10-QPeriod: Q1 FY2019

ROYAL CARIBBEAN CRUISES LTD Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 2, 2019For Securities:RCL

Summary

For the first quarter of 2019, Royal Caribbean Cruises Ltd. (RCL) reported a significant increase in total revenues, up 20.3% to $2.44 billion compared to the prior year period. This growth was driven by a 10.6% increase in capacity due to fleet expansion, including the addition of Symphony of the Seas, Celebrity Edge, and the acquisition of Silversea Cruises, alongside higher ticket prices and increased onboard spending per passenger. Net income attributable to Royal Caribbean Cruises Ltd. rose to $249.7 million ($1.19 per diluted share) from $218.7 million ($1.02 per diluted share) in the first quarter of 2018. The company also provided an optimistic outlook for the full year 2019, projecting Net Yields to increase between 7.5% and 9.0% on a constant currency basis, and Adjusted Diluted Earnings Per Share between $9.65 and $9.85. RCL's robust performance and positive forward guidance are supported by strong demand and effective capacity management, underscoring its continued growth trajectory in the cruise industry.

Financial Highlights

51 data points
Beta

Revenue

$2.44B

42.1% Gross Margin

Net Income

$249.68M

10.2% Net Margin

EPS (Diluted)

$1.19

Total Assets

$28.72B

Cash & Equivalents

$248.20M

Free Cash Flow

$608.34M

Financial Statements
Beta
Revenue$2.44B
Cost of Revenue$1.41B
Gross Profit$1.03B
SG&A Expenses$414.95M
Operating Income$318.83M
Interest Expense$100.42M
Net Income$249.68M
EPS (Basic)$1.19
EPS (Diluted)$1.19
Shares Outstanding (Basic)209.32M
Shares Outstanding (Diluted)209.87M

Key Highlights

  • 1Total revenues increased by 20.3% to $2.44 billion in Q1 2019, driven by capacity growth and higher ticket prices.
  • 2Net income attributable to Royal Caribbean Cruises Ltd. increased to $249.7 million ($1.19/share) from $218.7 million ($1.02/share) in Q1 2018.
  • 3Capacity increased by 10.6% due to new ship deliveries and the acquisition of Silversea Cruises, contributing to revenue growth.
  • 4Onboard and other revenues grew by 21.2% to $729.8 million, fueled by higher per-passenger spending and new revenue initiatives.
  • 5Depreciation and amortization expenses increased by 21.7% to $292.3 million, reflecting fleet expansion.
  • 6The company provided a positive full-year 2019 outlook, forecasting Net Yields between 7.5% and 9.0% (constant currency) and Adjusted Diluted EPS between $9.65 and $9.85.
  • 7Net cash provided by operating activities increased by $154.3 million to $1.1 billion in the first three months of 2019.

Frequently Asked Questions

Revenue growth was primarily driven by a 10.6% increase in capacity due to new ship additions (Symphony of the Seas, Celebrity Edge, Azamara Pursuit) and the acquisition of Silversea Cruises. Additionally, higher ticket prices and increased onboard spending per passenger contributed significantly to the 20.3% revenue increase.

The acquisition of Silversea Cruises contributed to the increase in total revenues, cruise operating expenses, marketing, selling, and administrative expenses, and depreciation and amortization expenses. Due to a three-month reporting lag, Silversea's results for October-December 2018 were included in the first quarter 2019 consolidated financial statements. An adjustment was made to Adjusted Net Income to exclude the impact of contractual accretion requirements related to Silversea's noncontrolling interest.

Royal Caribbean Cruises Ltd. provided a positive outlook for the full year 2019, expecting Net Yields to increase between 7.5% and 9.0% on a constant currency basis. They also project Adjusted Diluted Earnings Per Share to be between $9.65 and $9.85, indicating confidence in continued profitability and growth.

In the first quarter of 2019, the company managed its debt by increasing its commercial paper outstanding and using proceeds for general corporate purposes. The company also amended its revolving credit facility to extend its termination date and increase its size. In April 2019 (subsequent to the quarter), it entered into a $1.0 billion term loan to repay existing debt, demonstrating proactive management of its capital structure.