10-QPeriod: Q2 FY2015

ROYAL CARIBBEAN CRUISES LTD Quarterly Report for Q2 Ended Jun 30, 2015

Filed July 31, 2015For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) reported strong financial performance for the second quarter and first half of 2015, driven by increased revenues and improved operational efficiencies. Total revenues for the second quarter of 2015 rose by 4.0% to $2.1 billion, with passenger ticket revenues up 3.6% and onboard/other revenues increasing by 4.9%. This growth was fueled by a 5.0% increase in capacity and higher per-passenger spending onboard. The company demonstrated effective cost management, with total cruise operating expenses decreasing by 1.1% year-over-year in the second quarter, primarily due to lower fuel costs and favorable foreign currency exchange rates. Despite an increase in marketing, selling, and administrative expenses, operating income significantly improved by 33.6% in the quarter to $261.3 million. Net income for the second quarter reached $185.0 million, or $0.84 per diluted share, a substantial increase from $137.7 million, or $0.62 per diluted share, in the prior year period. The company also successfully amended and restated key credit facilities, extending maturities and reducing costs, enhancing its financial flexibility.

Financial Highlights

47 data points
Beta

Revenue

$2.06B

36.0% Gross Margin

Net Income

$184.97M

9.0% Net Margin

EPS (Diluted)

$0.84

Total Assets

$21.40B

Cash & Equivalents

$159.36M

Free Cash Flow

-$233.05M

Financial Statements
Beta
Revenue$2.06B
Cost of Revenue$1.32B
Gross Profit$741.91M
SG&A Expenses$274.15M
Operating Income$261.30M
Interest Expense$76.62M
Net Income$184.97M
EPS (Basic)$0.84
EPS (Diluted)$0.84
Shares Outstanding (Basic)219.91M
Shares Outstanding (Diluted)220.90M

Key Highlights

  • 1Total revenues increased by 4.0% to $2.1 billion in Q2 2015, driven by higher passenger ticket and onboard revenues.
  • 2Operating income saw a significant increase of 33.6% to $261.3 million in Q2 2015 compared to Q2 2014.
  • 3Net income for Q2 2015 was $185.0 million ($0.84/share diluted), up from $137.7 million ($0.62/share diluted) in Q2 2014.
  • 4Total cruise operating expenses decreased by 1.1% in Q2 2015, largely due to lower fuel costs and favorable currency impacts.
  • 5Capacity (APCD) increased by 5.0% in Q2 2015, supporting revenue growth.
  • 6The company successfully amended and extended key revolving credit facilities, improving its financial flexibility.
  • 7Net Debt-to-Capital ratio stood at 50.9% as of June 30, 2015, reflecting a stable capital structure.

Frequently Asked Questions

Revenue growth in the second quarter of 2015 was primarily driven by a 5.0% increase in capacity (Available Passenger Cruise Days or APCD) and higher per-passenger spending on onboard and other revenue-generating activities, alongside an increase in ticket prices across most core itineraries.

Total cruise operating expenses decreased by 1.1% in the second quarter of 2015 compared to the prior year. This was largely due to a significant decrease in fuel expense, as the price of fuel (net of swap agreements) fell by 15.8% per metric ton. Favorable foreign currency exchange rates also contributed to lower operating expenses.

For the full year 2015, the company projected Adjusted Earnings Per Share (Diluted) to be between $4.65 and $4.75. Net Yields were expected to be between -1.1% and -0.1% as reported, or 2.9% to 3.9% on a constant currency basis. Capacity was anticipated to increase by 5.4%.

As of June 30, 2015, the company reported total debt of $8.78 billion and total shareholders' equity of $8.32 billion. The Net Debt-to-Capital ratio was 50.9%, indicating a stable capital structure. The company also highlighted that it was well in excess of all debt covenant requirements.