MIAMI, Oct. 29, 2020 /PRNewswire/ -- Royal
Caribbean Group (NYSE: RCL) today reported financial results for
the third quarter of 2020 and commented on the business considering
the global COVID-19 pandemic.
Third Quarter 2020
On March 13, 2020 and due to the
COVID-19 pandemic, the Company voluntarily suspended its global
cruise operation. The Company resumed limited cruise operations
outside of the U.S. in July with three vessels from TUI cruises and
two vessels from Hapag Lloyd, and in September, for a limited
period, with one Silversea ship.
The Company reported US GAAP Net Loss for the third quarter of
2020 of $(1.3) billion or
$(6.29) per share compared to US GAAP
Net Income of $883.2 million or
$4.20 per share in the prior year.
The Company also reported Adjusted Net Loss of $(1.2) billion or $(5.62) per share for the third quarter of 2020
compared to Adjusted Net Income of $896.8
million or $4.27 per share in
the prior year. The Net Loss and Adjusted Net Loss for the quarter
are the result of the impact of the COVID-19 pandemic on the
business.
Business Update
The Company continues to work with government and health
authorities across the globe to address the unique public health
challenges posed by COVID-19 and expects to re-start its global
cruise operation in a phased manner. Recently, the Company received
approval to sail from the Singaporean Government. As a result, the
Company anticipates that Quantum of the Seas, a ship from
the Royal Caribbean International fleet, will resume cruising from
Singapore in December 2020.
These initial cruises will most likely take place with reduced
guest occupancy, modified itineraries and enhanced health protocols
developed in collaboration with governments and health
authorities.
Health and Safety Protocols
In June 2020, the Company together
with Norwegian Cruise Line Holdings Ltd. formed a panel of globally
recognized medical and scientific experts named the Healthy Sail
Panel ("HSP"). The HSP has spent the last months studying how to
better protect the health and safety of guests and crew aboard
cruise ships as well as the communities they serve. Through
research and its relevant experience, the HSP concluded that
cruising can prudently resume operations in a measured and
controlled manner even during the pandemic with a robust set of
science-backed protocols. To this end, the panelists have
identified 74 recommendations across five focus areas. On
September 21, 2020, the HSP submitted
its recommendations to the Centers for Disease Control and
Prevention ("CDC") in response to a CDC request for public comment
that will be used to inform future public health guidance and
preventative measures relating to travel on cruise ships.
"The work of the Healthy Sail Panel has been thorough and
comprehensive. We are grateful for its enormous dedication and
passion, which has resulted in what has quickly become the seminal
document in this arena. We are also grateful for the time the CDC
and their observers have spent on this important topic with the
Healthy Sail Panel," said Richard D.
Fain, Chairman and CEO. "We understand the importance of
getting this right and are preparing to put these plans to the test
with a gradual and methodical return to service in the near
future."
Update on Liquidity Actions and Ongoing Uses of Cash
Given the current environment, the Company continues to
prioritize and bolster its liquidity, working to ensure it is well
positioned for recovery. Since the last earnings call, the
Company has taken further actions to enhance its liquidity,
preserve cash and obtain additional financing. Among these latest
efforts, the Company highlighted a $700M increase in liquidity through a 12-month
commitment for a senior guaranteed 364-day facility and an
approximate $1.15 billion increase in
liquidity through a combination of a convertible bond issuance and
a common stock public offering.
The Company estimates its cash burn to be, on average, in the
range of approximately $250 million
to $290 million per month during a
prolonged suspension of operations. This range includes all
interest expenses, ongoing ship operating expenses, administrative
expenses, hedging costs, expected necessary capital expenditures
(net of committed financings in the case of newbuilds) and excludes
cash refunds of customer deposits, commissions, debt obligations
and cash inflows from new and existing bookings. When the Company
starts returning its fleet into service, it will incur incremental
spend as it brings the ships out of their various levels of layup,
returns the crew to the vessels, takes the necessary steps to
ensure compliance with the recommended protocols and restarts its
sales and marketing activities.
"We continue to aggressively manage our spend and take
opportunistic actions to bolster our financial position," said
Jason T. Liberty, executive vice
president and CFO. "Moreover, we are optimistic that with the
gradual resumption of cruise operations, our cash flow from
operations will sequentially improve, driven by an increase in the
inflow of customer deposits."
Liquidity and Financing Arrangements
As of
September 30, 2020, the Company had
liquidity of approximately $3.7
billion, including $3.0
billion in cash and cash equivalents and a $0.7 billion commitment from the 364-day
facility, compared to $4.1 billion as
of June 30, 2020. During the month of
October 2020, the Company raised an
additional $1.15 billion through a
combination of convertible notes and the public offering of common
stock, further improving its liquidity position.
The total cash spend for the third quarter was approximately
$1.1 billion, mainly driven by ship
operating expenses. These expenses sequentially declined each
month within the quarter as the fleet achieved the desired levels
of layup by end of August 2020. Our
cash burn rate for the quarter was consistent with our previously
announced range when excluding cash refunds of customer deposits,
commissions, debt obligations, cash inflows from new and existing
bookings and fees and collateral postings related to our financing
and hedging activities.
The Company noted that as of September
30, 2020, the scheduled debt maturities for the remainder of
2020 and 2021, are $0.3 billion and
$1.3 billion, respectively.
Interest expense for the fourth quarter of 2020 is expected to
be in the range of $270 million to
$275 million.
Capital Expenditures and Capacity Updates
The expected
capital expenditures for the fourth quarter of 2020 and full year
2021 are $0.5 billion and
$2.1 billion, respectively. These
expenditures are mostly related to newbuild projects which have
committed financing. As it relates to 2020, capital expenditures
include Silver Moon to be delivered this week.
For 2021, they include the delivery of Odyssey of the Seas
during the first quarter and now they include the delivery of
Silver Dawn during the fourth quarter which we had
previously expected to be delayed to 2022.
COVID-19 has impacted shipyard operations which has resulted in
delivery delays for newbuilds. The exact duration of the ship
delivery delays is currently under discussion with the impacted
shipyards.
Fuel Expense
As of September
30, 2020, the Company had hedged approximately 53%, 39%, 24%
and 5% of its total projected metric tons of fuel consumption for
the remainder of 2020, 2021, 2022 and 2023, respectively. The
current suspension of our cruise operations due to the COVID-19
pandemic resulted in reductions to our forecasted fuel consumption.
As of September 30, 2020, we had
outstanding fuel swaps of 113,700 and 96,450 metric tons maturing
in 2020 and 2021, respectively, that no longer hedge our forecasted
fuel consumption. For the remainder of 2020, 2021, 2022 and 2023,
the annual average cost per metric ton of the fuel swap portfolio
is approximately $396, $435, $514 and
$580, respectively.
2020 Outlook
The Company's operation is still subject to the impact of
COVID-19. Consequently, the Company cannot estimate its near
or longer-term financial or operational results with reasonable
certainty. Notwithstanding the foregoing, the Company expects to
incur a net loss on both a US GAAP and adjusted basis for its
fourth quarter and the 2020 fiscal year, the extent of which will
depend on the timing and extent of the return to service.
2021 Outlook- Update on Bookings
Booking activity for the first half of 2021 is aligned with the
Company's anticipated staggered resumption of cruises. The
cumulative booked position for sailings in the second half of 2021
is within historical ranges with prices that are down slightly
year-over-year when including the negative yield impact of bookings
made with future cruise credits ("FCCs") and about flat when
excluding them. Since our last business update, more than 65% of
the 2021 bookings are new and the rest are due to the redemption of
FCCs and the "Lift & Shift" program. The Company continues to
provide guests who were booked on a suspended sailing with the
option to request a refund, to receive an FCC, or to "lift and
shift" their booking to the following year.
As of September 30, 2020, the
Company had $1.8 billion in customer
deposits of which approximately 50% are FCCs and $180 million correspond to fourth quarter 2020
sailings. Approximately 50% of the guests booked on cancelled
sailings have requested cash refunds.
CONFERENCE CALL SCHEDULED
The Company has scheduled a conference call at 10 a.m. Eastern Time today. This call can
be heard, either live or on a delayed basis, on the Company's
investor relations website at www.rclinvestor.com.
Definitions
Selected Operational and Financial
Metrics
Adjusted (Loss) Earnings per Share ("Adjusted EPS")
Represents Adjusted Net (Loss) Income attributable to Royal
Caribbean Cruises Ltd. divided by weighted average shares
outstanding or by diluted weighted average shares outstanding, as
applicable. We believe that this non-GAAP measure is meaningful
when assessing our performance on a comparative basis.
Adjusted Net (Loss) Income
Adjusted Net (Loss) Income represents net (loss) income less net
income attributable to noncontrolling interest 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 (i) asset impairment and credit losses
recorded in 2020 as a result of the impact of COVID-19; (ii) equity
investment impairment charges recorded in the first quarter of 2020
as a result of the impact of COVID-19; (iii) currency translation
losses recognized in connection with the ships classified as assets
held-for-sale and that were subsequently sold, previously chartered
to Pullmantur; (iv) the estimated cash refund expected to be paid
to Pullmantur guests and other expenses incurred as part of the
Pullmantur S.A reorganization ; (v) restructuring charges incurred
in relation to the reduction in our U.S. workforce in 2020, the
reorganization of our global sales and marketing structure and
other initiatives expenses; (vi) the amortization of non-cash debt
discount on the $1.15 billion
convertible notes; (vii) loss on the extinguishment of debt; (viii)
the amortization of the Silversea Cruises intangible assets
resulting from the 2018 Silversea Cruises acquisition; (ix) the
noncontrolling interest adjustment to exclude the impact of the
contractual accretion requirements associated with the put option
held by Heritage Cruise Holding Ltd.'s ("Heritage") prior to the
July 2020 noncontrolling interest
purchase; (x) the change in fair value in the Silversea
Cruises contingent consideration; (xi) net insurance recoveries or
costs related to the collapse of the drydock structure at the Grand
Bahama Shipyard involving Oasis of the Seas; (xii)
transaction costs related to the 2018 Silversea Cruises
acquisition.
About Royal Caribbean Group
Royal Caribbean Group
(NYSE: RCL) is the operating business name for Royal Caribbean
Cruises Ltd. Royal Caribbean Group is the owner of four
global cruise vacation brands: Royal Caribbean International,
Celebrity Cruises, Silversea and Azamara. Royal Caribbean Group is
also a 50% owner of a joint venture that operates TUI Cruises and
Hapag-Lloyd Cruises. Together, our brands operate 62 ships with an
additional 16 on order as of September
30, 2020. Learn more at www.royalcaribbeangroup.com or
www.rclinvestor.com.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements in this release relating to,
among other things, our future performance estimates, forecasts and
projections constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These statements
include, but are not limited to: statements regarding revenues,
costs and financial results for 2020 and beyond. Words such
as "anticipate," "believe," "could," "driving," "estimate,"
"expect," "goal," "intend," "look into," "may," "plan," "project,"
"seek," "should," "will," "would," "considering", and similar
expressions are intended to help identify forward-looking
statements. Forward-looking statements reflect management's
current expectations, are based on judgments, 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 global incidence and spread of
COVID-19, which has led to the temporary suspension of our
operations and has had and will continue to have a material adverse
impact on our business, liquidity and results of operations, or
other contagious illnesses on economic conditions and the travel
industry in general and the financial position and operating
results of our Company in particular, such as: the current and
potential additional governmental and self-imposed travel
restrictions, the current and potential extension of the suspension
of cruises and new additional suspensions, guest cancellations; our
ability to obtain sufficient financing, capital or revenues to
satisfy liquidity needs, capital expenditures, debt repayments and
other financing needs; the effectiveness of the actions we have
taken to improve and address our liquidity needs; the impact of the
economic and geopolitical environment on key aspects of our
business, such as the demand for cruises, passenger spending, and
operating costs; incidents or adverse publicity concerning our
ships, port facilities, land destinations and/or passengers or the
cruise vacation industry in general; our ability to accurately
estimate our monthly cash burn rate during the suspension of our
operations; concerns over safety, health and security of guests and
crew; any protocols we adopt across our fleet relating to
COVID-19, such as those recommended by the Healthy Sail
Panel, may be costly and less effective than we expect in reducing
the risk of infection and spread of COVID-19 on our cruise ships;
further impairments of our goodwill, long-lived assets, equity
investments and notes receivable; an inability to source our crew
or our provisions and supplies from certain places; the incurrence
of COVID-19 and other contagious diseases on our ships and an
increase in concern about the risk of illness on our ships or when
traveling to or from our ships, all of which reduces demand;
unavailability of ports of call; growing anti-tourism sentiments
and environmental concerns; changes in US foreign travel policy;
the uncertainties of conducting business internationally and
expanding into new markets and new ventures; our ability to
recruit, develop and retain high quality personnel; changes in
operating and financing costs; our indebtedness, any additional
indebtedness we may incur and restrictions in the agreements
governing our indebtedness that limit our flexibility in operating
our business, including the significant portion of assets that are
collateral under these agreements; the impact of foreign currency
exchange rates, interest rate and fuel price fluctuations; the
settlement of conversions of our convertible notes, if any, in
shares of our common stock or a combination of cash and shares of
our common stock, which may result in substantial dilution for our
existing shareholders; our expectation that we will not declare or
pay dividends on our common stock for the near future; vacation
industry competition and changes in industry capacity and
overcapacity; the risks and costs associated with protecting our
systems and maintaining integrity and security of our business
information, as well as personal data of our guests, employees and
others; the impact of new or changing legislation and
regulations or governmental orders on our business; pending or
threatened litigation, investigations and enforcement actions; the
effects of weather, natural disasters and seasonality on our
business; emergency ship repairs, including the related lost
revenue; the impact of issues at shipyards, including ship delivery
delays, ship cancellations or ship construction cost increases;
shipyard unavailability; the unavailability or cost of air service;
and uncertainties of a foreign legal system as we are not
incorporated in the United
States.
In addition, many of these risks and uncertainties are currently
heightened by and will continue to be heightened by, or in
the future may be heightened by, the COVID-19 pandemic. It is not
possible to predict or identify all such risks.
More information about factors that could affect our operating
results is included under the caption "Risk Factors" in our most
recent quarterly report on Form 10-Q, as well as our other filings
with the SEC, and 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, as
updated by our Current Report on Form 8-K dated May 13, 2020, 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 defined as
non-GAAP financial measures 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 US 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 US 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 US GAAP measures.
A reconciliation to the most comparable US 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.
ROYAL CARIBBEAN
CRUISES LTD.
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
|
(unaudited, in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Passenger ticket
revenues
|
$
|
3,204
|
|
|
$
|
2,344,779
|
|
|
$
|
1,487,077
|
|
|
$
|
6,072,599
|
|
Onboard and other
revenues
|
(36,892)
|
|
|
842,071
|
|
|
687,590
|
|
|
2,360,649
|
|
Total
revenues
|
(33,688)
|
|
|
3,186,850
|
|
|
2,174,667
|
|
|
8,433,248
|
|
Cruise operating
expenses:
|
|
|
|
|
|
|
|
Commissions,
transportation and other
|
(3,321)
|
|
|
488,921
|
|
|
342,632
|
|
|
1,279,010
|
|
Onboard and
other
|
6,036
|
|
|
200,656
|
|
|
151,333
|
|
|
510,255
|
|
Payroll and
related
|
119,213
|
|
|
263,993
|
|
|
693,480
|
|
|
799,094
|
|
Food
|
5,640
|
|
|
149,621
|
|
|
154,439
|
|
|
436,002
|
|
Fuel
|
53,815
|
|
|
177,677
|
|
|
327,275
|
|
|
519,772
|
|
Other
operating
|
127,226
|
|
|
342,170
|
|
|
830,689
|
|
|
1,037,113
|
|
Total cruise operating
expenses
|
308,609
|
|
|
1,623,038
|
|
|
2,499,848
|
|
|
4,581,246
|
|
Marketing, selling
and administrative expenses
|
246,779
|
|
|
352,725
|
|
|
944,087
|
|
|
1,144,546
|
|
Depreciation and
amortization expenses
|
317,139
|
|
|
320,295
|
|
|
961,226
|
|
|
924,180
|
|
Impairment and credit
losses
|
89,899
|
|
|
—
|
|
|
1,354,514
|
|
|
—
|
|
Operating (Loss)
Income
|
(996,114)
|
|
|
890,792
|
|
|
(3,585,008)
|
|
|
1,783,276
|
|
Other
expense:
|
|
|
|
|
|
|
|
Interest
income
|
5,017
|
|
|
5,625
|
|
|
15,757
|
|
|
21,751
|
|
Interest expense, net
of interest capitalized
|
(259,349)
|
|
|
(102,038)
|
|
|
(571,149)
|
|
|
(313,757)
|
|
Equity investment
(loss) income
|
(78,013)
|
|
|
103,654
|
|
|
(140,258)
|
|
|
170,393
|
|
Other
expense
|
(10,853)
|
|
|
(7,668)
|
|
|
(127,537)
|
|
|
(34,537)
|
|
|
(343,198)
|
|
|
(427)
|
|
|
(823,187)
|
|
|
(156,150)
|
|
Net (Loss)
Income
|
(1,339,312)
|
|
|
890,365
|
|
|
(4,408,195)
|
|
|
$
|
1,627,126
|
|
Less: Net Income
attributable to noncontrolling interest
|
7,444
|
|
|
7,125
|
|
|
22,332
|
|
|
21,375
|
|
Net (Loss) Income
attributable to Royal Caribbean Cruises Ltd.
|
$
|
(1,346,756)
|
|
|
$
|
883,240
|
|
|
$
|
(4,430,527)
|
|
|
1,605,751
|
|
(Loss) Earnings
per Share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(6.29)
|
|
|
$
|
4.21
|
|
|
$
|
(21.01)
|
|
|
$
|
7.67
|
|
Diluted
|
$
|
(6.29)
|
|
|
$
|
4.20
|
|
|
$
|
(21.01)
|
|
|
$
|
7.65
|
|
|
|
|
|
|
|
|
|
Weighted-Average
Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
214,163
|
|
|
209,575
|
|
|
210,894
|
|
|
209,477
|
|
Diluted
|
214,163
|
|
|
210,121
|
|
|
210,894
|
|
|
210,032
|
|
|
|
|
|
|
|
|
|
Comprehensive
(Loss) Income
|
|
|
|
|
|
|
|
Net (Loss)
Income
|
$
|
(1,339,312)
|
|
|
$
|
890,365
|
|
|
$
|
(4,408,195)
|
|
|
$
|
1,627,126
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
19,071
|
|
|
(15,510)
|
|
|
55,698
|
|
|
(7,683)
|
|
Change in defined
benefit plans
|
(3,086)
|
|
|
(12,456)
|
|
|
(16,953)
|
|
|
(22,831)
|
|
Gain (loss) on cash
flow derivative hedges
|
66,135
|
|
|
(265,224)
|
|
|
(110,139)
|
|
|
(288,115)
|
|
Total other
comprehensive income (loss)
|
82,120
|
|
|
(293,190)
|
|
|
(71,394)
|
|
|
(318,629)
|
|
Comprehensive (Loss)
Income
|
(1,257,192)
|
|
|
597,175
|
|
|
(4,479,589)
|
|
|
1,308,497
|
|
Less: Comprehensive
Income attributable to noncontrolling interest
|
7,444
|
|
|
7,125
|
|
|
22,332
|
|
|
21,375
|
|
Comprehensive
(Loss) Income attributable to Royal Caribbean Cruises
Ltd.
|
$
|
(1,264,636)
|
|
|
$
|
590,050
|
|
|
$
|
(4,501,921)
|
|
|
$
|
1,287,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS
(1)
|
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Passengers
Carried
|
1,230
|
|
|
1,728,997
|
|
|
1,261,075
|
|
|
4,926,123
|
|
Passenger Cruise
Days
|
5,424
|
|
|
11,863,189
|
|
|
8,653,799
|
|
|
33,746,534
|
|
APCD
|
5,424
|
|
|
10,733,254
|
|
|
8,437,003
|
|
|
31,031,274
|
|
Occupancy
|
100.0
|
%
|
|
110.5
|
%
|
|
102.6
|
%
|
|
108.8
|
%
|
(1)
|
Due to the
three-month reporting lag, we include Silversea Cruises' result of
operations from April 1 through June 30 for the quarters ended
September 30, 2020 and 2019 and from October 1 through June 30 for
the nine months ended September 30, 2020 and 2019.
|
ROYAL CARIBBEAN
CRUISES LTD.
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands,
except share data)
|
|
As of
|
|
September
30,
|
|
December
31,
|
|
2020
|
|
2019
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
3,016,788
|
|
|
$
|
243,738
|
|
Trade and other
receivables, net of allowances of $47,396 and $5,635
at September 30, 2020 and December 31, 2019,
respectively
|
165,225
|
|
|
305,821
|
|
Inventories
|
142,432
|
|
|
162,107
|
|
Prepaid expenses and
other assets
|
197,195
|
|
|
429,211
|
|
Derivative financial
instruments
|
10,155
|
|
|
21,751
|
|
Total current
assets
|
3,531,795
|
|
|
1,162,628
|
|
Property and
equipment, net
|
25,362,549
|
|
|
25,466,808
|
|
Operating lease
right-of-use assets
|
584,477
|
|
|
687,555
|
|
Goodwill
|
809,471
|
|
|
1,385,644
|
|
Other assets, net of
allowances of $73,156 and $0 at September 30, 2020
and December 31,
2019, respectively
|
1,540,518
|
|
|
1,617,649
|
|
Total
assets
|
$
|
31,828,810
|
|
|
$
|
30,320,284
|
|
|
|
|
|
Liabilities,
Redeemable Noncontrolling Interest and Shareholders'
Equity
|
|
|
|
Current
liabilities
|
|
|
|
Current portion of
debt
|
$
|
870,027
|
|
|
$
|
1,186,586
|
|
Current portion of
operating lease liabilities
|
102,251
|
|
|
96,976
|
|
Commercial
paper
|
386,683
|
|
|
1,434,180
|
|
Accounts
payable
|
421,023
|
|
|
563,706
|
|
Accrued
interest
|
234,375
|
|
|
70,090
|
|
Accrued expenses and
other liabilities
|
677,594
|
|
|
1,078,345
|
|
Derivative financial
instruments
|
113,474
|
|
|
94,875
|
|
Customer
deposits
|
1,820,038
|
|
|
3,428,138
|
|
Total current
liabilities
|
4,625,465
|
|
|
7,952,896
|
|
Long-term
debt
|
17,633,737
|
|
|
8,414,110
|
|
Long-term operating
lease liabilities
|
546,494
|
|
|
601,641
|
|
Other long-term
liabilities
|
694,520
|
|
|
617,810
|
|
Total
liabilities
|
23,500,216
|
|
|
17,586,457
|
|
Redeemable
noncontrolling interest
|
—
|
|
|
569,981
|
|
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; 242,502,983 and
236,547,842
shares issued, September 30, 2020 and December 31, 2019,
respectively)
|
2,425
|
|
|
2,365
|
|
Paid-in
capital
|
4,329,557
|
|
|
3,493,959
|
|
Retained
earnings
|
6,929,710
|
|
|
11,523,326
|
|
Accumulated other
comprehensive loss
|
(869,107)
|
|
|
(797,713)
|
|
Treasury stock
(27,799,775 and 27,746,848 common shares at cost,
September 30, 2020 and
December 31, 2019, respectively)
|
(2,063,991)
|
|
|
(2,058,091)
|
|
Total shareholders'
equity
|
8,328,594
|
|
|
12,163,846
|
|
Total liabilities,
redeemable noncontrolling interest and shareholders'
equity
|
$
|
31,828,810
|
|
|
$
|
30,320,284
|
|
ROYAL CARIBBEAN
CRUISES LTD.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited, in
thousands)
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2020
|
|
2019
|
Operating
Activities
|
|
|
|
Net (loss)
income
|
$
|
(4,408,195)
|
|
|
$
|
1,627,126
|
|
Adjustments:
|
|
|
|
Depreciation and
amortization
|
961,226
|
|
|
924,180
|
|
Impairment and credit
losses
|
1,354,514
|
|
|
—
|
|
Net deferred income
tax (benefit) expense
|
(4,586)
|
|
|
4,664
|
|
Loss on derivative
instruments not designated as hedges
|
64,541
|
|
|
24,229
|
|
Share-based
compensation expense
|
29,871
|
|
|
51,256
|
|
Equity investment loss
(income)
|
140,258
|
|
|
(170,393)
|
|
Amortization of debt
issuance costs
|
54,887
|
|
|
24,154
|
|
Amortization of
commercial paper notes discount
|
7,269
|
|
|
23,583
|
|
Amortization of debt
discounts and premiums
|
29,061
|
|
|
265
|
|
Loss on extinguishment
of secured senior term loan
|
41,109
|
|
|
6,326
|
|
Change in fair value
of contingent consideration
|
(45,126)
|
|
|
10,700
|
|
Currency translation
adjustment losses
|
69,044
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Decrease (increase) in
trade and other receivables, net
|
133,769
|
|
|
(36,682)
|
|
Decrease (increase) in
inventories
|
19,675
|
|
|
(13,640)
|
|
Decrease in prepaid
expenses and other assets
|
271,315
|
|
|
41,757
|
|
(Decrease) increase in
accounts payable
|
(90,306)
|
|
|
51,011
|
|
Increase in accrued
interest
|
164,284
|
|
|
50,011
|
|
(Decrease) increase in
accrued expenses and other liabilities
|
(87,936)
|
|
|
81,026
|
|
(Decrease) increase in
customer deposits
|
(1,608,355)
|
|
|
261,335
|
|
Dividends received
from unconsolidated affiliates
|
2,215
|
|
|
148,285
|
|
Other, net
|
(4,789)
|
|
|
(2,125)
|
|
Net cash (used in)
provided by operating activities
|
$
|
(2,906,255)
|
|
|
$
|
3,107,068
|
|
Investing
Activities
|
|
|
|
Purchases of property
and equipment
|
$
|
(1,573,241)
|
|
|
$
|
(2,341,895)
|
|
Cash received on
settlement of derivative financial instruments
|
3,771
|
|
|
6,442
|
|
Cash paid on
settlement of derivative financial instruments
|
(139,940)
|
|
|
(86,671)
|
|
Investments in and
loans to unconsolidated affiliates
|
(87,943)
|
|
|
(6,889)
|
|
Cash received on loans
to unconsolidated affiliates
|
15,581
|
|
|
27,697
|
|
Other, net
|
(6,921)
|
|
|
(1,028)
|
|
Net cash used in
investing activities
|
$
|
(1,788,693)
|
|
|
$
|
(2,402,344)
|
|
Financing
Activities
|
|
|
|
Debt
proceeds
|
$
|
12,672,189
|
|
|
$
|
3,080,564
|
|
Debt issuance
costs
|
(348,118)
|
|
|
(42,491)
|
|
Repayments of
debt
|
(3,430,245)
|
|
|
(3,424,339)
|
|
Proceeds from issuance
of commercial paper notes
|
6,765,816
|
|
|
19,807,417
|
|
Repayments of
commercial paper notes
|
(7,837,635)
|
|
|
(19,684,288)
|
|
Dividends
paid
|
(326,421)
|
|
|
(439,543)
|
|
Proceeds from exercise
of common stock options
|
386
|
|
|
1,452
|
|
Other, net
|
(26,210)
|
|
|
(13,681)
|
|
Net cash provided by
(used in) financing activities
|
$
|
7,469,762
|
|
|
$
|
(714,909)
|
|
Effect of exchange
rate changes on cash
|
$
|
(1,764)
|
|
|
$
|
(937)
|
|
Net increase
(decrease) in cash and cash equivalents
|
$
|
2,773,050
|
|
|
$
|
(11,122)
|
|
Cash and cash
equivalents at beginning of period
|
243,738
|
|
|
287,852
|
|
Cash and cash
equivalents at end of period
|
$
|
3,016,788
|
|
|
$
|
276,730
|
|
Supplemental
Disclosure
|
|
|
|
Cash paid during the
period for:
|
|
|
|
Interest, net of
amount capitalized
|
$
|
258,063
|
|
|
$
|
179,497
|
|
Non-cash Investing
Activities
|
|
|
|
Notes receivable
issued upon sale of property and equipment
|
$
|
53,419
|
|
|
$
|
—
|
|
Purchase of property
and equipment included in accounts payable and
accrued expenses and other liabilities
|
$
|
13,603
|
|
|
$
|
—
|
|
Non-cash Financing
Activities
|
|
|
|
|
|
|
Purchase of Silversea
Cruises non-controlling interest
|
$
|
592,312
|
|
|
$
|
—
|
Termination of
Silversea Cruises contingent consideration obligation
|
$
|
17,274
|
|
|
$
|
—
|
ROYAL CARIBBEAN
CRUISES LTD.
|
|
NON-GAAP
RECONCILING INFORMATION
|
|
(unaudited)
|
|
|
|
Adjusted Net (Loss)
Income and Adjusted (Loss) Earnings per Share were calculated as
follows (in thousands, except per share data):
|
|
Quarter Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net (Loss) Income
attributable to Royal Caribbean Cruises Ltd.
|
$
|
(1,346,756)
|
|
|
$
|
883,240
|
|
|
$
|
(4,430,527)
|
|
|
$
|
1,605,751
|
|
|
Adjusted Net (Loss)
Income attributable to Royal Caribbean Cruises Ltd.
|
(1,204,350)
|
|
|
896,838
|
|
|
(2,797,335)
|
|
|
1,705,420
|
|
|
Net Adjustments to
Net (Loss) Income attributable to Royal Caribbean Cruises
Ltd.
|
$
|
142,406
|
|
|
$
|
13,598
|
|
|
$
|
1,633,192
|
|
|
$
|
99,669
|
|
|
Adjustments to Net
(Loss) Income attributable to Royal Caribbean Cruises
Ltd.:
|
|
|
|
|
|
|
|
|
Impairment and credit
losses (1)
|
$
|
89,899
|
|
|
$
|
—
|
|
|
$
|
1,354,514
|
|
|
$
|
—
|
|
|
Equity investment
impairment (2)
|
—
|
|
|
—
|
|
|
39,735
|
|
|
—
|
|
|
Currency translation
adjustment losses (3)
|
—
|
|
|
—
|
|
|
69,044
|
|
|
—
|
|
|
Pullmantur
reorganization settlement (4)
|
—
|
|
|
—
|
|
|
21,637
|
|
|
—
|
|
|
Restructuring charges
and other initiatives expense (5)
|
5,720
|
|
|
—
|
|
|
50,745
|
|
|
—
|
|
|
Convertible debt
amortization of debt discount (6)
|
17,750
|
|
|
—
|
|
|
21,934
|
|
|
—
|
|
|
Loss on
extinguishment of debt (7)
|
774
|
|
|
—
|
|
|
41,109
|
|
|
6,326
|
|
|
Amortization of
Silversea Cruises intangible assets resulting from the 2018
Silversea Cruises
acquisition (8)
|
3,069
|
|
|
3,069
|
|
|
9,207
|
|
|
9,207
|
|
|
Noncontrolling
interest adjustment (9)
|
25,715
|
|
|
8,508
|
|
|
72,331
|
|
|
43,082
|
|
|
Change in fair value
of the Silversea contingent consideration (8)
|
(521)
|
|
|
—
|
|
|
(45,126)
|
|
|
10,700
|
|
|
Net insurance
recoveries of Oasis of the Seas incident (10)
|
—
|
|
|
2,021
|
|
|
(1,938)
|
|
|
29,168
|
|
|
Transaction costs
related to the 2018 Silversea Cruises acquisition (8)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,186
|
|
|
Net Adjustments to
Net (Loss) Income attributable to Royal Caribbean Cruises
Ltd.
|
$
|
142,406
|
|
|
$
|
13,598
|
|
|
$
|
1,633,192
|
|
|
$
|
99,669
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Earnings per
Share - Diluted
|
$
|
(6.29)
|
|
|
$
|
4.20
|
|
|
$
|
(21.01)
|
|
|
$
|
7.65
|
|
|
Adjusted (Loss)
Earnings per Share - Diluted
|
(5.62)
|
|
|
4.27
|
|
|
(13.26)
|
|
|
8.12
|
|
|
Net Adjustments to
(Loss) Earnings per Share
|
$
|
0.67
|
|
|
$
|
0.07
|
|
|
$
|
7.75
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to (Loss)
Earnings per Share:
|
|
|
|
|
|
|
|
|
Impairment and credit
losses (1)
|
$
|
0.42
|
|
|
$
|
—
|
|
|
$
|
6.43
|
|
|
$
|
—
|
|
|
Equity investment
impairment (2)
|
—
|
|
|
—
|
|
|
0.19
|
|
|
—
|
|
|
Currency translation
adjustment losses (3)
|
—
|
|
|
—
|
|
|
0.33
|
|
|
—
|
|
|
Pullmantur
reorganization settlement (4)
|
—
|
|
|
—
|
|
|
0.10
|
|
|
—
|
|
|
Restructuring charges
and other initiatives expense (5)
|
0.03
|
|
|
—
|
|
|
0.24
|
|
|
—
|
|
|
Convertible debt
amortization of debt discount (6)
|
0.08
|
|
|
—
|
|
|
0.10
|
|
|
—
|
|
|
Loss on
extinguishment of debt (7)
|
—
|
|
|
—
|
|
|
0.20
|
|
|
0.03
|
|
|
Amortization of
Silversea Cruises intangible assets resulting from the 2018
Silversea Cruises
acquisition (8)
|
0.02
|
|
|
0.02
|
|
|
0.04
|
|
|
0.04
|
|
|
Noncontrolling
interest adjustment (9)
|
0.12
|
|
|
0.04
|
|
|
0.34
|
|
|
0.20
|
|
|
Change in fair value
of the Silversea contingent consideration (8)
|
—
|
|
|
—
|
|
|
(0.21)
|
|
|
0.05
|
|
|
Net insurance
recoveries of Oasis of the Seas incident (10)
|
—
|
|
|
0.01
|
|
|
(0.01)
|
|
|
0.14
|
|
|
Transaction costs
related to the 2018 Silversea Cruises acquisition (8)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
Net Adjustments to
(Loss) Earnings per Share
|
$
|
0.67
|
|
|
$
|
0.07
|
|
|
$
|
7.75
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
Shares Outstanding - Diluted
|
214,163
|
|
|
210,121
|
|
|
210,894
|
|
|
210,032
|
|
|
(1)
|
Represents asset
impairment and credit losses recorded in 2020 as a result of the
impact of COVID-19.
|
(2)
|
Represents equity
investment asset impairment, primarily for our investment in Grand
Bahama Shipyard, recorded in the first quarter of 2020 as a result
of the impact of COVID-19.
|
(3)
|
Represents currency
translation losses recognized in connection with the ships
classified as assets held-for-sale and that were subsequently sold,
previously chartered to Pullmantur.
|
(4)
|
Represents estimated
cash refunds expected to be paid to Pullmantur guests and other
expenses incurred as part of the Pullmantur S.A
reorganization.
|
(5)
|
Represents
restructuring charges incurred in relation to the reduction in our
U.S. workforce in 2020 and the reorganization of our international
sales and marketing structure and other initiatives
expenses.
|
(6)
|
Represents the
amortization of non-cash debt discount on the $1.15 billion
convertible notes.
|
(7)
|
In 2020, represents
the loss on the extinguishment of the $2.2 billion Senior Secured
Term Loan. In 2019, represents the loss on the extinguishment of
the $700 million 364-day loan related to the 2018 Silversea Cruises
acquisition and the remaining balance of the unsecured term loan
originally incurred in 2010 to purchase Allure of the
Seas.
|
(8)
|
Related to the 2018
Silversea Cruises acquisition.
|
(9)
|
Adjustment made to
exclude the impact of the contractual accretion requirements
associated with the put option held by the Silversea Cruises
noncontrolling interest prior to the July 2020 noncontrolling
interest purchase.
|
(10)
|
Amount includes net
insurance recoveries related to the collapse of the drydock
structure at the Grand Bahama Shipyard involving Oasis of the
Seas.
|
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SOURCE Royal Caribbean Group