10-QPeriod: Q1 FY2024

ROYAL CARIBBEAN CRUISES LTD Quarterly Report for Q1 Ended Mar 31, 2024

Filed April 25, 2024For Securities:RCL

Summary

Royal Caribbean Cruises Ltd. (RCL) reported a significant turnaround in the first quarter of 2024, posting a net income of $360 million, a substantial improvement from a net loss of $48 million in the same period of 2023. Total revenues surged by 29.2% to $3.7 billion, driven by increased passenger ticket prices, expanded capacity with the addition of new ships like Icon of the Seas, and higher onboard spending. The company demonstrated strong operational execution, with occupancy rates rising to 107.0% from 102.1% year-over-year. While cruise operating expenses also increased, they grew at a slower pace than revenues, leading to a significant improvement in operating income to $750 million from $272 million. RCL's management appears confident in its financial health, noting compliance with debt covenants and sufficient liquidity to meet obligations for the next twelve months. The company continues to invest in fleet expansion with substantial capital commitments for new ship orders.

Financial Highlights

47 data points
Beta

Revenue

$3.73B

44.8% Gross Margin

Net Income

$360.00M

9.7% Net Margin

EPS (Diluted)

$1.35

Total Assets

$35.19B

Cash & Equivalents

$437.00M

Free Cash Flow

$1.09B

Financial Statements
Beta
Revenue$3.73B
Cost of Revenue$2.06B
Gross Profit$1.67B
SG&A Expenses$535.00M
Operating Income$750.00M
Interest Expense$424.00M
Net Income$360.00M
EPS (Basic)$1.40
EPS (Diluted)$1.35
Shares Outstanding (Basic)257.00M
Shares Outstanding (Diluted)281.00M

Key Highlights

  • 1Strong revenue growth of 29.2% to $3.7 billion, driven by higher ticket prices and increased capacity.
  • 2Net income of $360 million, a significant turnaround from a net loss of $48 million in Q1 2023.
  • 3Occupancy increased to 107.0%, indicating robust demand and efficient capacity utilization.
  • 4Operating income more than doubled to $750 million, reflecting improved operational efficiency and pricing power.
  • 5Customer deposits rose to $6.04 billion, signaling strong future booking trends.
  • 6Successful refinancing of higher-interest debt, including the redemption of $1.25 billion of 11.625% Senior Notes.
  • 7Management expresses confidence in liquidity, with $3.7 billion in available liquidity (cash and undrawn credit facilities).

Frequently Asked Questions

Revenue increased by $842 million (29.2%) to $3.7 billion primarily due to a 9.4% increase in capacity, driven by the addition of new ships like Icon of the Seas, Celebrity Ascent, and Silver Nova. Additionally, higher ticket prices and increased onboard spending per passenger contributed significantly to the revenue growth.

Total cruise operating expenses increased by $263 million, primarily due to higher drydock and maintenance expenses and increased commissions, transportation, and other costs related to higher ticket prices. However, these expenses grew at a slower rate than revenues, contributing to the substantial increase in operating income.

RCL reported strong liquidity with $3.7 billion available and stated they are in compliance with debt covenants, expecting to remain so for at least the next twelve months. The company has substantial future capital commitments, primarily for new ship orders totaling approximately $8.1 billion (excluding partner brands), with $1.9 billion anticipated for ship purchases in the remainder of 2024.

In March 2024, RCL issued $1.25 billion in senior unsecured notes at a 6.25% interest rate and used the proceeds to redeem $1.25 billion of 11.625% Senior Notes due 2027, effectively reducing its interest expense. The weighted average interest rate on total debt decreased from 6.06% at the end of 2023 to 5.75% at the end of Q1 2024.