Summary
Royal Caribbean Cruises Ltd. (RCL) reported its third quarter and nine-month results for the period ending September 30, 2015. The company experienced a significant year-over-year decline in net income, largely driven by a substantial impairment charge of $411.3 million related to its Pullmantur brand. This charge reflects the negative economic conditions and currency devaluation in Latin America, prompting a strategic shift for Pullmantur towards a right-sizing approach. Despite this significant non-recurring charge, total revenues saw an increase, driven by higher capacity and improved per-passenger spending on board. Operationally, RCL is navigating challenging economic environments, particularly in Latin America, which has impacted the Pullmantur brand. However, the company is strategically investing in fleet expansion with new ship deliveries and commitments for future vessels. Management is also focusing on cost control, as evidenced by a decrease in net cruise costs. The company provided updated guidance for the full year and fourth quarter of 2015, indicating expectations for continued revenue growth on a constant currency basis, offset by the aforementioned impairment charge impacting the reported net income.
Financial Highlights
48 data points| Revenue | $2.52B |
| Cost of Revenue | $1.39B |
| Gross Profit | $1.14B |
| SG&A Expenses | $256.06M |
| Operating Income | $258.00M |
| Interest Expense | $66.82M |
| Net Income | $228.79M |
| EPS (Basic) | $1.04 |
| EPS (Diluted) | $1.03 |
| Shares Outstanding (Basic) | 219.96M |
| Shares Outstanding (Diluted) | 221.14M |
Key Highlights
- 1Significant impairment charge of $411.3 million recognized for Pullmantur related assets (goodwill, trademarks, long-lived assets) due to adverse economic conditions in Latin America.
- 2Total revenues increased by 5.6% for the quarter and 2.3% for the nine months ended September 30, 2015, compared to the prior year periods, driven by increased capacity and higher onboard spending.
- 3Net income for the quarter decreased by 53.3% to $228.8 million ($1.03 diluted EPS) from $490.2 million ($2.19 diluted EPS) in the prior year quarter.
- 4The company is actively managing its fuel costs and hedging strategies, showing a decrease in fuel expenses and a stable percentage of hedged fuel consumption.
- 5Capital expenditures remain significant, with multiple new ships on order across various brands, indicating ongoing investment in fleet modernization and expansion.
- 6Shareholder returns are being supported through dividend payments and a newly authorized $500 million share repurchase program.
- 7The company maintains a substantial amount of liquidity, with $147.4 million in cash and cash equivalents and $858.0 million available under credit facilities as of September 30, 2015.