Royal Caribbean Reports Solid Third Quarter Results And Remains On Path To The Double-Double
MIAMI, Oct. 28, 2016 /PRNewswire/ -- Royal Caribbean Cruises Ltd. (NYSE: RCL) today reported GAAP and adjusted third quarter earnings of $3.21 and $3.20, respectively, up 13% from last year and better than expectations. Full year adjusted earnings guidance is unchanged at $6.00 to $6.10 per share.
Looking ahead to 2017, the company's booked position is better than same time last year on both volume and rate, supporting the company's trajectory to the Double-Double.
KEY HIGHLIGHTS
Third Quarter 2016 results:
- Net Yields were up 2.9% on a Constant-Currency basis (up 0.4%, As-Reported), better than guidance driven mainly by strong close-in demand for North American itineraries.
- Net Cruise Costs ("NCC") excluding fuel were down 1.6% on a Constant-Currency basis (down 2.0%, As-Reported), in line with guidance.
- US GAAP Net Income was $693.3 million or $3.21 per share, versus $228.8 million, or $1.03 per share in 2015. Last year's figure includes an impairment charge related to Pullmantur.
- Adjusted Net Income was $690.9 million, or $3.20 per share, better than expectations driven by strong yields and positive movements in currency and fuel during the quarter, versus $628.1 million, or $2.84 per share, in 2015.
Full Year 2016 forecast:
- Net Yields are expected to be up 4.0% or better on a Constant-Currency basis (up in the range of 1.7% to 2.0% As-Reported). Strong close-in demand for North American products in the third quarter is helping offset the impact from the delay in opening Empress of the Seas sailings in the fourth quarter.
- NCC excluding fuel are expected to be up approximately 1.0% on a Constant-Currency basis (flat to up 1.0% As-Reported).
- Adjusted EPS is expected to be in the range of $6.00 to $6.10 per share, unchanged from prior guidance.
"Our business continues to progress solidly to the Double-Double, and our recent dividend increase is evidence of our confidence in that trajectory," said Richard D. Fain, chairman and chief executive officer. "It is gratifying to again be headed towards record earnings for the year, above our initial guidance."
THIRD QUARTER RESULTS
Net Yields on a Constant-Currency basis increased 2.9% during the quarter, better than previous guidance. Continued strength in demand for North American products was a key driver of the outperformance while the balance of the portfolio performed in-line with expectations. Growth in onboard revenue continued to outpace overall net yield growth, despite an extraordinary outperformance last summer. Favorable trends in both currency and fuel compared to expectations also provided a benefit to the quarter.
US GAAP Net Income for the third quarter 2016 was $693.3 million or $3.21 per share, compared to $228.8 million or $1.03 per share in 2015 – this includes $399.3 million in non-cash impairment charges related to the Pullmantur brand that was taken last year. Adjusted Net Income for the third quarter of 2016 was $690.9 million, or $3.20 per share, which was $0.10 better than guidance and up 13% versus same quarter last year. About half of the outperformance was driven by better than expected revenue performance, with the balance of the improvement being mainly driven by the benefits of a weaker dollar and lower fuel prices.
Constant-Currency NCC excluding fuel decreased 1.6%, in-line with expectations. Bunker pricing net of hedging for the third quarter was $524 per metric ton and consumption was 341,000 metric tons.
FULL YEAR 2016
The company maintains full year Adjusted EPS guidance of $6.00 to $6.10 per share. Constant-Currency Net Yields are expected to be up 4.0% or better for the full year. Strong close-in demand for North American itineraries in the third quarter is helping offset an impact from the delayed opening of Empress of the Seas sailings during the fourth quarter.
NCC excluding fuel are expected to be up approximately 1.0% on a Constant-Currency basis, in-line with previous guidance.
"Our strong booked position and continued focus on effective cost management is expected to keep full year earnings ahead of initial guidance and positions us well for the Double-Double in 2017," said Jason T. Liberty, chief financial officer. "Minor operational variations are causing some timing shifts between quarters, but the overall market and our overall results remain unchanged from our last guidance."
Taking into account current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects 2016 Adjusted EPS in the range of $6.00 to $6.10 per share.
FOURTH QUARTER 2016
Constant-Currency Net Yields are expected to be up approximately 6.0% in the fourth quarter of 2016, and NCC excluding fuel are expected to be down approximately 1.5%.
These yield improvement expectations in the fourth quarter are largely driven by the deconsolidation of Pullmantur that was announced earlier this year, strong demand for our new hardware and a higher mix of North American and Australian based itineraries.
Based on current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects fourth quarter Adjusted EPS to be approximately $1.20 per share.
2017 OUTLOOK
At this time, 2017 itineraries are booked ahead of last year in both rate and volume. New ships including Harmony of the Seas and Ovation of the Seas are seeing strong trends, supporting a solid outlook for 2017.
"Next year marks the finish line for the Double-Double and we are looking forward to a strong finish to this chapter in our continuous journey of rising shareholder returns," said Richard D. Fain, chairman and chief executive officer. "New hardware, continued strength onboard, along with continued cost discipline and a highly motivated team over 65,000 strong is proving to be a winning combination."
FUEL EXPENSE AND SUMMARY OF KEY GUIDANCE STATS
Fuel Expense
The company does not forecast fuel prices and its fuel cost calculations are based on current at-the-pump prices, net of hedging impacts. Based on today's fuel prices the company has included $189 million and $720 million of fuel expense in its fourth quarter and full year 2016 guidance, respectively.
Forecasted consumption is 68% hedged via swaps for the remainder of 2016 and 60%, 45%, 36% and 20% hedged for 2017, 2018, 2019 and 2020, respectively. For the same five-year period, the average cost per metric ton of the hedge portfolio is approximately $535, $508, $452, $342 and $340, respectively.
The company provided the following fuel statistics for the fourth quarter and full year 2016:
| FUEL STATISTICS |
Fourth Quarter 2016 |
Full Year 2016 |
| Fuel Consumption (metric tons) |
340,000 |
1,371,000 |
| Fuel Expenses |
$189 million |
$720 million |
| Percent Hedged (fwd consumption) |
68% |
68% |
| Impact of 10% change in fuel prices |
$4.0 million |
$4.0 million |
In summary, the company provided the following guidance for the fourth quarter and full year of 2016:
| GUIDANCE |
As-Reported Constant-Currency |
||
| Fourth Quarter 2016 |
|||
| Net Yields |
Approx. 4.5% |
Approx. 6.0% |
|
| Net Cruise Costs per APCD |
Approx. (1.5%) |
(1.0%) to (1.5%) |
|
| Net Cruise Costs per APCD |
Approx. (2.0%) |
Approx. (1.5%) |
|
| Full Year 2016 |
|||
| Net Yields |
1.7% to 2.0% |
4.0% or better |
|
| Net Cruise Costs per APCD |
Approx. (2.0%) |
Approx. (1.5%) |
|
| Net Cruise Costs per APCD |
Approx. 0.5% |
Approx. 1.0% |
|
| GUIDANCE |
Fourth Quarter 2016 |
Full Year 2016 |
|
| Capacity Increase |
(0.2%) |
3.3% |
|
| Depreciation and Amortization |
$230 to $235 million |
$890 to $900 million |
|
| Interest Expense, net |
$75 to $80 million |
$287 to $292 million |
|
| Adjusted EPS |
Approx. $1.20 |
$6.00 to $6.10 |
|
| GUIDANCE |
Fourth Quarter 2016 |
Full Year 2016 |
|
| 1% Change in Currency |
$4 million |
$4 million |
|
| 1% Change in Net Yield |
$15 million |
$15 million |
|
| 1% Change in NCC x fuel |
$8 million |
$8 million |
|
| 1% Change in LIBOR |
$12 million |
$12 million |
|
| Exchange rates used in guidance calculations |
|||
| Previous – August |
Current - October |
||
| GBP |
$1.32 |
$1.22 |
|
| AUD CAD CNH EUR |
$0.75 $0.76 $0.15 $1.10 |
$0.76 $0.75 $0.15 $1.09 |
|
LIQUIDITY AND FINANCING ARRANGEMENTS
As of September 30, 2016, liquidity was $1.1 billion, including cash and the undrawn portion of the company's unsecured revolving credit facilities. The company noted that scheduled debt maturities for the remainder of 2016, 2017, 2018, 2019 and 2020 are $0.3 billion, $1.3 billion, $2.2 billion, $0.8 billion and $1.7 billion, respectively.
CAPITAL EXPENDITURES AND CAPACITY GUIDANCE
Based upon current ship orders, projected capital expenditures for full year 2016, 2017, 2018, 2019 and 2020 are $2.4 billion, $0.5 billion, $2.6 billion, $1.5 billion and $2.0 billion, respectively. Capacity changes for 2016, 2017, 2018, 2019 and 2020 are expected to be 3.3%, -1.7%, 3.3%, 7.4% and 3.5%, respectively. These figures do not include potential ship sales or additions that we may elect to make in the future.
CONFERENCE CALL SCHEDULED
The company has scheduled a conference call at 10 a.m. Eastern Daylight Time today to discuss its earnings. This call can be heard, either live or on a delayed basis, on the company's investor relations website at www.rclinvestor.com.
Selected Operational and Financial Metrics
Adjusted Net Income
Adjusted Net Income represents net income excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis. For the periods presented, these items included the impairment of the Pullmantur related assets, net loss related to the elimination of the Pullmantur reporting lag, the net gain related to the sale of the Pullmantur and CDF brands and related costs, restructuring charges and other initiative costs related to our Pullmantur right-sizing strategy and other restructuring initiatives.
Adjusted Earnings Per Share ("Adjusted EPS")
Represents Adjusted Net Income divided by the diluted shares outstanding at the end of the reporting period. We believe this measure is meaningful when assessing our performance on a comparative basis.
Available Passenger Cruise Days ("APCD")
APCD is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period. We use this measure to perform capacity and rate analysis to identify the main non-capacity drivers that cause our cruise revenues and expenses to vary. APCDs reported do not include the November and December 2015 APCD amounts related to the elimination of the Pullmantur reporting lag.
Constant-Currency
We believe Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel are our most relevant non-GAAP financial measures. However, a significant portion of our revenue and expenses are denominated in currencies other than the US Dollar. Because our reporting currency is the US Dollar, the value of these revenues and expenses in US Dollars will be affected by changes in currency exchange rates. Although such changes in local currency prices are just one of many elements impacting our revenues and expenses, it can be an important element. For this reason, we also monitor Net Yields, Net Cruise Costs, and Net Cruise Costs Excluding Fuel on a "Constant-Currency" basis – i.e. as if the current period's currency exchange rates had remained constant with the comparable prior period's rates. We calculate "Constant-Currency" by applying the average prior year period exchange rates for each of the corresponding months of the reported and/or forecasted period, so as to calculate what the results would have been had exchange rates been the same throughout both periods. We do not make predictions about future exchange rates and use current exchange rates for calculations of future periods. It should be emphasized that the use of Constant-Currency is primarily used by us for comparing short-term changes and/or projections. Over the longer term, changes in guest sourcing and shifting the amount of purchases between currencies can significantly change the impact of the purely currency-based fluctuations.
DOUBLE-DOUBLE
Our DOUBLE-DOUBLE Program refers to the multi-year Adjusted EPS and Return on Invested Capital (ROIC) goals we publicly announced in 2014 and are seeking to achieve by the end of 2017. Under this program, we are targeting Adjusted EPS of at least $6.78 by the end of 2017, which is double our 2014 Adjusted EPS of $3.39. We are also targeting ROIC of at least 10% by the end of 2017 as compared to ROIC of 5.9% in 2014.
Gross Cruise Costs
Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.
Gross Yields
Gross Yields represent total revenues per APCD.
Net Cruise Costs ("NCC") and Net Cruise Costs ("NCC") Excluding Fuel
Represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses and, in the case of Net Cruise Costs Excluding Fuel, fuel expenses. In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs and Net Cruise Costs Excluding Fuel to be the most relevant indicators of our performance. We have not provided a quantitative reconciliation of projected Gross Cruise Costs to projected Net Cruise Costs and projected Net Cruise Costs Excluding Fuel due to the significant uncertainty in projecting the costs deducted to arrive at these measures. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful. Net Cruise Costs excludes the net gain related to the sale of the Pullmantur and CDF brands and related costs and initiative costs related to our Pullmantur right-sizing strategy and other restructuring initiatives.
Net Revenues
Net Revenues represent total revenues less commissions, transportation and other expenses and onboard and other expenses.
Net Yields
Net Yields represent Net Revenues per APCD. We utilize Net Revenues and Net Yields to manage our business on a day-to-day basis as we believe that it is the most relevant measure of our pricing performance because it reflects the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses and onboard and other expenses. We have not provided a quantitative reconciliation of projected Gross Yields to projected Net Yields due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful. Net Yields excludes initiative costs related to the sale of the Pullmantur and CDF brands.
Occupancy
Occupancy, in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.
Passenger Cruise Days
Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.
Royal Caribbean Cruises Ltd. (NYSE: RCL) is a global cruise vacation company that owns and operates three global brands: Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. We also own a 50 percent joint venture interest in the German brand TUI Cruises and a 49% interest in the Spanish brand Pullmantur and have a minority interest in smaller regional brands. Together, these brands operate a combined total of 49 ships with an additional thirteen on order. They operate diverse itineraries around the world that call on approximately 490 destinations on all seven continents. Additional information can be found on www.royalcaribbean.com, www.celebritycruises.com, www.azamaraclubcruises.com, www.tuicruises.com, www.pullmantur.es, or www.rclinvestor.com.
Certain statements in this release relating to, among other things, our future performance constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding expected financial results for the fourth quarter and full year 2016 and for 2017, and expectations regarding the timing and results of our Double-Double initiative and the costs and yields expected in 2016, and other future periods. Words such as "anticipate," "believe," "could," "driving," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," "would," and similar expressions are intended to identify these forward-looking statements. Forward-looking statements reflect management's current expectations, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to the following: the impact of the economic and geopolitical environment on key aspects of our business, such as the demand for cruises, passenger spending, our operating costs and our ability to obtain new borrowings in amounts sufficient to satisfy our capital expenditures, debt repayments and other financing needs, incidents or adverse publicity concerning the cruise vacation industry, concerns over safety, health and security aspects of traveling, unavailability of ports of call, the uncertainties of conducting business internationally and expanding into new markets and new ventures, changes in operating and financing costs, the impact of foreign exchange rates, interest rate and fuel price fluctuations, vacation industry competition and changes in industry capacity and overcapacity, the impact of new or changing regulations on our business, emergency ship repairs, including the related lost revenue, the impact of ship delivery delays, ship cancellations or ship construction price increases, shipyard unavailability and the unavailability or cost of air service.
More information about factors that could affect our operating results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent annual report on Form 10-K and our recent quarterly report on 10-Q, copies of which may be obtained by visiting our Investor Relations website at www.rclinvestor.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to us on the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Adjusted Measures of Financial Performance
This press release includes certain adjusted financial measures as defined under Securities and Exchange Commission rules, which we believe provide useful information to investors as a supplement to our consolidated financial statements which are prepared and presented in accordance with generally accepted accounting principles, or GAAP.
The presentation of adjusted financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These measures may be different from adjusted measures used by other companies. In addition, these adjusted measures are not based on any comprehensive set of accounting rules or principles. Adjusted measures have limitations in that they do not reflect all of the amounts associated with our results of operations as do the corresponding GAAP measures.
A reconciliation to the most comparable GAAP measure of all adjusted financial measures included in this press release can be found in the tables included at the end of this press release.
Adjusted Earnings per Share estimates for the Full Year and Fourth Quarter of 2016 are presented in lieu of US GAAP earnings per share estimates due to uncertainty in projecting the amounts adjusted to arrive at this measure, such as, uncertainty in the timing and amount of restructuring charges and other initiative costs that we will absorb in the remainder of 2016, the amount of which is expected to be immaterial. Refer to Note 11 Restructuring Charges in our consolidated financial statements in our quarterly report on 10-Q for the third quarter of 2016 for further information on our Restructuring charges and other initiative charges and to the definition for Adjusted Earnings per Share herein. For the quarter and nine months ended September 30, 2016, we incurred restructuring charges and other initiative charges of $1.5 million and $9.9 million, respectively.
| ROYAL CARIBBEAN CRUISES LTD. |
|||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
|||||||||||||||
| (unaudited, in thousands, except per share data) |
|||||||||||||||
| Quarter Ended |
Nine Months Ended |
||||||||||||||
| September 30, |
September 30, |
||||||||||||||
| 2016 |
2015 |
2016 |
2015 |
||||||||||||
| Passenger ticket revenues |
$ |
1,899,956 |
$ |
1,873,942 |
$ |
4,794,653 |
$ |
4,688,189 |
|||||||
| Onboard and other revenues |
663,785 |
649,158 |
1,792,145 |
1,708,832 |
|||||||||||
| Total revenues |
2,563,741 |
2,523,100 |
6,586,798 |
6,397,021 |
|||||||||||
| Cruise operating expenses: |
|||||||||||||||
| Commissions, transportation and other |
400,933 |
413,156 |
1,060,391 |
1,093,409 |
|||||||||||
| Onboard and other |
159,887 |
175,214 |
399,739 |
438,558 |
|||||||||||
| Payroll and related |
214,081 |
217,627 |
671,955 |
647,788 |
|||||||||||
| Food |
125,732 |
122,124 |
371,759 |
361,317 |
|||||||||||
| Fuel |
178,772 |
199,848 |
531,283 |
607,689 |
|||||||||||
| Other operating |
260,718 |
259,057 |
857,161 |
777,291 |
|||||||||||
| Total cruise operating expenses |
1,340,123 |
1,387,026 |
3,892,288 |
3,926,052 |
|||||||||||
| Marketing, selling and administrative expenses |
257,430 |
256,060 |
845,808 |
817,040 |
|||||||||||
| Depreciation and amortization expenses |
229,328 |
210,742 |
661,712 |
617,678 |
|||||||||||
| Impairment of Pullmantur related assets |
— |
411,267 |
— |
411,267 |
|||||||||||
| Restructuring charges |
1,897 |
— |
6,627 |
— |
|||||||||||
| Operating Income |
734,963 |
258,005 |
1,180,363 |
624,984 |
|||||||||||
| Other income (expense): |
|||||||||||||||
| Interest income |
6,472 |
1,735 |
14,875 |
8,244 |
|||||||||||
| Interest expense, net of interest capitalized |
(82,610) |
(66,819) |
(226,803) |
(213,598) |
|||||||||||
| Other income (including a $21.7 million loss related to the 2016 elimination of the Pullmantur reporting lag for the nine months ended September 30, 2016 and including in the quarter and nine months ended September 30, 2015 a net deferred tax benefit of $12.0 million related to the Pullmantur impairment) |
34,432 |
35,866 |
53,867 |
39,354 |
|||||||||||
| (41,706) |
(29,218) |
(158,061) |
(166,000) |
||||||||||||
| Net Income |
$ |
693,257 |
$ |
228,787 |
$ |
1,022,302 |
$ |
458,984 |
|||||||
| Earnings per Share: |
|||||||||||||||
| Basic |
$ |
3.23 |
$ |
1.04 |
$ |
4.74 |
$ |
2.09 |
|||||||
| Diluted |
$ |
3.21 |
$ |
1.03 |
$ |
4.72 |
$ |
2.08 |
|||||||
| Weighted-Average Shares Outstanding: |
|||||||||||||||
| Basic |
214,819 |
219,963 |
215,663 |
219,835 |
|||||||||||
| Diluted |
215,667 |
221,137 |
216,575 |
220,979 |
|||||||||||
| Comprehensive Income |
|||||||||||||||
| Net Income |
$ |
693,257 |
$ |
228,787 |
$ |
1,022,302 |
$ |
458,984 |
|||||||
| Other comprehensive income (loss): |
|||||||||||||||
| Foreign currency translation adjustments |
4,043 |
(4,191) |
8,423 |
(23,994) |
|||||||||||
| Change in defined benefit plans |
(5,051) |
3,318 |
(12,148) |
5,567 |
|||||||||||
| Gain (loss) on cash flow derivative hedges |
95,536 |
(222,492) |
254,624 |
(280,968) |
|||||||||||
| Total other comprehensive income (loss) |
94,528 |
(223,365) |
250,899 |
(299,395) |
|||||||||||
| Comprehensive Income |
$ |
787,785 |
$ |
5,422 |
$ |
1,273,201 |
$ |
159,589 |
|||||||
| STATISTICS |
|||||||||||||||
| Quarter Ended |
Nine Months Ended |
||||||||||||||
| September 30, |
September 30, |
||||||||||||||
| 2016 |
2015 |
2016(1) |
2015 |
||||||||||||
| Passengers Carried |
1,558,224 |
1,403,650 |
4,365,144 |
4,053,451 |
|||||||||||
| Passenger Cruise Days |
10,727,918 |
10,176,750 |
30,367,048 |
28,856,742 |
|||||||||||
| APCD |
9,766,482 |
9,465,368 |
28,503,681 |
27,284,750 |
|||||||||||
| Occupancy |
109.8 |
% |
107.5 |
% |
106.5 |
% |
105.8 |
% |
|||||||
| (1) Does not include the November and December 2015 amounts related to the elimination of the Pullmantur reporting lag. |
| ROYAL CARIBBEAN CRUISES LTD. |
|||||||
| CONSOLIDATED BALANCE SHEETS |
|||||||
| (in thousands, except share data) |
|||||||
| As of |
|||||||
| September 30, |
December 31, |
||||||
| 2016 |
2015 |
||||||
| (unaudited) |
|||||||
| Assets |
|||||||
| Current assets |
|||||||
| Cash and cash equivalents |
$ |
178,428 |
$ |
121,565 |
|||
| Trade and other receivables, net |
273,422 |
238,972 |
|||||
| Inventories |
118,849 |
121,332 |
|||||
| Prepaid expenses and other assets |
231,442 |
220,579 |
|||||
| Derivative financial instruments |
928 |
134,574 |
|||||
| Total current assets |
803,069 |
837,022 |
|||||
| Property and equipment, net |
20,230,803 |
18,777,778 |
|||||
| Goodwill |
288,461 |
286,764 |
|||||
| Other assets |
1,127,929 |
880,479 |
|||||
| $ |
22,450,262 |
$ |
20,782,043 |
||||
| Liabilities and Shareholders' Equity |
|||||||
| Current liabilities |
|||||||
| Current portion of long-term debt |
$ |
1,298,002 |
$ |
899,542 |
|||
| Accounts payable |
259,027 |
302,072 |
|||||
| Accrued interest |
95,112 |
38,325 |
|||||
| Accrued expenses and other liabilities |
678,874 |
658,601 |
|||||
| Derivative financial instruments |
201,877 |
651,866 |
|||||
| Customer deposits |
1,967,678 |
1,742,286 |
|||||
| Total current liabilities |
4,500,570 |
4,292,692 |
|||||
| Long-term debt |
8,419,850 |
7,627,701 |
|||||
| Other long-term liabilities |
739,693 |
798,611 |
|||||
| Commitments and contingencies |
|||||||
| Shareholders' equity |
|||||||
| Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding) |
— |
— |
|||||
| Common stock ($0.01 par value; 500,000,000 shares authorized; 234,589,237 and 233,905,166 shares issued, September 30, 2016 and December 31, 2015, respectively) |
2,346 |
2,339 |
|||||
| Paid-in capital |
3,316,385 |
3,297,619 |
|||||
| Retained earnings |
7,702,260 |
6,944,862 |
|||||
| Accumulated other comprehensive loss |
(1,077,534) |
(1,328,433) |
|||||
| Treasury stock (20,019,237 and 15,911,971 common shares at cost, September 30, 2016 and December 31, 2015, respectively) |
(1,153,308) |
(853,348) |
|||||
| Total shareholders' equity |
8,790,149 |
8,063,039 |
|||||
| $ |
22,450,262 |
$ |
20,782,043 |
||||
| ROYAL CARIBBEAN CRUISES LTD. |
|||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
| (unaudited, in thousands) |
|||||||
| Nine Months Ended |
|||||||
| September 30, |
|||||||
| 2016 |
2015 |
||||||
| Operating Activities |
|||||||
| Net income |
$ |
1,022,302 |
$ |
458,984 |
|||
| Adjustments: |
|||||||
| Depreciation and amortization |
661,712 |
617,678 |
|||||
| Impairment of Pullmantur related assets |
— |
411,267 |
|||||
| Net deferred income tax expense (benefit) |
1,601 |
(13,466) |
|||||
| Loss on derivative instruments not designated as hedges |
6,353 |
49,607 |
|||||
| Changes in operating assets and liabilities: |
|||||||
| Decrease in trade and other receivables, net |
9,823 |
24,130 |
|||||
| Increase in inventories |
(6,379) |
(8,377) |
|||||
| Decrease (increase) in prepaid expenses and other assets |
2,484 |
(30,649) |
|||||
| Decrease in accounts payable |
(17,313) |
(22,915) |
|||||
| Increase in accrued interest |
56,787 |
34,207 |
|||||
| Increase in accrued expenses and other liabilities |
23,216 |
11,558 |
|||||
| Increase in customer deposits |
197,277 |
65,511 |
|||||
| Dividends received from unconsolidated affiliates |
71,370 |
5,327 |
|||||
| Other, net |
(28,281) |
5,074 |
|||||
| Net cash provided by operating activities |
2,000,952 |
1,607,936 |
|||||
| Investing Activities |
|||||||
| Purchases of property and equipment |
(2,313,831) |
(1,360,637) |
|||||
| Cash paid on settlement of derivative financial instruments |
(172,878) |
(158,890) |
|||||
| Investments in and loans to unconsolidated affiliates |
(8,611) |
(54,250) |
|||||
| Cash received on loans to unconsolidated affiliates |
22,470 |
122,710 |
|||||
| Other, net(2) |
(44,709) |
(18,642) |
|||||
| Net cash used in investing activities |
(2,517,559) |
(1,469,709) |
|||||
| Financing Activities |
|||||||
| Debt proceeds |
6,038,560 |
2,962,501 |
|||||
| Debt issuance costs |
(83,793) |
(57,146) |
|||||
| Repayments of debt |
(4,818,262) |
(2,887,237) |
|||||
| Purchases of treasury stock |
(299,959) |
— |
|||||
| Dividends paid |
(243,557) |
(197,718) |
|||||
| Proceeds from exercise of common stock options |
1,782 |
6,902 |
|||||
| Other, net |
2,179 |
1,778 |
|||||
| Net cash provided by (used in) financing activities |
596,950 |
(170,920) |
|||||
| Effect of exchange rate changes on cash |
(23,480) |
(9,129) |
|||||
| Net increase (decrease) in cash and cash equivalents |
56,863 |
(41,822) |
|||||
| Cash and cash equivalents at beginning of period |
121,565 |
189,241 |
|||||
| Cash and cash equivalents at end of period |
$ |
178,428 |
$ |
147,419 |
|||
| Supplemental Disclosure |
|||||||
| Cash paid during the period for: |
|||||||
| Interest, net of amount capitalized |
$ |
140,335 |
$ |
151,661 |
|||
| Non-cash Investing Activities |
|||||||
| Notes receivable issued upon sale of property and equipment |
$ |
213,042 |
$ |
— |
|||
| (2)Amount includes $26.0 million of cash outflow related to the divestiture of RCHE. |
| ROYAL CARIBBEAN CRUISES LTD. |
|||||||||||||||||||||||
| NON-GAAP RECONCILING INFORMATION |
|||||||||||||||||||||||
| (unaudited) |
|||||||||||||||||||||||
| Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields): |
|||||||||||||||||||||||
| Quarter Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2016 |
2016 On a Constant Currency Basis |
2015 |
2016 |
2016 On a Constant Currency Basis |
2015 |
||||||||||||||||||
| Passenger ticket revenues |
$ |
1,899,956 |
$ |
1,952,378 |
$ |
1,873,942 |
$ |
4,794,653 |
$ |
4,934,937 |
$ |
4,688,189 |
|||||||||||
| Onboard and other revenues |
663,785 |
670,195 |
649,158 |
1,792,145 |
1,806,124 |
1,708,832 |
|||||||||||||||||
| Total revenues |
2,563,741 |
2,622,573 |
2,523,100 |
6,586,798 |
6,741,061 |
6,397,021 |
|||||||||||||||||
| Less: |
|||||||||||||||||||||||
| Commissions, transportation and other |
400,933 |
410,399 |
413,156 |
1,060,391 |
1,086,888 |
1,093,409 |
|||||||||||||||||
| Onboard and other |
159,887 |
160,036 |
175,214 |
399,739 |
401,285 |
438,558 |
|||||||||||||||||
| Net Revenues including other initiative costs |
2,002,921 |
2,052,138 |
1,934,730 |
5,126,668 |
5,252,888 |
4,865,054 |
|||||||||||||||||
| Less: |
|||||||||||||||||||||||
| Other initiative costs included within Net Revenues |
(1,843) |
(1,790) |
— |
(1,843) |
(1,790) |
— |
|||||||||||||||||
| Net Revenues |
$ |
2,004,764 |
$ |
2,053,928 |
$ |
1,934,730 |
$ |
5,128,511 |
$ |
5,254,678 |
$ |
4,865,054 |
|||||||||||
| APCD |
9,766,482 |
9,766,482 |
9,465,368 |
28,503,681 |
28,503,681 |
27,284,750 |
|||||||||||||||||
| Gross Yields |
$ |
262.50 |
$ |
268.53 |
$ |
266.56 |
$ |
231.09 |
$ |
236.50 |
$ |
234.45 |
|||||||||||
| Net Yields |
$ |
205.27 |
$ |
210.30 |
$ |
204.40 |
$ |
179.92 |
$ |
184.35 |
$ |
178.31 |
|||||||||||
| Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD): |
|||||||||||||||||||||||
| Quarter Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2016 |
2016 On a Constant Currency Basis |
2015 |
2016 |
2016 On a Constant Currency Basis |
2015 |
||||||||||||||||||
| Total cruise operating expenses |
$ |
1,340,123 |
$ |
1,350,295 |
$ |
1,387,026 |
$ |
3,892,288 |
$ |
3,926,447 |
$ |
3,926,052 |
|||||||||||
| Marketing, selling and administrative expenses |
257,430 |
260,471 |
256,060 |
845,808 |
856,941 |
817,040 |
|||||||||||||||||
| Gross Cruise Costs |
1,597,553 |
1,610,766 |
1,643,086 |
4,738,096 |
4,783,388 |
4,743,092 |
|||||||||||||||||
| Less: |
|||||||||||||||||||||||
| Commissions, transportation and other |
400,933 |
410,399 |
413,156 |
1,060,391 |
1,086,888 |
1,093,409 |
|||||||||||||||||
| Onboard and other |
159,887 |
160,036 |
175,214 |
399,739 |
401,285 |
438,558 |
|||||||||||||||||
| Net Cruise Costs including other initiative costs |
1,036,733 |
1,040,331 |
1,054,716 |
3,277,966 |
3,295,215 |
3,211,125 |
|||||||||||||||||
| Less: |
|||||||||||||||||||||||
| Other initiative costs included within cruise operating expenses and marketing, selling and administrative expenses |
(2,252) |
(2,157) |
— |
1,073 |
1,240 |
— |
|||||||||||||||||
| Net gain related to the sale of Pullmantur and CDF Croisières de France brands included within other operating expenses |
(3,834) |
(3,834) |
— |
(3,834) |
(3,834) |
— |
|||||||||||||||||
| Net Cruise Costs |
1,042,819 |
1,046,322 |
1,054,716 |
3,280,727 |
3,297,809 |
3,211,125 |
|||||||||||||||||
| Less: |
|||||||||||||||||||||||
| Fuel(3) |
178,772 |
178,742 |
199,848 |
530,859 |
531,836 |
607,689 |
|||||||||||||||||
| Net Cruise Costs Excluding Fuel |
$ |
864,047 |
$ |
867,580 |
$ |
854,868 |
$ |
2,749,868 |
$ |
2,765,973 |
$ |
2,603,436 |
|||||||||||
| APCD |
9,766,482 |
9,766,482 |
9,465,368 |
28,503,681 |
28,503,681 |
27,284,750 |
|||||||||||||||||
| Gross Cruise Costs per APCD |
$ |
163.58 |
$ |
164.93 |
$ |
173.59 |
$ |
166.23 |
$ |
167.82 |
$ |
173.84 |
|||||||||||
| Net Cruise Cost per APCD |
$ |
106.78 |
$ |
107.13 |
$ |
111.43 |
$ |
115.10 |
$ |
115.70 |
$ |
117.69 |
|||||||||||
| Net Cruise Costs Excluding Fuel per APCD |
$ |
88.47 |
$ |
88.83 |
$ |
90.32 |
$ |
96.47 |
$ |
97.04 |
$ |
95.42 |
|||||||||||
| (3) For the nine months ended September 30, 2016, amount does not include fuel expense of $0.4 million included within other initiative costs associated with the redeployment of Pullmantur's Empress to the Royal Caribbean International brand. |
| ROYAL CARIBBEAN CRUISES LTD. |
|||||||||||||||
| NON-GAAP RECONCILING INFORMATION (CONTINUED) |
|||||||||||||||
| (unaudited) |
|||||||||||||||
| Adjusted Net Income and Adjusted Earnings per Share were calculated as follows (in thousands, except per share data): |
|||||||||||||||
| Quarter Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
| 2016 |
2015 |
2016 |
2015 |
||||||||||||
| Net Income |
$ |
693,257 |
$ |
228,787 |
$ |
1,022,302 |
$ |
458,984 |
|||||||
| Adjusted Net income |
690,911 |
628,070 |
1,050,031 |
858,267 |
|||||||||||
| Net Adjustments to Net Income- (Decrease) Increase |
$ |
(2,346) |
$ |
399,283 |
$ |
27,729 |
$ |
399,283 |
|||||||
| Adjustments to Net Income: |
|||||||||||||||
| Impairment of Pullmantur related assets(4) |
$ |
— |
$ |
399,283 |
$ |
— |
$ |
399,283 |
|||||||
| Net loss related to the elimination of the Pullmantur reporting lag |
— |
— |
21,656 |
— |
|||||||||||
| Net gain related to the sale of the Pullmantur and CDF Croisières de France brands |
(3,834) |
— |
(3,834) |
— |
|||||||||||
| Restructuring charges |
1,897 |
— |
6,627 |
— |
|||||||||||
| Other initiative costs |
(409) |
— |
3,280 |
— |
|||||||||||
| Net Adjustments to Net Income- (Decrease) Increase |
$ |
(2,346) |
$ |
399,283 |
$ |
27,729 |
$ |
399,283 |
|||||||
| Earnings per Share - Diluted |
$ |
3.21 |
$ |
1.03 |
$ |
4.72 |
$ |
2.08 |
|||||||
| Adjusted Earnings per Share - Diluted |
3.20 |
2.84 |
4.85 |
3.88 |
|||||||||||
| Net Adjustments to Net Income- (Decrease) Increase |
$ |
(0.01) |
$ |
1.81 |
$ |
0.13 |
$ |
1.80 |
|||||||
| Adjustments to Earnings per Share: |
|||||||||||||||
| Impairment of Pullmantur related assets(4) |
$ |
— |
$ |
1.81 |
$ |
— |
$ |
1.80 |
|||||||
| Net loss related to the elimination of the Pullmantur reporting lag |
— |
— |
0.10 |
— |
|||||||||||
| Net gain related to the sale of the Pullmantur and CDF Croisières de France brands |
(0.02) |
— |
(0.02) |
— |
|||||||||||
| Restructuring charges |
0.01 |
— |
0.03 |
— |
|||||||||||
| Other initiative costs |
— |
— |
0.02 |
— |
|||||||||||
| Net Adjustments to Net Income- (Decrease) Increase |
$ |
(0.01) |
$ |
1.81 |
$ |
0.13 |
$ |
1.80 |
|||||||
| Weighted-Average Shares Outstanding - Diluted |
215,667 |
221,137 |
216,575 |
220,979 |
|||||||||||
| (4) Includes a net income tax benefit of $12.0 million related to the Pullmantur impairment. |
SOURCE Royal Caribbean
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