01—Abstract
Summary
Summary of the 10-Q filed October 31, 2011. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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 millionb, 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.
02—Key points
Key Highlights
- Total revenues increased by 11.9% year-over-year for the nine months ended September 30, 2011, reaching $5.8 billion.
- Net 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.
- Capacity, measured by Available Passenger Cruise Days (APCD), increased by 7.6% for the nine-month period.
- Net Yields saw a 4.3% increase for the nine-month period, indicating improved pricing power and revenue generation per passenger.
- The 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.
- Royal Caribbean reinstated its quarterly dividend in July 2011, signaling confidence in its financial health and future prospects.
- The company is actively managing its fleet, taking delivery of the 'Celebrity Silhouette' and amending its credit facilities to enhance financial flexibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2011, Royal Caribbean Cruises Ltd kept $0.17.
- Revenue$2.32B100.0%
- Cost of revenue−$1.41B60.5%
- Gross profit$916.7M39.5%
- Operating costs−$409.0M17.6%
- Operating income$507.7M21.9%
- Interest, other & tax−$108.8M4.7%
- Net income$399.0M17.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed October 31, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Revenue | $2.32B$2.06B | +12.7% |
| Cost of Revenue | $1.41B$1.24B | +13.4% |
| Gross Profit | $916.69M$821.03M | +11.7% |
| SG&A Expenses | $231.76M$213.30M | +8.7% |
| Operating Income | $507.74M$445.50M | +14.0% |
| Interest Expense | $98.20M$89.08M | +10.2% |
| Net Income | $398.96M$350.18M | +13.9% |
| EPS (Basic) | $1.84$1.63 | +12.9% |
| EPS (Diluted) | $1.82$1.61 | +13.0% |
| Shares Outstanding (Basic) | 217.10M215.15M | +0.9% |
| Shares Outstanding (Diluted) | 218.93M217.51M | +0.7% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the first nine months of 2011?
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.
How did the company manage its expenses during the period?
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.
What is the company's liquidity position and how does it plan to fund its operations and future growth?
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.
What are the key risks and uncertainties mentioned in the report?
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.
06—Continue