01—Abstract
Summary
Summary of the 10-Q filed April 29, 2021. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) reported a net loss of $1.13 billiona for the first quarter of 2021, a slight improvement from the $1.44 billion loss in the same period of 2020.
Total revenues plummeted to $42 millionb from $2.03 billion year-over-year, reflecting the continued suspension of global cruise operations due to the COVID-19 pandemic. Despite the significant revenue decline, the company has actively managed its liquidity, ending the quarter with $5.1 billion in cash and cash equivalents and access to further credit facilities. Management's focus remains on navigating the ongoing operational challenges posed by the pandemic, including working with regulatory bodies for a safe return to service.
The company has implemented substantial cost-reduction measures and secured significant financing to ensure sufficient liquidity to meet obligations for at least the next twelve months. While booking activity for the latter half of 2021 shows positive trends and higher pricing compared to 2019, the outlook for full-year 2021 remains uncertain and dependent on the pace of operational resumption and the broader impact of COVID-19.
02—Key points
Key Highlights
- Net loss attributable to Royal Caribbean Cruises Ltd. was $(1.13) billion for Q1 2021, compared to $(1.44) billion in Q1 2020.
- Total revenues decreased by 97.9% to $42.0 million in Q1 2021 from $2.0 billion in Q1 2020, due to the suspension of cruise operations.
- The company maintained a strong liquidity position with $5.1 billion in cash and cash equivalents as of March 31, 2021.
- Operating expenses significantly decreased by 81.2% to $0.3 billion in Q1 2021 from $1.5 billion in Q1 2020, reflecting cost-saving measures during the operational suspension.
- Substantial financing activities occurred, including the issuance of $1.5 billion in senior unsecured notes and $1.5 billion from common stock issuance.
- The company has extended waivers on financial covenants and deferred principal payments on export-credit facilities to preserve liquidity.
- Booking activity for the second half of 2021 is aligned with anticipated resumption of cruising, with pricing higher than 2019 levels.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed April 29, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $42.01M$2.03B | −97.9% |
| Cost of Revenue | $283.49M$1.51B | −81.2% |
| Gross Profit | -$241.47M$521.93M | −146.3% |
| SG&A Expenses | $258.04M$395.89M | −34.8% |
| Operating Income | -$809.23M-$1.31B | +38.1% |
| Interest Expense | $272.51M$92.91M | +193.3% |
| Net Income | -$1.13B-$1.44B | +21.7% |
| EPS (Basic) | $-4.66$-6.91 | +32.6% |
| EPS (Diluted) | $-4.66$-6.91 | +32.6% |
| Shares Outstanding (Basic) | 243.00M209.10M | +16.2% |
| Shares Outstanding (Diluted) | 243.00M209.10M | +16.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of the significant revenue decline in Q1 2021?
The primary driver was the continued suspension of global cruise operations due to the COVID-19 pandemic. This led to a substantial decrease in passenger ticket revenues and onboard and other revenues.
How is the company managing its liquidity amidst the ongoing operational suspension?
Royal Caribbean has focused on bolstering liquidity through significant cost and capital expenditure reductions, cash conservation, and additional financing sources. As of March 31, 2021, they had $5.1 billion in cash and cash equivalents and access to further credit facilities. They also successfully issued $1.5 billion in senior unsecured notes and raised approximately $1.5 billion from common stock issuance.
What is the company's outlook for returning to full operations?
The company is working with regulatory bodies like the CDC on plans for a safe return to service, considering global vaccination efforts and the CDC's Conditional Sailing Order. Operations are expected to resume in a phased manner, with reduced guest occupancy, modified itineraries, and enhanced health protocols. However, the exact timing and extent of the return to full operations remain uncertain and depend on various factors related to the pandemic and regulatory approvals.
Are there any significant debt maturities or covenant issues to be aware of?
The company has taken steps to manage its debt obligations, including extending maturity dates on certain credit facilities and deferring principal payments. Waivers for financial covenants have been extended through at least the third quarter of 2022. They are currently in compliance with their minimum liquidity covenant but face restrictions on dividends and share repurchases until at least Q3 2022.
06—Continue