10-QPeriod: Q1 FY2011

ROYAL CARIBBEAN CRUISES LTD Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 28, 2011For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) reported first-quarter 2011 results showing a significant increase in total revenues, up 12.5% year-over-year to $1.7 billion. This growth was driven by a 10.1% increase in capacity and a 4.0% rise in Net Yields, attributed to higher ticket prices and increased occupancy. Despite higher operating expenses associated with expanded capacity, the company's net income rose slightly to $91.6 million, or $0.42 per diluted share, from $87.4 million, or $0.40 per diluted share, in the prior year's first quarter. The company also demonstrated improved financial health with a reduction in its Net Debt-to-Capital ratio to 50.1% from 52.4% at the end of 2010. Looking ahead, RCL provided an optimistic outlook for the full year 2011, projecting Net Yields to increase by 5%-7% and announcing plans for a 7.5% capacity increase driven by new ship deployments. The company also highlighted strategic fleet development, including the agreement for a new generation of Royal Caribbean International ships, and reaffirmed its focus on cost management and liquidity. The sale of ships, such as the Celebrity Mercury, contributed positively to investing activities, while financing activities showed increased debt repayments alongside new borrowings.

Financial Highlights

46 data points
Beta

Revenue

$1.67B

34.1% Gross Margin

Net Income

$78.41M

4.7% Net Margin

EPS (Diluted)

$0.36

Total Assets

$19.78B

Cash & Equivalents

$470.26M

Free Cash Flow

$219.12M

Financial Statements
Beta
Revenue$1.67B
Cost of Revenue$1.10B
Gross Profit$570.92M
SG&A Expenses$248.14M
Operating Income$149.53M
Interest Expense$100.63M
Net Income$78.41M
EPS (Basic)$0.36
EPS (Diluted)$0.36
Shares Outstanding (Basic)216.51M
Shares Outstanding (Diluted)219.63M

Key Highlights

  • 1Total revenues increased by 12.5% to $1.7 billion in Q1 2011, driven by a 10.1% increase in capacity and a 4.0% rise in Net Yields.
  • 2Net income for Q1 2011 was $91.6 million ($0.42/share), a modest increase from $87.4 million ($0.40/share) in Q1 2010.
  • 3Net Debt-to-Capital ratio improved to 50.1% as of March 31, 2011, down from 52.4% as of December 31, 2010.
  • 4The company expects full-year 2011 Net Yields to increase by 5%-7% and Net Cruise Costs per APCD to increase by 5%-6%.
  • 5Capacity is projected to increase by 7.5% for the full year 2011 due to new ship additions.
  • 6Investing activities were boosted by proceeds from ship sales, including Celebrity Mercury, offsetting capital expenditures.
  • 7Financing activities involved significant debt repayments and new borrowings, leading to a decrease in total debt.

Frequently Asked Questions

Revenue growth was primarily driven by a 10.1% increase in capacity (measured by Available Passenger Cruise Days) and a 4.0% increase in Net Yields. The increase in Net Yields was due to higher ticket prices, improved occupancy rates, and favorable foreign currency exchange rate movements.

Net income saw a slight increase to $91.6 million in Q1 2011, up from $87.4 million in Q1 2010. This resulted in diluted earnings per share of $0.42 for Q1 2011, compared to $0.40 for Q1 2010. The growth in revenue helped offset increased operating expenses.

Royal Caribbean has a positive outlook for the full year 2011, projecting Net Yields to increase between 5% and 7% and Net Cruise Costs per APCD to increase between 5% and 6%. The company also anticipates a 7.5% increase in capacity due to new ship deployments and expects full-year earnings per share to be in the range of $3.10 to $3.30.

The company is actively managing its capital structure. The Net Debt-to-Capital ratio improved to 50.1% at the end of Q1 2011 from 52.4% at the end of 2010. During the quarter, financing activities included significant debt repayments and new borrowings, and the company is focused on maintaining adequate liquidity and managing its revolving credit facilities.