01—Abstract
Summary
Summary of the 10-Q filed April 28, 2011. Cited figures are marked; the original filing is the authoritative source.
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 billiona.
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 millionb, 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%c-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.
02—Key points
Key Highlights
- Total 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.
- Net income for Q1 2011 was $91.6 million ($0.42/share), a modest increase from $87.4 million ($0.40/share) in Q1 2010.
- Net Debt-to-Capital ratio improved to 50.1% as of March 31, 2011, down from 52.4% as of December 31, 2010.
- The company expects full-year 2011 Net Yields to increase by 5%-7% and Net Cruise Costs per APCD to increase by 5%-6%.
- Capacity is projected to increase by 7.5% for the full year 2011 due to new ship additions.
- Investing activities were boosted by proceeds from ship sales, including Celebrity Mercury, offsetting capital expenditures.
- Financing activities involved significant debt repayments and new borrowings, leading to a decrease in total debt.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2011, Royal Caribbean Cruises Ltd kept $0.05.
- Revenue$1.67B100.0%
- Cost of revenue−$1.10B65.9%
- Gross profit$570.9M34.1%
- Operating costs−$421.4M25.2%
- Operating income$149.5M8.9%
- Interest, other & tax−$71.1M4.3%
- Net income$78.4M4.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2011filed April 28, 2011Financial Statements
Q1 FY2011 against Q1 FY2010
| Line item | Q1 FY2011Q1 FY2010 | Change |
|---|---|---|
| Revenue | $1.67B$1.49B | +12.5% |
| Cost of Revenue | $1.10B$1.03B | +7.4% |
| Gross Profit | $570.92M$460.38M | +24.0% |
| SG&A Expenses | $248.14M$211.05M | +17.6% |
| Operating Income | $149.53M$91.75M | +63.0% |
| Interest Expense | $100.63M$91.53M | +9.9% |
| Net Income | $78.41M$79.84M | −1.8% |
| EPS (Basic) | $0.36$0.37 | −2.7% |
| EPS (Diluted) | $0.36$0.37 | −2.7% |
| Shares Outstanding (Basic) | 216.51M214.31M | +1.0% |
| Shares Outstanding (Diluted) | 219.63M216.97M | +1.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of Royal Caribbean's revenue growth in the first quarter of 2011?
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.
How did Royal Caribbean's profitability change compared to the previous year?
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.
What is the company's outlook for the remainder of 2011?
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.
How is Royal Caribbean managing its debt and capital structure?
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.
06—Continue