10-QPeriod: Q3 FY2011

ROYAL CARIBBEAN CRUISES LTD Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 31, 2011For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) reported strong financial performance for the nine months ended September 30, 2011, with total revenues increasing by 11.9% to $5.8 billion compared to the same period in 2010. This growth was driven by a 7.6% increase in capacity and a 4.3% increase in Net Yields, reflecting a combination of higher ticket prices and favorable foreign currency exchange rates. Net income for the period rose to $570.9 million, or $2.60 per diluted share, up from $483.8 million, or $2.23 per diluted share, in the prior year. The company also demonstrated robust liquidity, with $1.3 billion in cash and cash equivalents and available credit facilities. Significant events during the quarter included the delivery of the new ship 'Celebrity Silhouette,' the amendment and extension of a major revolving credit facility, and the reinstatement of quarterly dividends. Despite geopolitical events impacting demand in certain regions, RCL maintained a positive outlook, expecting Net Yields to increase for the full year 2011.

Financial Highlights

48 data points
Beta

Revenue

$2.32B

39.5% Gross Margin

Net Income

$398.96M

17.2% Net Margin

EPS (Diluted)

$1.82

Total Assets

$20.17B

Cash & Equivalents

$451.46M

Free Cash Flow

-$272.56M

Financial Statements
Beta
Revenue$2.32B
Cost of Revenue$1.41B
Gross Profit$916.69M
SG&A Expenses$231.76M
Operating Income$507.74M
Interest Expense$98.20M
Net Income$398.96M
EPS (Basic)$1.84
EPS (Diluted)$1.82
Shares Outstanding (Basic)217.10M
Shares Outstanding (Diluted)218.93M

Key Highlights

  • 1Total revenues increased by 11.9% year-over-year for the nine months ended September 30, 2011, reaching $5.8 billion.
  • 2Net income grew to $570.9 million for the nine-month period, translating to diluted EPS of $2.60, up from $2.23 in the prior year.
  • 3Capacity, measured by Available Passenger Cruise Days (APCD), increased by 7.6% for the nine-month period.
  • 4Net Yields saw a 4.3% increase for the nine-month period, indicating improved pricing power and revenue generation per passenger.
  • 5The company ended the period with strong liquidity, holding $451.5 million in cash and cash equivalents and $840.0 million available under revolving credit facilities.
  • 6Royal Caribbean reinstated its quarterly dividend in July 2011, signaling confidence in its financial health and future prospects.
  • 7The company is actively managing its fleet, taking delivery of the 'Celebrity Silhouette' and amending its credit facilities to enhance financial flexibility.

Frequently Asked Questions

Revenue growth was driven by a combination of increased capacity (7.6% higher APCD), improved Net Yields (4.3% increase), and favorable foreign currency exchange rates. While geopolitical events in Northern Africa and Japan presented challenges, leading to some pricing adjustments, overall demand and pricing power remained strong.

Cruise operating expenses increased primarily due to higher capacity, increased fuel expenses, and commissions, along with unfavorable foreign currency exchange rate movements. However, the company also focused on cost management, with Net Cruise Costs Excluding Fuel per APCD remaining relatively stable on a constant currency basis. Marketing, selling, and administrative expenses increased due to international expansion efforts.

RCL maintained a strong liquidity position with $1.3 billion in cash and available credit facilities as of September 30, 2011. The company expects to fund its operations, capital expenditures, and debt repayments through a combination of cash flows from operations, existing credit facilities, and potential future financing arrangements. The company also has significant committed financing for its new ship orders.

Key risks include the impact of the global economic environment on demand, disruptions in financial markets, changes in operating and financing costs (including fuel, interest rates, and foreign exchange), competition, regulatory changes, pending litigation, and unforeseen events such as geopolitical unrest, natural disasters, and health concerns. The company also highlighted potential impairment risks for its Pullmantur goodwill due to the Spanish economic downturn.