01—Abstract
Summary
Summary of the 10-Q filed July 26, 2013. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) reported a net income of $24.7 milliona for the second quarter of 2013, a significant improvement from a net loss of $3.7 million in the same quarter of the previous year.
Total revenues increased by 3.4% to $1.9 billionb, driven by higher passenger ticket revenues and onboard spending, along with a modest increase in capacity. Despite increased operating expenses, largely due to an unscheduled drydock for the Grandeur of the Seas and higher advertising costs, the company demonstrated a return to profitability. The company is actively managing its financial resources, with a net debt-to-capital ratio of 49.0% as of June 30, 2013.
RCL has also secured significant financing for its future fleet expansion, including a new agreement for a third Quantum-class ship. Looking ahead, RCL provided guidance for the full year and third quarter of 2013, anticipating continued net yield growth and efforts to control Net Cruise Costs. The company also highlighted its ongoing profitability improvement program aimed at increasing revenues and reducing expenses.
02—Key points
Key Highlights
- Returned to profitability in Q2 2013 with a net income of $24.7 million, compared to a net loss of $3.7 million in Q2 2012.
- Total revenues increased by 3.4% to $1.9 billion in Q2 2013, driven by higher ticket prices and onboard spending.
- Operating expenses increased by 2.1% in Q2 2013, partly due to an unscheduled drydock for the Grandeur of the Seas and higher advertising spend.
- The company secured a conditional agreement for a third Quantum-class ship, with an expected delivery in Q2 2016.
- Net Debt-to-Capital ratio improved to 49.0% as of June 30, 2013, down from 50.0% at the end of 2012.
- Full-year 2013 Net Yields are projected to increase by approximately 2% on a constant currency basis.
- The company is implementing a profitability improvement program focused on increasing revenues and reducing expenses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, Royal Caribbean Cruises Ltd kept $0.01.
- Revenue$1.88B100.0%
- Cost of revenue−$1.32B70.3%
- Gross profit$559.1M29.7%
- Operating costs−$445.8M23.7%
- Operating income$113.3M6.0%
- Interest, other & tax−$88.6M4.7%
- Net income$24.7M1.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed July 26, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $1.88B$1.82B | +3.4% |
| Cost of Revenue | $1.32B$1.30B | +2.1% |
| Gross Profit | $559.15M$524.99M | +6.5% |
| SG&A Expenses | $257.95M$247.57M | +4.2% |
| Operating Income | $113.34M$96.91M | +17.0% |
| Interest Expense | $86.88M$89.11M | −2.5% |
| Net Income | $24.75M-$3.65M | +777.4% |
| EPS (Basic) | $0.11$-0.02 | +650.0% |
| EPS (Diluted) | $0.11$-0.02 | +650.0% |
| Shares Outstanding (Basic) | 219.50M217.87M | +0.8% |
| Shares Outstanding (Diluted) | 220.65M217.87M | +1.3% |
05—Questions
Frequently Asked Questions
What was the primary driver of the company's return to profitability in Q2 2013?
The primary driver was an increase in total revenues, which grew by 3.4% to $1.9 billion. This growth was fueled by higher passenger ticket revenues and increased onboard spending, alongside a modest increase in capacity. Despite higher operating costs, the revenue growth outpaced expense increases, leading to a net income of $24.7 million.
How is RCL managing its debt and capital structure?
RCL is actively managing its capital structure. As of June 30, 2013, the company reported a Net Debt-to-Capital ratio of 49.0%, an improvement from 50.0% at the end of 2012. The company also secured significant financing for its newbuilds and has a revolving credit facility, indicating proactive liquidity management.
What are the key financial outlook indicators provided by RCL for the remainder of 2013?
RCL anticipates a full-year 2013 Constant Currency Net Yields increase of approximately 2%, with guidance for the third quarter Net Yields between 1% and 2%. The company also projects Net Cruise Costs per APCD to increase by 1% to 2% for the full year. Diluted Earnings Per Share (EPS) for the full year is projected to be between $2.20 and $2.30.
Were there any significant operational events impacting the Q2 2013 results?
Yes, an unscheduled drydock for the Grandeur of the Seas in May 2013 due to an onboard incident resulted in additional refurbishment expenses and costs related to cancelled sailings. This incident had a direct financial impact of approximately $0.05 per diluted share for the quarter.
06—Continue