01—Abstract
Summary
Summary of the 10-Q filed August 5, 2021. Cited figures are marked; the original filing is the authoritative source.
Royal Caribbean Cruises Ltd. (RCL) reported significant revenue declines for the quarter and six months ended June 30, 2021, compared to the prior year, primarily due to the ongoing impact of the COVID-19 pandemic and the suspension of global cruise operations.
Despite the revenue drop, the company showed signs of recovery with improved booking volumes for 2021 and 2022 sailings, at prices higher than pre-pandemic levels. RCL has been actively managing its liquidity, securing substantial financing and implementing cost-saving measures. The company is gradually resuming operations, with a significant portion of its fleet expected to be back in service by the end of 2021.
While the company continues to face operating losses, investors should note the efforts in debt management and the strategic extensions of credit facilities. The significant increase in customer deposits, partly due to future cruise credits, indicates a level of customer confidence.
The outlook remains cautious, with ongoing uncertainties related to health protocols, potential future disruptions, and the pace of full fleet return. However, the company believes it has sufficient liquidity to fund its obligations for at least the next twelve months.
02—Key points
Key Highlights
- Total revenues for the second quarter of 2021 decreased by 71.0% to $50.9 million compared to $175.6 million in the second quarter of 2020, reflecting the ongoing impact of COVID-19.
- The company reported a Net Loss attributable to Royal Caribbean Cruises Ltd. of $1.35 billion for Q2 2021, compared to a Net Loss of $1.64 billion in Q2 2020.
- Average monthly cash burn rate for Q2 2021 was approximately $330 million, slightly higher than the previous quarter due to more ships returning to operation.
- Total debt increased to $21.0 billion as of June 30, 2021, with the company taking significant financing actions, including issuing new debt and equity, to bolster liquidity.
- Booking volumes improved in Q2 2021 compared to Q1 2021, with pricing for 2021 and 2022 sailings reported to be higher than in 2019.
- By the end of 2021, RCL anticipates having 80% of its fleet in service.
- Customer deposits increased to $2.4 billion as of June 30, 2021, with approximately 40% of this balance related to future cruise credits.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2021filed August 5, 2021Financial Statements
Q2 FY2021 against Q2 FY2020
| Line item | Q2 FY2021Q2 FY2020 | Change |
|---|---|---|
| Revenue | $50.91M$175.60M | −71.0% |
| Cost of Revenue | $424.83M$680.42M | −37.6% |
| Gross Profit | -$373.92M-$504.81M | +25.9% |
| SG&A Expenses | $285.56M$301.42M | −5.3% |
| Operating Income | -$1.02B-$1.28B | +20.2% |
| Interest Expense | $304.81M$218.89M | +39.3% |
| Net Income | -$1.35B-$1.64B | +17.8% |
| EPS (Basic) | $-5.29$-7.83 | +32.4% |
| EPS (Diluted) | $-5.29$-7.83 | +32.4% |
| Shares Outstanding (Basic) | 254.58M209.38M | +21.6% |
| Shares Outstanding (Diluted) | 254.58M209.38M | +21.6% |
05—Questions
Frequently Asked Questions
What is the company's current financial performance and liquidity situation?
Royal Caribbean experienced a significant decline in revenues and continued to report net losses in the second quarter of 2021 due to the ongoing impact of the COVID-19 pandemic. However, the company has bolstered its liquidity to $5.0 billion (including $4.3 billion in cash and cash equivalents) through various financing activities and believes it has sufficient resources to meet its obligations for at least the next twelve months.
What is the outlook for resuming cruise operations?
RCL is gradually resuming global cruise operations, with 36 of its 60 ships expected to be sailing or have announced plans to sail by August 31, 2021. The company anticipates that 80% of its fleet will be in service by the end of 2021. While operations are resuming, the company notes that uncertainties remain regarding the specifics, timing, and costs of health and safety measures.
How is the company managing its debt and financial covenants?
The company has undertaken significant financing activities, including issuing new debt and equity, to manage its liquidity. RCL has amended several credit facilities, extending waiver periods for financial covenants through at least the third quarter of 2022. The company is currently in compliance with its minimum liquidity covenants.
What is the trend in bookings and customer confidence?
Booking volumes showed improvement in the second quarter of 2021 compared to the first quarter, with pricing for upcoming sailings at levels higher than pre-pandemic. Customer deposits have increased to $2.4 billion, with a portion representing future cruise credits, indicating some level of customer confidence and future demand.
06—Continue