10-QPeriod: Q1 FY2010

ROYAL CARIBBEAN CRUISES LTD Quarterly Report for Q1 Ended Mar 31, 2010

Filed April 29, 2010For Securities:RCL

Summary

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 billion, 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%, 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.

Financial Highlights

44 data points
Beta

Revenue

$1.49B

31.0% Gross Margin

Net Income

$79.84M

5.4% Net Margin

EPS (Diluted)

$0.37

Total Assets

$18.04B

Cash & Equivalents

$278.10M

Free Cash Flow

$246.53M

Financial Statements
Beta
Revenue$1.49B
Cost of Revenue$1.03B
Gross Profit$460.38M
SG&A Expenses$211.05M
Operating Income$91.75M
Interest Expense$91.53M
Net Income$79.84M
EPS (Basic)$0.37
EPS (Diluted)$0.37
Shares Outstanding (Basic)214.31M
Shares Outstanding (Diluted)216.97M

Key Highlights

  • 1Total revenues increased 12.1% to $1.5 billion in Q1 2010 from $1.3 billion in Q1 2009.
  • 2The 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.
  • 3A significant one-time gain of $85.6 million from a settlement with Rolls Royce contributed to the improved net income.
  • 4Net Yields increased by 2.6% to $153.12, reflecting improved pricing and onboard spending.
  • 5Net Cruise Costs per APCD decreased by 2.2%, indicating effective cost management.
  • 6Capacity increased by 9.1%, driven by new ship deliveries such as 'Oasis of the Seas' and 'Celebrity Equinox'.
  • 7Customer deposits increased significantly, showing improved booking trends and advance payments.

Frequently Asked Questions

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.

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.

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.

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.