01—Abstract
Summary
Summary of the 10-Q filed October 24, 2013. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) reported its third-quarter and nine-month results for the period ending September 30, 2013.
For the quarter, total revenues increased by 3.8% to $2.3 billiona, driven by higher ticket prices and onboard spending, partially offset by unscheduled drydocks affecting capacity. Net income for the quarter was $365.7 million, a slight decrease from $367.8 million in the prior year, with diluted EPS at $1.65 compared to $1.68. For the nine months, total revenues grew 3.8% to $6.1 billion, and net income increased to $466.7 million from $411.1 million, with diluted EPS rising to $2.11 from $1.87.
The company is actively managing its financial position, including a refinancing strategy that has raised significant revolving capacity and entered into new term loan facilities. RCL also incurred restructuring charges of $12.2 millionb in the third quarter as part of a broader profitability improvement program aimed at enhancing returns on invested capital through cost reductions and revenue growth initiatives. Looking ahead, RCL provided an outlook for the full year 2013 and the fourth quarter, forecasting continued growth in Net Yields and managing Net Cruise Costs.
02—Key points
Key Highlights
- Total revenues for Q3 2013 increased 3.8% to $2.3 billion year-over-year, driven by higher ticket prices and onboard spending.
- Net income for Q3 2013 was $365.7 million, a slight decrease from $367.8 million in Q3 2012, with diluted EPS at $1.65.
- For the nine months ended September 30, 2013, net income increased to $466.7 million, up from $411.1 million in the prior year, with diluted EPS improving to $2.11.
- The company incurred $12.2 million in restructuring and related charges in Q3 2013 as part of a profitability improvement program.
- RCL is actively managing its debt through a refinancing strategy, including raising revolving capacity and entering into new term loan facilities.
- The company's Net Yields increased by 2.6% for the quarter and 2.6% for the nine months, indicating improved pricing power.
- Capacity increased by 1.0% for the quarter and 1.1% for the nine months compared to the prior year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Royal Caribbean Cruises Ltd kept $0.16.
- Revenue$2.31B100.0%
- Cost of revenue−$1.42B61.3%
- Gross profit$894.9M38.7%
- Operating costs−$450.7M19.5%
- Operating income$444.2M19.2%
- Interest, other & tax−$78.5M3.4%
- Net income$365.7M15.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed October 24, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $2.31B$2.23B | +3.8% |
| Cost of Revenue | $1.42B$1.35B | +5.1% |
| Gross Profit | $894.95M$878.07M | +1.9% |
| SG&A Expenses | $249.95M$243.88M | +2.5% |
| Operating Income | $444.21M$452.14M | −1.8% |
| Interest Expense | $79.65M$84.98M | −6.3% |
| Net Income | $365.70M$367.78M | −0.6% |
| EPS (Basic) | $1.66$1.69 | −1.8% |
| EPS (Diluted) | $1.65$1.68 | −1.8% |
| Shares Outstanding (Basic) | 219.74M217.94M | +0.8% |
| Shares Outstanding (Diluted) | 221.00M219.30M | +0.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the third quarter?
Revenue growth in the third quarter was primarily driven by an increase in passenger ticket prices, higher onboard spending per passenger, and a general increase in capacity. Higher demand for European sailings also contributed positively, although this was partially offset by unscheduled drydocks for two ships.
How is the company managing its debt and refinancing its obligations?
Royal Caribbean Cruises Ltd. is executing a refinancing strategy. During the third quarter, they raised $345.0 million in additional revolving capacity and entered into a new unsecured term loan facility of up to $380.0 million. The company also amended and restated its revolving credit facility, increasing its capacity and extending its termination date. These actions are part of managing upcoming maturities and strengthening liquidity.
What are the 'Restructuring and related charges' and why were they incurred?
The company incurred $12.2 million in restructuring and related charges during the third quarter of 2013 as part of a broad profitability improvement program. This program aims to improve returns on invested capital by consolidating global sales, marketing, and administrative structures, including the consolidation of call centers and the elimination of approximately 500 shore-side positions, primarily in international markets.
What is the outlook for the full year 2013 and beyond?
For the full year 2013, the company projected Adjusted Earnings Per Share (diluted) between $2.30 and $2.35, with expected Net Yield growth of 2% to 3%. For 2014, the company anticipates continued yield growth, projecting it to be the fifth consecutive year, with current earnings estimates consistent with street consensus of $3.06 on an Adjusted Earnings Per Share basis.
06—Continue