01—Abstract
Summary
Summary of the 10-Q filed May 2, 2019. Cited figures are marked; the original filing is the authoritative source.
For the first quarter of 2019, Royal Caribbean Cruises Ltd. (RCL) reported a significant increase in total revenues, up 20.3% to $2.44 billiona 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 millionb ($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 $9.65c 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.
02—Key points
Key Highlights
- Total revenues increased by 20.3% to $2.44 billion in Q1 2019, driven by capacity growth and higher ticket prices.
- Net 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.
- Capacity increased by 10.6% due to new ship deliveries and the acquisition of Silversea Cruises, contributing to revenue growth.
- Onboard and other revenues grew by 21.2% to $729.8 million, fueled by higher per-passenger spending and new revenue initiatives.
- Depreciation and amortization expenses increased by 21.7% to $292.3 million, reflecting fleet expansion.
- The 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.
- Net cash provided by operating activities increased by $154.3 million to $1.1 billion in the first three months of 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2019, Royal Caribbean Cruises Ltd kept $0.10.
- Revenue$2.44B100.0%
- Cost of revenue−$1.41B57.9%
- Gross profit$1.03B42.1%
- Operating costs−$707.2M29.0%
- Operating income$318.8M13.1%
- Interest, other & tax−$69.2M2.8%
- Net income$249.7M10.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2019filed May 2, 2019Financial Statements
Q1 FY2019 against Q1 FY2018
| Line item | Q1 FY2019Q1 FY2018 | Change |
|---|---|---|
| Revenue | $2.44B$2.03B | +20.3% |
| Cost of Revenue | $1.41B$1.18B | +20.2% |
| Gross Profit | $1.03B$851.74M | +20.5% |
| SG&A Expenses | $414.95M$337.36M | +23.0% |
| Operating Income | $318.83M$274.15M | +16.3% |
| Interest Expense | $100.42M$67.88M | +47.9% |
| Net Income | $249.68M$218.65M | +14.2% |
| EPS (Basic) | $1.19$1.03 | +15.5% |
| EPS (Diluted) | $1.19$1.02 | +16.7% |
| Shares Outstanding (Basic) | 209.32M212.61M | −1.5% |
| Shares Outstanding (Diluted) | 209.87M213.60M | −1.7% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the first quarter of 2019?
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.
How did the acquisition of Silversea Cruises impact the financial results?
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.
What is the company's outlook for the remainder of 2019?
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.
How did the company manage its debt and financing in the quarter?
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.
06—Continue