01—Abstract
Summary
Summary of the 10-Q filed October 25, 2012. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) reported its third quarter 2012 financial results, showing a decrease in total revenues to $2.2 billiona from $2.3 billion in the same quarter of the prior year.
This decline was partly attributed to unfavorable foreign currency exchange rate fluctuations. Despite the revenue dip, the company managed cruise operating expenses effectively, also seeing a decrease, which contributed to a net income of $367.8 millionb ($1.68 diluted EPS) for the quarter. The nine-month period also saw a revenue increase to $5.9 billion, with net income at $411.1 million ($1.87 diluted EPS).
The company continues to manage its debt, repurchasing a significant portion of its senior notes and entering into new credit facilities to manage future maturities. The company highlighted ongoing efforts in fleet modernization and deployment strategies, including new ship deliveries and the integration of new itineraries.
While the Costa Concordia incident earlier in the year had an impact on booking patterns, management indicated it did not expect a significant long-term impact. RCL's liquidity remains strong, with substantial cash and equivalents and available credit facilities, enabling it to meet its short-term obligations and continue strategic investments in new vessels.
02—Key points
Key Highlights
- Total revenues for the third quarter of 2012 decreased by 4.1% to $2.2 billion compared to $2.3 billion in the third quarter of 2011, impacted by currency fluctuations and a decrease in ticket prices.
- Net income for the third quarter of 2012 was $367.8 million, or $1.68 per diluted share, down from $399.0 million, or $1.82 per diluted share, in the same period of 2011.
- For the nine months ended September 30, 2012, total revenues increased by 2.1% to $5.9 billion, while net income decreased to $411.1 million from $570.9 million in the prior year.
- The company repurchased €255.0 million (approximately $328.0 million) of its 5.625% unsecured senior notes due 2014, resulting in a loss on early extinguishment of debt of approximately $7.5 million.
- RCL entered into new credit facilities, including a Euro-denominated term loan facility of up to €365.0 million and borrowed $290.0 million under another unsecured term loan, primarily to manage debt maturities and reduce revolving credit balances.
- The company took delivery of the 'Celebrity Reflection' in October 2012, financed by a $673.5 million unsecured term loan.
- As of September 30, 2012, RCL had $241.2 million in cash and cash equivalents and $1.7 billion available under its unsecured credit facilities, indicating strong liquidity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2012, Royal Caribbean Cruises Ltd kept $0.17.
- Revenue$2.23B100.0%
- Cost of revenue−$1.35B60.6%
- Gross profit$878.1M39.4%
- Operating costs−$425.9M19.1%
- Operating income$452.1M20.3%
- Interest, other & tax−$84.4M3.8%
- Net income$367.8M16.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2012filed October 25, 2012Financial Statements
Q3 FY2012 against Q3 FY2011
| Line item | Q3 FY2012Q3 FY2011 | Change |
|---|---|---|
| Revenue | $2.23B$2.32B | −4.1% |
| Cost of Revenue | $1.35B$1.41B | −4.1% |
| Gross Profit | $878.07M$916.69M | −4.2% |
| SG&A Expenses | $243.88M$231.76M | +5.2% |
| Operating Income | $452.14M$507.74M | −11.0% |
| Interest Expense | $84.98M$98.20M | −13.5% |
| Net Income | $367.78M$398.96M | −7.8% |
| EPS (Basic) | $1.69$1.84 | −8.2% |
| EPS (Diluted) | $1.68$1.82 | −7.7% |
| Shares Outstanding (Basic) | 217.94M217.10M | +0.4% |
| Shares Outstanding (Diluted) | 219.30M218.93M | +0.2% |
05—Questions
Frequently Asked Questions
What was the primary reason for the decrease in total revenues in the third quarter of 2012?
The primary reasons cited for the decrease in total revenues were the unfavorable impact of fluctuations in foreign currency exchange rates and a decrease in ticket prices, partially offset by an increase in capacity.
How has the company managed its debt position?
Royal Caribbean has actively managed its debt by repurchasing €255.0 million of its senior notes due 2014 and by securing new credit facilities, including a Euro-denominated term loan, to refinance existing debt and manage maturities.
What is the company's outlook for the remainder of 2012 and beyond?
The company expects Net Yields to increase for the full year 2012 on a constant currency basis, driven by changes in its international distribution system and deployment initiatives. The outlook for 2013 is cautiously optimistic, with early booking trends showing higher load factors and average per diems compared to the prior year, even considering the impact of the Costa Concordia incident.
What is the company's liquidity position?
As of September 30, 2012, Royal Caribbean had $241.2 million in cash and cash equivalents and $1.7 billion in available credit facilities, indicating a strong liquidity position to meet its short-term obligations.
06—Continue