Royal Caribbean Reports Over 25 Percent Growth in Second Quarter Earnings and Updates 2016 Guidance

  • Royal Caribbean International
  • 08.02.16
Royal Caribbean Cruises Ltd. reported GAAP and adjusted earnings of $1.06 and $1.09, respectively, up over 25 percent from last year and better than expectations.

Full year adjusted earnings are also expected to be up 25 percent in the range of $6.00 to $6.10, down $0.20 from the midpoint of earlier guidance due to a negative impact of approximately $0.27 related to currency and fuel.

Yields and costs for the year are also performing generally as expected.  The sale of 51 percent of the Pullmantur Group announced in May was completed at the end of July.  Consequently, Pullmantur's results will no longer be consolidated in the company's accounts.  Since Pullmantur's yields and costs are lower than the fleet average, this change has the effect of increasing the company's yields and costs metrics for 2016.

KEY HIGHLIGHTS

Second Quarter 2016 results:

  • Net Yields were up 1.1 percent on a Constant-Currency basis (down 0.5 percent As-Reported), in-line with previous guidance.
  • Net Cruise Costs ("NCC") excluding fuel were up 1.9% on a Constant-Currency basis (up 1.5 percent As-Reported), in-line with guidance.
  • US GAAP Net Income was $229.9 million or $1.06 per share, versus $185.0 million, or $0.84 per share in 2015.
  • Adjusted Net Income was $235.2 million, or $1.09 per share, versus $185.0 million, or $0.84 per share in 2015, better than guidance due to lower than expected fuel expense.

Full Year 2016 forecast:    

  • Net Yields are expected to increase in the range of 4.0 percent to 4.5 percent on a Constant-Currency basis (up approximately 2.0 percent As-Reported) with the increase from previous guidance driven primarily by the deconsolidation of the Pullmantur Group.
  • NCC excluding fuel are expected to be up approximately 1.0 percent on a Constant-Currency basis (up flat to up 1.0 percent As-Reported), unchanged from previous guidance. This includes a slight increase in this cost metric driven by the deconsolidation of the Pullmantur Group.
  • Adjusted EPS is expected to be in the range of $6.00 to $6.10 per share, a $0.20 decrease from the mid-point of the company's previous guidance, driven by a negative $0.27 impact of currency and fuel rates, partially offset by the better than expected second quarter.

"Our business remains strong and we continue to improve our return profile," said Richard Fain, chief executive officer.  "This keeps us solidly on our path towards the Double-Double."

SECOND QUARTER RESULTS

US GAAP Net Income for the second quarter 2016 was $229.9 million or $1.06 per share, compared to $185.0 million or $0.84 per share in 2015.  Adjusted Net Income for the second quarter of 2016 was $235.2 million, or $1.09 per share, up over 25% versus the same quarter last year.  The outperformance for the quarter was primarily driven by better than anticipated fuel expense.

Net Yields on a Constant-Currency basis increased 1.1 percent, in-line with guidance. The portfolio of global destinations performed as expected.  Constant-Currency NCC excluding fuel increased 1.9 percent, also in-line with previous guidance.

Bunker pricing net of hedging for the second quarter was $511 per metric ton and consumption was 346,000 metric tons.

FULL YEAR 2016

The company updated full year Adjusted EPS guidance to a range of $6.00 to $6.10. This is a $0.20 decrease at the midpoint versus previous guidance due to a $0.27 negative impact from currency and fuel rates, of which approximately $0.14 is related to weakness in the British Pound following the Brexit vote.  Lower than expected fuel expense in the second quarter partially offset the full year impact of weaker foreign currencies and rise in fuel prices.

As previously announced, the company sold 51 percent of its stake in Pullmantur and formed a Joint Venture with Springwater Capital.  This sale results in the deconsolidation of the Pullmantur Group.  Consistent with our other joint ventures, results from this venture will now be accounted for under equity method accounting.  An immaterial gain related to the sale has been excluded from the company's earnings guidance.

The company's booked position for the remainder of 2016 remains strong, similar to last year's record levels.  Looking further ahead, the company's booked position for the next twelve months is also strong, up on both rate and volume, versus same time last year.  Net Yields on a Constant-Currency basis are expected to increase in the range of 4.0 percent to 4.5 percent, driven primarily by the deconsolidation of the Pullmantur Group.  Continued strength for North American products are helping offset weakness in the Eastern Mediterranean and in Shanghai.

NCC excluding fuel are expected to be up approximately 1.0 percent for the year.  This includes a slight increase in this cost metric driven by the deconsolidation of the Pullmantur Group offset by a slight decrease in costs from the rest of the fleet.

"While there are always puts and takes in our key markets, our portfolio is performing as expected, our booked position remains strong, and our newbuilds are entering their markets to great fanfare," said Jason T. Liberty, chief financial officer.  "These factors are driving another year of record earnings."

Taking into account current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects 2016 Adjusted EPS to be in the range of $6.00 to $6.10 per share.

THIRD QUARTER 2016

Constant-Currency Net Yields are expected to be up approximately 2.0 percent in the third quarter of 2016.  The year-over-year improvement is primarily driven by the deconsolidation of the Pullmantur Group.

NCC excluding fuel are expected to be down approximately 1.5 percent on a Constant-Currency basis.  This includes a small increase relating to deconsolidation of the Pullmantur Group.

Based on current fuel pricing, interest rates and currency exchange rates and the factors detailed above, the company expects third quarter Adjusted EPS to be approximately $3.10 per share.

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 $187 million and $725 million of fuel expense in its third quarter and full year 2016 guidance, respectively.

Forecasted consumption is 64 percent hedged via swaps for the remainder of 2016 and 60 percent, 45 percent, 36 percent and 20 percent 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, $505, $452, $342 and $340, respectively.

The company provided the following fuel statistics for the third quarter and full year 2016:
 

FUEL STATISTICS

Third Quarter 2016

Full Year 2016

Fuel Consumption (metric tons)

341,000

1,369,000

Fuel Expenses

$187 million

$725 million

Percent Hedged (fwd consumption)

59%

64%

Impact of 10% change in fuel prices

$3.8 million

$8.4 million

 
In summary, the company provided the following guidance for the third quarter and full year of 2016:
 
 

GUIDANCE

As-Reported                    Constant-Currency

Third Quarter 2016

Net Yields

Approx. flat

Approx. 2.0%

Net Cruise Costs per APCD

(3.0%) to (4.0%)

Approx. (3.0%)

Net Cruise Costs per APCD

excluding Fuel

Approx. (2.0%)

Approx. (1.5%)

Full Year 2016

Net Yields

Approx. 2.0%

4.0% to 4.5%

Net Cruise Costs per APCD

(1.5%) to (2.0%)

Approx. (1.5%)

Net Cruise Costs per APCD

excluding Fuel

Flat to up 1.0%

Approx. 1.0%

GUIDANCE

Third Quarter 2016

Full Year 2016

Capacity Increase

3.2%

3.3%

Depreciation and Amortization

$227 to $232 million

$890 to $900 million

Interest Expense, net

$75 to $80 million

$282 to $292 million

Adjusted EPS

Approx. $3.10

$6.00 to $6.10

1% Change in Currency

$4 million

$8 million

1% Change in Net Yield

$20 million

$36 million

1% Change in NCC x fuel

$9 million

$17 million

1% Change in LIBOR

$10 million

$24 million

Exchange rates used in guidance calculations

Current – July

Previous – April

GBP

$1.32

$1.45

AUD

$0.75

$0.77

CAD

$0.76

$0.79

CNH

$0.15

$0.15

EUR

$1.10

$1.13

LIQUIDITY AND FINANCING ARRANGEMENTS

As of June 30, 2016, liquidity was $0.8 billion, including cash and the undrawn portion of the company's unsecured 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, $2.3 billion, $0.8 billion and $1.8 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, $2.5 billion, $1.4 billion and $1.7 billion, respectively.  Capacity increases for 2016, 2017, 2018, 2019 and 2020 are expected to be 3.3%, -1.8%, 3.4%, 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 web site 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 net loss related to the elimination of the Pullmantur reporting lag, restructuring charges and other costs related to our Pullmantur right-sizing strategy. The company has also said that it intends to exclude any gain on the sale of its 51% interest in Pullmantur.

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 costs related to our Pullmantur right-sizing strategy.

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.

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 Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises, as well as TUI Cruises through our 50 percent joint venture interest and Pullmantur and CDF Croisières de France through our 49 percent joint venture interest.  Together, these six brands operate a combined total of 48 ships with an additional eleven 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.pullmantur.es, www.cdfcroisieresdefrance.com, www.tuicruises.com 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 third quarter and full year 2016, 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, a copy of which may be obtained by visiting our Investor Relations web site at www.rclinvestor.com or the SEC's web site 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 Third 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 under Item 1. Financial Statements 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 six months ended June 30, 2016, we incurred restructuring charges and other initiative charges of $5.3 million and $8.4 million, respectively.
 

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands, except per share data)

Quarter Ended

Six Months Ended

June 30,

June 30,

2016

2015

2016

2015

Passenger ticket revenues

$

1,516,530

$

1,507,468

$

2,894,697

$

2,814,247

Onboard and other revenues

588,732

550,854

1,128,360

1,059,674

Total revenues

2,105,262

2,058,322

4,023,057

3,873,921

Cruise operating expenses:

Commissions, transportation and other

334,568

355,835

659,458

680,253

Onboard and other

136,198

147,105

239,852

263,344

Payroll and related

230,433

218,570

457,874

430,161

Food

124,517

119,407

246,027

239,193

Fuel

176,649

202,565

352,511

407,841

Other operating

308,222

272,927

596,443

518,234

Total cruise operating expenses

1,310,587

1,316,409

2,552,165

2,539,026

Marketing, selling and administrative expenses

286,357

274,148

588,378

560,980

Depreciation and amortization expenses

221,620

206,468

432,384

406,936

Restructuring charges

4,425

4,730

Operating Income

282,273

261,297

445,400

366,979

Other income (expense):

Interest income

5,683

2,772

8,403

6,509

Interest expense, net of interest capitalized

(78,747)

(76,620)

(144,193)

(146,779)

Other income (expense)1

20,696

(2,482)

19,435

3,488

(52,368)

(76,330)

(116,355)

(136,782)

Net Income

$

229,905

$

184,967

$

329,045

$

230,197

Earnings per Share:

Basic

$

1.07

$

0.84

$

1.52

$

1.05

Diluted

$

1.06

$

0.84

$

1.52

$

1.04

Weighted-Average Shares Outstanding:

Basic

215,265

219,913

216,089

219,770

Diluted

216,131

220,902

217,040

220,886

Comprehensive Income

Net Income

$

229,905

$

184,967

$

329,045

$

230,197

Other comprehensive (loss) income:

Foreign currency translation adjustments

(2,268)

11,741

4,380

(19,803)

Change in defined benefit plans

(3,585)

3,742

(7,097)

2,249

Gain (loss) on cash flow derivative hedges

156,351

202,473

159,088

(58,476)

Total other comprehensive income (loss)

150,498

217,956

156,371

(76,030)

Comprehensive Income

$

380,403

$

402,923

$

485,416

$

154,167

STATISTICS

Quarter Ended

Six Months Ended

June 30,

June 30,

2016

2015

2016(2)

2015

Passengers Carried

1,403,998

1,314,284

2,806,920

2,649,802

Passenger Cruise Days

9,980,140

9,465,349

19,639,130

18,679,992

APCD

9,544,636

9,040,437

18,737,199

17,819,382

Occupancy

104.6

%

104.7

%

104.8

%

104.8

%

 

(1)

For the six months ended June 30, 2016, amount includes a $21.7 million loss related to the 2016 elimination of the Pullmantur reporting lag. 

(2)

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

June 30,

December 31,

2016

2015

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

175,164

$

121,565

Trade and other receivables, net

215,804

238,972

Inventories

112,380

121,332

Prepaid expenses and other assets

265,063

220,579

Derivative financial instruments

3,592

134,574

Assets held for sale

85,935

Total current assets

857,938

837,022

Property and equipment, net

20,185,878

18,777,778

Goodwill

288,399

286,764

Other assets

1,139,278

880,479

$

22,471,493

$

20,782,043

Liabilities and Shareholders' Equity

Current liabilities

Current portion of long-term debt

$

895,411

$

899,542

Accounts payable

319,606

302,072

Accrued interest

47,415

38,325

Accrued expenses and other liabilities

551,293

658,601

Derivative financial instruments

237,743

651,866

Customer deposits

2,222,196

1,742,286

Liabilities held for sale

99,967

Total current liabilities

4,373,631

4,292,692

Long-term debt

9,153,499

7,627,701

Other long-term liabilities

798,698

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; 234,566,541 and 233,905,166 shares issued, June 30, 2016 and December 31, 2015, respectively)

2,346

2,339

Paid-in capital

3,306,685

3,297,619

Retained earnings

7,112,096

6,944,862

Accumulated other comprehensive loss

(1,172,062)

(1,328,433)

Treasury stock (19,312,522 and 15,911,971 common shares at cost, June 30, 2016 and December 31, 2015, respectively)

(1,103,400)

(853,348)

Total shareholders' equity

8,145,665

8,063,039

$

22,471,493

$

20,782,043

 


 

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Six Months Ended

June 30,

2016

2015

Operating Activities

Net income

$

329,045

$

230,197

Adjustments:

Depreciation and amortization

432,384

406,936

Net deferred income tax expense

348

2,534

Loss on derivative instruments not designated as hedges

3,979

16,902

Changes in operating assets and liabilities:

Decrease in trade and other receivables, net

33,929

54,272

Decrease (increase) in inventories

1,394

(17,523)

Increase in prepaid expenses and other assets

(47,056)

(58,722)

Increase in accounts payable

41,173

14,668

Increase in accrued interest

9,090

4,998

Increase (decrease) in accrued expenses and other liabilities

21,839

(39,474)

Increase in customer deposits

467,539

405,752

Dividends received from unconsolidated affiliates

23,878

3,981

Other, net

(46,630)

15,824

Net cash provided by operating activities

1,270,912

1,040,345

Investing Activities

Purchases of property and equipment

(2,047,195)

(1,151,616)

Cash paid on settlement of derivative financial instruments

(161,307)

(118,521)

Investments in and loans to unconsolidated affiliates

(54,250)

Cash received on loans to unconsolidated affiliates

14,923

120,297

Other, net

(18,871)

(12,482)

Net cash used in investing activities

(2,212,450)

(1,216,572)

Financing Activities

Debt proceeds

5,300,561

2,376,001

Debt issuance costs

(70,406)

(41,171)

Repayments of debt

(3,738,905)

(1,992,232)

Purchases of treasury stock

(250,051)

Dividends paid

(243,557)

(197,718)

Proceeds from exercise of common stock options

1,512

5,067

Other, net

1,309

1,156

Net cash provided by financing activities

1,000,463

151,103

Effect of exchange rate changes on cash

9,195

(4,757)

Net increase (decrease) in cash and cash equivalents

68,120

(29,881)

Cash and cash equivalents at beginning of period

121,565

189,241

Less: Cash and cash equivalents attributed to assets held for sale

(14,521)

Cash and cash equivalents at end of period

$

175,164

$

159,360

Supplemental Disclosure

Cash paid during the period for:

Interest, net of amount capitalized

$

116,531

$

120,089

Non-cash Investing Activities

Notes receivable issued upon sale of property and equipment

$

213,042

$

 

 

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 June 30,

Six Months Ended June 30,

2016

2016 On a Constant Currency Basis

2015

2016

2016 On a Constant Currency Basis

2015

Passenger ticket revenues

$

1,516,530

$

1,544,074

$

1,507,468

$

2,894,697

$

2,982,559

$

2,814,247

Onboard and other revenues

588,732

591,338

550,854

1,128,360

1,135,929

1,059,674

Total revenues

2,105,262

2,135,412

2,058,322

4,023,057

4,118,488

3,873,921

Less:

Commissions, transportation and other

334,568

339,191

355,835

659,458

676,489

680,253

Onboard and other

136,198

136,271

147,105

239,852

241,249

263,344

Net Revenues

$

1,634,496

$

1,659,950

$

1,555,382

$

3,123,747

$

3,200,750

$

2,930,324

APCD

9,544,636

9,544,636

9,040,437

18,737,199

18,737,199

17,819,382

Gross Yields

$

220.57

$

223.73

$

227.68

$

214.71

$

219.80

$

217.40

Net Yields

$

171.25

$

173.91

$

172.05

$

166.71

$

170.82

$

164.45

 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 June 30,

Six Months Ended June 30,

2016

2016 On a Constant Currency Basis

2015

2016

2016 On a Constant Currency Basis

2015

Total cruise operating expenses

$

1,310,587

$

1,315,712

$

1,316,409

$

2,552,165

$

2,576,152

$

2,539,026

Marketing, selling and administrative expenses

286,357

289,673

274,148

588,378

596,740

560,980

Gross Cruise Costs

1,596,944

1,605,385

1,590,557

3,140,543

3,172,892

3,100,006

Less:

Commissions, transportation and other

334,568

339,191

355,835

659,458

676,489

680,253

Onboard and other

136,198

136,271

147,105

239,852

241,249

263,344

Net Cruise Costs including other initiative costs

1,126,178

1,129,923

1,087,617

2,241,233

2,255,154

2,156,409

Less:

Other initiative costs included within cruise operating expenses and marketing, selling and administrative expenses

834

846

3,325

3,397

Net Cruise Costs

1,125,344

1,129,077

1,087,617

2,237,908

2,251,757

2,156,409

Less:

Fuel(3)

176,649

177,079

202,565

352,087

353,094

407,841

Net Cruise Costs Excluding Fuel

$

948,695

$

951,998

$

885,052

$

1,885,821

$

1,898,663

$

1,748,568

APCD

9,544,636

9,544,636

9,040,437

18,737,199

18,737,199

17,819,382

Gross Cruise Costs per APCD

$

167.31

$

168.20

$

175.94

$

167.61

$

169.34

$

173.97

Net Cruise Cost per APCD

$

117.90

$

118.29

$

120.31

$

119.44

$

120.18

$

121.01

Net Cruise Costs Excluding Fuel per APCD

$

99.40

$

99.74

$

97.90

$

100.65

$

101.33

$

98.13

 

(3)

For the six months ended June 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)

Quarter Ended June 30,

Six Months Ended June 30,

2016

2015

2016

2015

Net Income

$

229,905

$

184,967

$

329,045

$

230,197

Adjusted Net income

235,164

184,967

359,120

230,197

Net Adjustments to Net Income- Increase

$

5,259

$

$

30,075

$

Adjustments to Net Income:

Net loss related to the elimination of the Pullmantur reporting lag

$

$

$

21,656

$

Restructuring charges

4,425

4,730

Other initiative costs

834

3,689

Net Adjustments to Net Income- Increase

$

5,259

$

$

30,075

$

Earnings per Share - Diluted

$

1.06

$

0.84

$

1.52

$

1.04

Adjusted Earnings per Share - Diluted

1.09

0.84

1.65

1.04

Net Adjustments to Net Income- Increase

$

0.03

$

$

0.13

$

Adjustments to Earnings per Share:

Net loss related to the elimination of the Pullmantur reporting lag

$

$

$

0.10

$

Restructuring charges

0.02

0.02

Other initiative costs

0.01

0.01

Net Adjustments to Net Income- Increase

$

0.03

$

$

0.13

$

Weighted-Average Shares Outstanding - Diluted

216,131

220,902

217,040

220,886



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