10-QPeriod: Q2 FY2019

ROYAL CARIBBEAN CRUISES LTD Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 26, 2019For Securities:RCL

Summary

For the second quarter of 2019, Royal Caribbean Cruises Ltd. (RCL) reported robust top-line growth, with total revenues increasing by 20.1% year-over-year to $2.8 billion. This growth was driven by an 11.0% increase in capacity, largely due to the addition of new ships and the full integration of Silversea Cruises, coupled with a significant rise in ticket prices and onboard spending. Net income attributable to Royal Caribbean Cruises Ltd. saw a modest increase of 1.4% to $472.8 million, resulting in diluted earnings per share of $2.25, up from $2.19 in the prior year period. The company demonstrated effective cost management, with Net Cruise Costs per APCD increasing by 6.1% (8.2% on a constant currency basis), indicating a strong ability to translate revenue growth into profitability.

Financial Highlights

51 data points
Beta

Revenue

$2.81B

45.0% Gross Margin

Net Income

$472.83M

16.8% Net Margin

EPS (Diluted)

$2.25

Total Assets

$29.81B

Cash & Equivalents

$235.00M

Free Cash Flow

-$278.95M

Financial Statements
Beta
Revenue$2.81B
Cost of Revenue$1.54B
Gross Profit$1.26B
SG&A Expenses$376.87M
Operating Income$573.65M
Interest Expense$111.30M
Net Income$472.83M
EPS (Basic)$2.26
EPS (Diluted)$2.25
Shares Outstanding (Basic)209.53M
Shares Outstanding (Diluted)210.05M

Key Highlights

  • 1Total revenues increased by 20.1% to $2.8 billion for the second quarter of 2019 compared to the prior year period.
  • 2Net income attributable to Royal Caribbean Cruises Ltd. rose by 1.4% to $472.8 million, with diluted EPS reaching $2.25.
  • 3Capacity increased by 11.0% driven by new ship additions (Spectrum of the Seas, Celebrity Edge, etc.) and the integration of Silversea Cruises.
  • 4Net Yields increased by 8.1%, reflecting higher ticket prices and onboard spending per passenger.
  • 5Gross Cruise Costs increased by 19.2%, largely in line with capacity expansion and operational costs associated with new ships and acquisitions.
  • 6The company maintained strong liquidity, with $2.1 billion in available liquidity as of June 30, 2019, consisting of cash and cash equivalents and undrawn credit facilities.
  • 7Significant future capital commitments exist, with 13 ships on order totaling approximately $10.3 billion, indicating continued investment in fleet expansion.

Frequently Asked Questions

Revenue growth was primarily driven by an 11.0% increase in capacity due to new ship deliveries and the integration of Silversea Cruises, coupled with a substantial increase in ticket prices and onboard spending per passenger, reflecting successful revenue enhancement initiatives.

Royal Caribbean Cruises Ltd. demonstrated effective cost management. While Gross Cruise Costs increased by 19.2%, this was largely in line with capacity expansion. Net Cruise Costs per APCD saw a more controlled increase of 6.1% (8.2% on a constant currency basis), indicating that the company is managing its operational expenses efficiently relative to its increased capacity and revenue.

The company has a substantial fleet expansion plan with 13 ships on order totaling approximately $10.3 billion, expected to enter service through 2024. This indicates a strong commitment to future growth and increasing capacity, supported by solid liquidity and access to financing.

Yes, the company reported several significant items. These included incidental costs related to the Grand Bahama drydock structure incident involving Oasis of the Seas, a loss on extinguishment of debt related to loan repayments, and changes in the fair value of contingent consideration for the Silversea acquisition. The company also noted a negative impact from the U.S. government's rescission of authorized travel to Cuba.