue?
The primary driver for the increase in revenue was a 9.1% increase in capacity due to the delivery of new ships like 'Oasis of the Seas' and 'Celebrity Equinox'. This was complemented by improved occupancy rates and increased onboard spending.
How did the company achieve profitability in Q1 2010 after a loss in Q1 2009?
The company returned to profitability due to a combination of factors, including a significant increase in total revenues driven by higher capacity and improved yields. Additionally, a one-time gain of $85.6 million from a settlement with Rolls Royce substantially contributed to the net income.
What is the company's outlook for the second quarter of 2010?
For the second quarter of 2010, Royal Caribbean expects Net Yields to increase by approximately 6% year-over-year and Net Cruise Costs per APCD to increase by approximately 1%. They anticipate a 14.6% increase in capacity and project earnings per share to be in the range of $0.16 to $0.21.
How is the company managing its debt and capital resources?
The company is managing its debt by utilizing available credit facilities and securing financing for new ship deliveries. The Net Debt-to-Capital ratio decreased slightly to 51.2% as of March 31, 2010. They anticipate that cash flows from operations, credit facilities, and existing financing arrangements will be adequate to meet capital expenditures and debt repayments.
06—Continue