Royal Caribbean Cruises .(RCL) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents Royal Caribbean Cruises Ltd.'s unaudited consolidated financial statements, including income, balance sheets, cash flows, and equity, with detailed notes Consolidated Statements of Comprehensive Income (Loss) The company reported significant year-over-year increases in Q2 and H1 2025 revenues and net income, driven by strong operational performance Quarterly Financial Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $4,538 | $4,110 | +10.4% | | Passenger ticket revenues | $3,199 | $2,887 | +10.8% | | Onboard and other revenues | $1,339 | $1,223 | +9.5% | | Operating Income | $1,329 | $1,099 | +20.9% | | Net Income | $1,214 | $858 | +41.5% | | Diluted EPS | $4.41 | $3.11 | +41.8% | Six-Month Financial Performance (H1 2025 vs H1 2024) | Metric | H1 2025 (in millions) | H1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $8,537 | $7,838 | +8.9% | | Operating Income | $2,275 | $1,848 | +23.1% | | Net Income | $1,950 | $1,222 | +59.6% | | Diluted EPS | $7.10 | $4.46 | +59.2% | Consolidated Balance Sheets Total assets increased to $38.54 billion as of June 30, 2025, while liabilities slightly decreased, leading to a rise in shareholders' equity Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $38,542 | $37,070 | | Cash and cash equivalents | $735 | $388 | | Property and equipment, net | $32,351 | $31,831 | | Total Liabilities | $29,182 | $29,335 | | Customer deposits | $6,379 | $5,496 | | Long-term debt | $17,612 | $18,473 | | Total Shareholders' Equity | $9,360 | $7,735 | Consolidated Statements of Cash Flows Net cash from operating activities increased significantly, while cash used in investing activities decreased, and financing activities saw higher outflows Cash Flow Summary for Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,373 | $2,901 | | Net cash used in investing activities | $(1,146) | $(2,494) | | Net cash used in financing activities | $(1,887) | $(511) | | Net increase (decrease) in cash | $347 | $(106) | | Cash and cash equivalents at end of period | $735 | $391 | Notes to the Consolidated Financial Statements Detailed notes explain accounting policies, debt structure, new ship commitments, and derivative instruments used to manage market risks - The company operates three global cruise brands (Royal Caribbean, Celebrity Cruises, Silversea Cruises) and holds a 50% interest in TUI Cruises. The combined fleet operated 67 ships as of June 30, 2025[28] - Customer deposits, including future cruise credits (FCCs), totaled $6.38 billion as of June 30, 2025, with $139 million in unredeemed pandemic-era FCCs[14][41][42] - Total debt, net of unamortized costs, was $19.01 billion as of June 30, 2025, a decrease from year-end 2024, with the company in compliance with all debt covenants[62][69] - New ship orders had an aggregate cost of approximately $12.1 billion as of June 30, 2025, with significant committed financing[84] - Approximately 59% of projected 2025 fuel purchases were hedged using derivative instruments as of June 30, 2025, to manage market risks[106][124] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong Q2 2025 financial performance, driven by revenue growth and improved operational metrics, alongside robust liquidity and future capital commitments Results of Operations Q2 2025 total revenues increased to $4.5 billion, driven by capacity growth and higher yields, leading to significant net income growth for both the quarter and six-month period Key Performance Indicators (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | APCD (in thousands) | 12,942 | 12,233 | +5.8% | | Occupancy | 110.3% | 108.2% | +2.1 p.p. | | Net Yields (per APCD) | $283.56 | $269.38 | +5.3% | | Net Cruise Costs Ex. Fuel (per APCD) | $126.76 | $123.65 | +2.5% | - The increase in Q2 2025 passenger ticket revenue was driven by $167 million from capacity growth (new ships Utopia of the Seas and Silver Ray) and $144 million from yield growth due to higher load factors and pricing[175] - Interest expense for Q2 2025 decreased by $70 million year-over-year, primarily due to debt refinancing at lower rates and the absence of a $17 million loss on debt extinguishment recorded in Q2 2024[172] Liquidity and Capital Resources The company maintains strong liquidity of $7.1 billion, with $3.4 billion in net cash from operations, and anticipates $5 billion in 2025 capital expenditures, primarily for new ships - Total liquidity as of June 30, 2025 was $7.1 billion, including $6.4 billion available under revolving credit facilities[200] - Anticipated capital expenditures for the full year 2025 are approximately $5 billion, mainly for new ships and land-based destination projects[189] Material Cash Requirements (as of June 30, 2025, in millions) | Category | Remainder of 2025 | 2026 | 2027 | Total | | :--- | :--- | :--- | :--- | :--- | | Interest on debt | $489 | $868 | $733 | $4,759 | | Ship purchase obligations | $2,696 | $2,004 | $1,930 | $9,334 | Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk exposure, primarily related to interest rates, foreign currency, and fuel prices, have occurred since the 2024 Annual Report - There have been no material changes to the company's market risk exposure since the 2024 Annual Report[205] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective in providing reasonable assurance for timely and accurate reporting[206] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[207] PART II. OTHER INFORMATION Legal Proceedings The company provides an update on the Havana Docks Action lawsuit, where an appeals court reversed a judgment, leading to a U.S. Supreme Court petition and the release of a $124 million loss contingency - Regarding the Havana Docks Action, the 11th Circuit Court of Appeals reversed a judgment against the company; the plaintiff has now petitioned the U.S. Supreme Court[211] - Following the appeals court's decision, the company released approximately $124 million of a previously recorded loss contingency for the year ended December 31, 2024[211] Risk Factors The company states that there have been no material changes from the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes to risk factors have occurred since the company's most recent Annual Report on Form 10-K[213] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no common stock repurchases during the quarter ended June 30, 2025. As of that date, approximately $759 million remained available for future repurchases under the $1.0 billion program authorized in February 2025 - No common stock was repurchased during the second quarter of 2025[214] - As of June 30, 2025, $759 million remains available under the board-authorized stock repurchase program[215] Other Information During the quarter ended June 30, 2025, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025[216] Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, CEO and CFO certifications, and the Interactive Data File (iXBRL) - Filed exhibits include amendments to credit facilities, CEO/CFO certifications (Rules 13a-14(a) and 13a-14(b)), and iXBRL data files[219]