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Item 2. Management’s Discussion and Analysis

2023-10-26 compared with 2023-07-27 · 99 added, 107 removed, 363 unchanged (36% of the section changed)

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• a review of our financial presentation, including discussion of certain operational and financial metrics we utilize to assist us in managing our business;

• a discussion of our results of operations for the quarter and six months ended June 30, 2023, compared to the same period in 2022;

• a discussion of our results of operations for the quarter and nine months ended September 30, 2023, compared to the same period in 2022;

• a discussion of our liquidity and capital resources, including our future capital and material cash requirements and potential funding sources.

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Adjusted EBITDA is a non-GAAP measure that represents EBITDA (as defined below) excluding certain items that we believe adjusting for is meaningful whe n assessing our profitability on a comparative basis.

For the 2023 and 2022 p eriods, these items included (i) other (income) expense;

For the 2023 and 2022 p eriods, these items included (i) other expense (income);

(ii) gain on sale of controlling interest;

(iii) recovery of losses from one of our equity method investees;

(iv) impa irment and credit losses (recoveries);

and (v) restructuring charges and other initiative expenses.

(iii) impa irment and credit losses (recoveries);

(iv) restructuring charges and other initiative expenses;

and (v) equity investments impairment and recovery of losses.

A reconciliation of Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

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We believe that this non-GAAP measure is meaningful when assessing our performance on a comparative basis.

A reconciliation of Earnings (Loss) per Share to Adjusted Loss per share is provided below under Results of Operations.

A reconciliation of Earnings (Loss) per Share to Adjusted Earnings (Loss) per share is provided below under Results of Operations.

Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

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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) loss on the extinguishment of debt;

For the periods presented, these items included (i) loss on extinguishment of debt;

(ii) gain on sale of controlling interest;

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(iv) Silver Whisper deferred tax liability release;

(v) r ecovery of losses from one of our equity method investees;

(vi) impairment and credit losses (recoveries); (vii) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018;

and (viii) restructuring charges and other initiative expenses.

(v) impairment and credit losses (recoveries); (vi) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018;

(vii) restructuring charges and other initiative expenses;

and (viii) equity investments impairment and recovery of losses.

A reconciliation of Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

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and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

for the second quarter of 2023 was $458.8 million and $491.7 million, reflecting our full operations at higher occupancy in 2023, compared to Net Loss and Adjusted Net Loss of $(521.6) million and $(530.0) million, respectively, for the second quarter of 2022.

for the third quarter of 2023 was $1.0 billion and $1.1 billion, compared to Net Income and Adjusted Net Income of $33.0 million and $65.8 million, respectively, for the third quarter of 2022.

Net Income attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

for the six months ended June 30, 2023 was $410.9 million and $432.8 million, compared to Net Loss and Adjusted Net Loss of $1,688.7 million and $1,694.4 million, respectively, for the six months ended June 30, 2022.

Significant items for the quarter and six months ended June 30, 2023 include:

• Total revenues, increased $1.3 billion and $3.2 billion, respectively, for the quarter and six months ended June 30, 2023 as compared to the same period in 2022.

The increase reflects our full operations in 2023 including a 13.7% and 27.5% higher capacity, and a 28.0% and 44.9% higher occupancy for the quarter ended and six months ended June 30, 2023, respectively, as well as an increase in ticket prices, compared to a partial return to operations during the same period in 2022.

• Total cruise operating expenses, increased $0.3 billion and $0.9 billion, respectively, for the quarter and six months ended June 30, 2023 as compared to the same period in 2022.

The increase reflects our full operations in 2023 at higher capacity and occupancy, compared to a partial return to operations during the same period in 2022.

for the nine months ended September 30, 2023 was $1.4 billion and $1.5 billion, compared to Net Loss and Adjusted Net Loss of $1.7 billion and $1.6 billion, respectively, for the nine months ended September 30, 2022.

Significant items for the quarter and nine months ended September 30, 2023 include:

• Total revenues, increased $1.2 billion and $4.3 billion, respectively, for the quarter and nine months ended September 30, 2023 as compared to the same period in 2022.

The increase is primarily driven by a 13.9% and 30.2% higher occupancy for the quarter and nine months ended September 30, 2023, respectively, as well as an increase in capacity, and ticket prices in 2023, compared to same periods in 2022.

• Total cruise operating expenses, increased $170.4 million and $1.1 billion, respectively, for the quarter and nine months ended September 30, 2023 as compared to the same period in 2022.

The increase reflects our operations in 2023 at higher capacity and occupancy, compared to the same period in 2022.

• In January 2023, we amended and extended the majority of our two unsecured revolving credit facilities.

The amendment has extended the maturities of $2.3 billion of the $3.0 billion aggregate revolving capacity by one year to April 2025, with the remainder maturing in April 2024.

Additionally, during the six months ended June 30, 2023, we repaid $2.7 billion under our revolving credit facilities, resulting in an aggregate borrowing capacity of $3.0 billion under the facilities as of June 30, 2023.

• In February 2023, we issued $700 million aggregate principal amount of 7.25% Priority Guaranteed Notes.

Upon closing, we terminated our commitment for the $700 million 364-day term loan facility.

The amendment extended the maturities of $2.3 billion of the $3.0 billion aggregate revolving capacity by one year to April 2025, with the remainder maturing in April 2024.

• In February 2023, we issued $0.7 billion aggregate principal amount of 7.25% Priority Guaranteed Notes.

Upon closing, we terminated our commitment for the $0.7 billion 364-day term loan facility.

In addition, the remaining $350 million backstop committed financing was also terminated upon closing.

• Effective March 31, 2023, we closed on the previously announced partnership with iCON.

As part of the transaction, we sold 80% of PortMiami for $208.9 million and retained a 20% minority interest.

The partnership will own, develop, and manage cruise terminal facilities and infrastructure in key ports of call, initially including several development projects in Italy, Spain, and the U.S.

As part of the transaction, we sold 80% of PortMiami to the partnership for $208.9 million and retained a 20% minority interest.

The partnership will own, develop, and manage cruise terminal facilities and infrastructure in key ports of call, initially including

several development projects in Italy, Spain, and the U.S.

Virgin Islands.

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• In June 2023, we took delivery of Silver Nova .

• In June 2023, we repaid $392.0 million of our 11.50% secured senior notes due in June 2025.

• In June 2023, our 4.25% Convertible Senior Notes with an outstanding balance of $350 million were settled using a combination of $337.8 million in cash, and the issuance of approximately 374,000 shares of common stock.

The issuance of equity increased additional paid-in capital by $12.2 million.

• During the nine months ended September 30, 2023, we repaid $0.9 billion of our 11.50% secured senior notes due in June 2025.

For further information regarding the debt transactions discussed above, refer to Note 6 .

Debt to our consolidated financial statements.

Operating results for the quarter and six months ended June 30, 2023 compared to the same period in 2022 are shown in the following table (in thousands, except per share data):

Quarter Ended June 30,

Operating results for the quarter and nine months ended September 30, 2023 compared to the same period in 2022 are shown in the following table (in thousands, except per share data):

Quarter Ended September 30,

Revenues % of Total

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Depreciation and amortization expenses 365,473 8.8 % 355,085 11.9 %

Operating Income (Loss) 771,581 21.9 % (218,644) (10.0) %

Operating Income 1,265,104 30.4 % 298,425 10.0 %

Other income (expense):

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Interest expense, net of interest capitalized (340,620) (8.2) % (352,187) (11.8) %

Equity investment income (loss) 42,014 1.2 % (13,179) (0.6) %

Equity investment income 86,627 2.1 % 73,997 2.5 %

Other (expense) income (7,905) (0.2) % 780 — %

(254,426) (6.1) % (265,457) (8.9) %

Net Income (Loss) $ 462,280 13.1 % $ (521,582) (23.9) %

Net Income 1,010,678 24.3 % 32,968 1.1 %

Net Income attributable to noncontrolling interest 1,602 — % — — %

Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,009,076 24.3 % $ 32,968 1.1 %

Diluted Earnings (Loss) per Share $ 3.65 $ 0.13

Six Months Ended June 30,

Nine Months Ended September 30,

Revenues % of Total

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Interest expense, net of interest capitalized (1,055,519) (10.0) % (932,552) (15.0) %

Equity investment income (loss) 62,485 1.0 % (44,238) (1.4) %

Equity investment income 149,112 1.4 % 29,759 0.5 %

Other (expense) income (8,676) (0.1) % 4,699 0.1 %

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and Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd, were calculated as follows (in thousands, except per share data):

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Silver Whisper deferred tax liability release (3) — — (25,784) —

Recovery of losses from one of our equity method investees (4,228) — (4,228) —

Impairment and credit losses (recoveries) (4) — 10,186 (6,990) (584)

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Restructuring charges and other initiative expenses — 4,573 5,288 6,448

Equity investments impairment and recovery of losses (6) 16,672 — 12,444 —

Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

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(5) Represents the amortization of the Silversea Cruises intangible assets resulting from the 2018 Silversea Cruises acquisition.

(6) Diluted EPS and Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $21.3 million and $4.2 million for the quarter and six months ended June 30, 2023, respectively.

(6) For the quarter and nine months ended September 30, 2023, represents equity method impairments of $12.6 million and recognition of deferred currency translation adjustment losses of $4.0 million.

These amounts are included in Equity investment income and Other (expense) income within our consolidated statements of comprehensive income (loss), respectively.

Additionally, the nine months ended September 30, 2023, includes a $4.2 million recovery of losses from one of our equity method investees recognized during the second quarter of 2023.

This amount is included in Equity investment income within our consolidated statements of comprehensive income (loss).

(7) Diluted EPS and Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $20.3 million and $67.6 million for the quarter and nine months ended September 30, 2023, respectively.

Refer to Note 4 .

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Selected statistical information is shown in the following table:

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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EBITDA and Adjusted EBITDA were calculated as follows (in thousands):

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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EBITDA 1,714,573 728,249 3,536,845 305,640

Other (income) expense (2) (2,420) (4,432) 1,308 (8,472)

Other expense (income) (2) 1,029 (742) 2,337 (9,214)

Gain on sale of controlling interest (3) — — (3,130) —

Recovery of losses from one of our equity method investees (4,228) — (4,228) —

Impairment and credit losses (recoveries) (4) — 10,186 (6,990) (584)

Restructuring charges and other initiative expenses — 4,573 5,288 6,448

Equity investment impairment and recovery of losses (5) 12,634 — 8,406 —

Adjusted EBITDA $ 1,728,236 $ 742,266 $ 3,542,756 $ 302,290

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These amounts are included in Other operating within our consolidated statements of comprehensive income (loss).

(5) For the quarter and nine months ended September 30, 2023, represents equity method impairments of $12.6 million.

Additionally, the nine months ended September 30, 2023, includes a $4.2 million recovery of losses from one of our

equity method investees recognized during the second quarter of 2023.

These amounts are included in Equity investment income within our consolidated statements of comprehensive income (loss).

Gross Margin Yields and Net Yields were calculated by dividing Gross Margin and Adjusted Gross Margin by APCD as follows (in thousands, except APCD and Yields):

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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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,

Quarter Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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(3) These amounts are included in Marketing, selling and administrative expenses within our consolidated statements of comprehensive income (loss).

Quarter Ended June 30, 2023 Compared to Quarter Ended June 30, 2022

In this section, references to 2023 refer to the quarter ended June 30, 2023 and references to 2022 refer to the quarter ended June 30, 2022.

Quarter Ended September 30, 2023 Compared to Quarter Ended September 30, 2022

In this section, references to 2023 refer to the quarter ended September 30, 2023 and references to 2022 refer to the quarter ended September 30, 2022.

Total revenues for 2023 increased $1.2 billion to $4.2 billion from $3.0 billion in 2022.

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Passenger ticket revenues for 2023 increased by $0.9 billion, or 45.5% to $2.9 billion from $2.0 billion in 2022.

The increase was primarily due to increase in ticket prices, and 28.0% higher occupancy in 2023 compared to the same period in 2022.

The remaining 30.6% of 2023 total revenues was comprised of Onboard and other revenues , which increased $0.3 billion, or 40.9% to $1.1 billion in 2023 from $766.0 million in 2022.

The increase was primarily due to an increase in occupancy noted above in 2023 compared to the same period in 2022.

The increase in revenues reflect our full operations in 2023, compared to a partial return to operations during the same period in 2022.

Occupancy in 2023 was 105.0% compared to 82.0% in 2022.

The increase was primarily due to higher ticket prices which increased ticket revenues by $0.8 billion compared to the same period in 2022.

Additionally, the increase is complemented by an increase in occupancy of 13.9% in 2023 compared to the same period in 2022.

The remaining 29.3% of 2023 total revenues was comprised of Onboard and other revenues , which increased $246.9 million, or 25.4% to $1.2 billion in 2023 from $1.0 billion in 2022.

The increase was primarily due to an increase in prices and occupancy noted above in 2023 compared to the same period in 2022.

Onboard and other revenues included concession revenues of $126.2 million in 2023 and $104.4 million in 2022.

Cruise Operating Expenses

Total Cruise operating expenses for 2023 increased $0.3 billion to $2.0 billion from $1.7 billion in 2022.

Total Cruise operating expenses for 2023 increased $170.4 million to $2.1 billion from $2.0 billion in 2022.

The increase was primarily due to:

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• a $41.0 million increase in Onboard and other expenses;

• a $47.5 million increase in Food expense.

The increase in operating expenses noted above reflects our full operations in 2023;

at higher occupancy compared to the same period in 2022, as well as inflationary pressures on food expense.

Marketing, Sellin g and Administrative Expenses

Marketing, selling and administrative expenses for 2023 increased $63.4 million, or 17.1%, to $434.8 million from $371.4 million in 2022.

The increase was primarily due to higher benefits expense related to our performance share awards driven by higher stock prices in 2023 compared to the same period in 2022.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2023 increased $10.1 million, or 2.9%, to $361.7 million from $351.5 million in 2022.

The increase was primarily due to depreciation expenses for Silver Endeavour, which was not part of our fleet during the same period in 2022.

Other (Expense) Income

Interest expense, net of interest capitalized for 2023 increased $52.8 million, or 17.4%, to $355.5 million from $302.7 million in 2022.

The increase was primarily due to loss on extinguishment of debt of $30.2 million, higher rates on refinancing transactions during the second half of 2022, as well as the impact of higher rates on floating-rate debt.

Equity investment income was $42.0 million for 2023 compared to Equity investment loss of $13.2 million in 2022.

The increase in income was primarily due to income from TUI Cruises, one of our equity investments, in 2023 compared to losses in 2022.

The increase in operating expenses noted above reflects our operations in 2023 at higher occupancy compared to the same period in 2022.

Other Comprehensive Income (Loss)

Other comprehensive (loss) was $(2.1) million in 2023 compared to $(56.6) million for the same period in 2022 .

The decrease in loss of $54.6 million, or 96.4% was primarily due to a Gain on cash flow derivative hedges in 2023 of $5.0 million compared to a Loss on cash flow derivative hedges in 2022 of $(84.5) million, mostly as a result of a significant decrease in fair value of our fuel swaps in 2023 compared to 2022.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

In this section, references to 2023 refer to the six months ended June 30, 2023 and references to 2022 refer to the six months ended June 30, 2022

Other comprehensive income was $35.0 million in 2023 compared to o ther comprehensive loss of $(241.2) million for the same period in 2022 .

The increase of $276.3 million, or 114.5% was primarily due to a Gain on cash flow derivative hedges in 2023 of $19.6 million compared to a Loss on cash flow derivative hedges in 2022 of $(259.9) million, mostly as a result of a significant increase in fair value of our fuel swaps in 2023 compared to 2022 .

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

In this section, references to 2023 refer to the nine months ended September 30, 2023 and references to 2022 refer to the nine months ended September 30, 2022

Total revenues for 2023 increased $4.3 billion to $10.6 billion from $6.2 billion in 2022.

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Passenger ticket revenues for 2023 increased by $3.2 billion to $7.3 billion from $4.1 billion in 2022.

The increase was primarily due to increase in ticket prices, 44.9% higher occupancy, and higher capacity of 27.5% compared to the same period in 2022.

The increase was primarily due to a 30.2% increase in occupancy reflecting our full operations in 2023, compared to a partial return to operations during the first half of 2022 and full operations in the third quarter of 2022, higher ticket prices which increased ticket revenues by $2.4 billion, and higher capacity of 18.3% compared to the same period in 2022.

The remaini ng 31.1% of 2023 total revenues was comprised of Onboard and other revenues , which increased $1.1 billion to $3.3 billion in 2023 from $2.1 billion in 2022.

The increase was primarily due to an increase in occupancy and higher capacity, as noted above, in 2023 compared to the same period in 2022.

The increase in revenues reflect our full operations in 2023, compared to a partial return to operations during the same period in 2022.

The increase in revenues reflect our full operations in 2023, compared to a partial return to operations during the first half of 2022 and full operations in the third quarter of 2022.

Occupancy in 2023 was 105.7% compared to 81.2% in 2022.

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• a $163.4 million increase in Food expense;

• a $136.4 million increase in Other operating expense;

• a $70.0 million increase in Fuel expense.

The increase in operating expenses noted above reflects our to full operations in 2023;

including additional capacity and higher occupancy compared to the same period in 2022, as well as inflationary pressures on food expense.

The increase in operating expenses noted above reflects full operations in 2023;

including additional capacity and higher occupancy compared to the same period in 2022, offset by a decrease of $93.1 million in payroll and related due to additional costs incurred during our return to service in 2022, which did not recur in 2023.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2023 increased $130.2 million, or 17.0%, to $0.9 billion from $0.8 billion in 2022.

The increase was primarily due to an increase in payroll due to the additional capacity and higher occupancy, and to higher benefits expense related to our performance share awards driven by higher stock prices in 2023 compared to the same period in 2022.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2023 increased $30.4 million, or 4.4%, compared to 2022.

The increase was primarily due to depreciation expenses for the Celebrity Beyond which entered service in the second quarter of 2022, and Silver Endeavour which was not part of our fleet during the same period in 2022.

Other (Expense) Income

Interest expense, net of interest capitalized for 2023 increased $134.5 million, or 23.2%, to $714.9 million from $580.4 million in 2022.

The increase was primarily due to higher rates on refinancing transactions during the first half of 2023, as well as the impact of higher rates on floating-rate debt, and loss on extinguishment of debt of $43.5 million during the first half of 2023.

Equity investment Income for 2023 was $62.5 million compared to Equity investment loss of $(44.2) million in 2022.

The increase in income was primarily due to income from TUI Cruises, one of our equity investments, in 2023 compared to losses in 2022.

Other Comprehensive (Loss) Income

Other comprehensive (loss) for 2023 was $(36.8) million compared to Other comprehensive income of $159.6 million in 2022.

The change was primarily due to a Loss on cash flow derivative hedges in 2023 of $(26.7) million compared to a Gain on cash flow derivative hedges in 2022 of $111.4 million, which was mostly as a result of a significant decrease in fair value of our fuel swaps in 2023 compared to 2022.

Marketing, selling and administrative expenses for 2023 increased $150.1 million, or 13.2%, to $1.3 billion from $1.1 billion in 2022, driven by an increase in headcount and higher stock price year over year related to our performance share awards.

Other Income (Expense)

Interest expense, net of interest capitalized for 2023 increased $123.0 million, or 13.2%, to $1.1 billion from $0.9 billion in 2022.

The increase was primarily due to loss on extinguishment of debt of $81.4 million including partial repayments of the 11.50% senior secured notes due 2025 in 2023, compared to $16.4 million in 2022, higher rates on refinancing transactions that were completed in 2022, as well as the impact of higher rates on floating-rate debt compared to the same period in 2022.

Equity investment income for 2023 increased $119.4 million, or 401.1%, to $149.1 million from $29.8 million in 2022.

The increase in income was primarily due to increase of income from TUI Cruises, one of our equity investments, in 2023 compared to 2022.

Other Comprehensive Loss

Other comprehensive loss for 2023 decreased $79.8 million, or 97.8%, to $(1.8) million from $(81.6) million in 2022.

The decrease was primarily due to decrease in Loss on cash flow derivative hedges of $141.4 million, to $(7.1) million from $(148.5) million in 2022 , which was mostly as a result of a significant increase in fair value of our fuel swaps in 2023 compared to 2022 .

Future Application of Accounting Standards

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Sources and Uses of Cash

Net cash provided by operating activities was $2.7 billion for the six months ended June 30, 2023, compared to cash used of $0.1 billion for the same period in 2022.

The increase of $2.8 billion was primarily attributable to higher bookings, and occupancy in 2023 compared to the same period in 2022.

Net cash used in investing activities decreased $1.5 billion to cash used of $1.0 billion for the six months ended June 30, 2023, compared to cash used of $2.5 billion for the same period in 2022.

The decrease was primarily attributable to a decrease in capital expenditures of $1.3 billion during 2023, compared to the same period in 2022, due to the delivery of Wonder of the Seas and Celebrity Beyond in 2022 compared to the delivery of Silver Nova during the same period in 2023, and a decrease in cash paid on the settlement of derivative financial instruments of $251.1 million during 2023, compared to the same period in 2022.

Net cash used in financing activities was $2.9 billion for the six months ended June 30, 2023, compared to cash provided by financing activities of $2.0 billion for the same period in 2022.

The change of $4.9 billion was primarily attributable to a decrease of $2.6 billion in debt proceeds in 2023 compared to the same period in 2022, and an increase in repayments of debt of $2.5 billion in 2023 compared to the same period in 2022.

The change is partially offset by proceeds received of $209.3 million for the sale of noncontrolling interest of PortMiami during the six months ended June 30, 2023.

Net cash provided by operating activities was $3.4 billion for the nine months ended September 30, 2023, compared to cash used of $94.7 million for the same period in 2022.

The increase of $3.5 billion was primarily attributable to higher occupancy and bookings in 2023 compared to the same period in 2022.

Net cash used in investing activities decreased $1.5 billion to cash used of $1.3 billion for the nine months ended September 30, 2023, compared to cash used of $2.9 billion for the same period in 2022.

The decrease was primarily attributable to a decrease in capital expenditures of $1.2 billion during 2023, compared to the same period in 2022, due to the delivery of Wonder of the Seas, Celebrity Beyond, and Silver Endeavour in 2022 compared to the delivery of Silver Nova during the same period in 2023, and a decrease in cash paid on the settlement of derivative financial instruments of $323.1 million during 2023, compared to the same period in 2022.

Net cash used in financing activities was $3.3 billion for the nine months ended September 30, 2023, compared to cash provided by financing activities of $1.8 billion for the same period in 2022.

The change of $5.2 billion was primarily

attributable to a decrease of $5.4 billion in debt proceeds in 2023 compared to the same period in 2022, and an increase in repayments of debt of $170 million in 2023 compared to the same period in 2022.

The change is partially offset by proceeds received of $209.3 million for the sale of noncontrolling interest of PortMiami during the nine months ended September 30, 2023.

Future Capital Commitments

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Our future capital commitments consist primarily of new ship orders.

As of June 30, 2023, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

As of September 30, 2023, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship Shipyard Expected delivery Approximate

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Icon of the Seas Meyer Turku Oy 4th Quarter 2023 5,600

Unnamed Meyer Turku Oy 2nd Quarter 2025 5,600

Star of the Seas Meyer Turku Oy 2nd Quarter 2025 5,600

Unnamed Meyer Turku Oy 2nd Quarter 2026 5,600

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Mein Schiff 7 Meyer Turku Oy 2nd Quarter 2024 2,900

Unnamed Fincantieri 4th Quarter 2024 4,100

Mein Schiff Relax Fincantieri 4th Quarter 2024 4,100

Unnamed Fincantieri 2nd Quarter 2026 4,100

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Our future capital commitments consist primarily of new ship orders.

As of June 30, 2023, the aggregate expected cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $11.0 billion, of which we had deposited $1.0 billion.

Approximately 42.3% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at June 30, 2023.

As of September 30, 2023, the aggregate expected cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $10.9 billion, of which we had deposited $1.1 billion.

Approximately 40.1% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, 2023.

Refer to Note 8.

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Fair Value Measurements and Derivative Instruments to our consolidated financial statement .

As of June 30, 2023, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $4.2 billion for 2023.

As of September 30, 2023, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $4.1 billion for 2023.

This amount does not include any ships on order by our Partner Brands.

Material Cash Requirements

As of June 30, 2023, our material cash requirements were as follows (in thousands):

As of September 30, 2023, our material cash requirements were as follows (in thousands):

2023 2024 2025 2026 2027 Thereafter Total

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(1) Long-term debt obligations mature at various dates through fiscal year 2037 and bear interest at fixed and variable rates.

Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements, using the applicable rate at June 30, 2023.

Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2023.

Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements, using the applicable rate at September 30, 2023.

Debt denominated in other currencies is calculated based on the applicable exchange rate at September 30, 2023.

(2) Amounts primarily represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts.

(3) Amounts are based on contractual installment and delivery dates for our ships on order.

Included in these figures are $6.2 billion in final contractual installments, which have committed financing covering 80% of the cost of the ships on order for our Global Brands, almost all of which include sovereign financing guarantees.

Included in these figures are $6.0 billion in final contractual installments, which have committed financing with sovereign guarantees covering 80% of the cost of the ships on order for our Global Brands.

Amounts do not include potential obligations which remain subject to cancellation at our sole discretion or any agreements entered for ships on order that remain contingent upon completion of conditions precedent.

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Commitments and Contingencies for other agreements.

As of June 30, 2023, other than the items referenced above, we are not party to any other off-balance sheet arrangements, including guarantee contracts, retained or contingent interest, certain derivative instruments and variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial position.

As of September 30, 2023, other than the items referenced above, we are not party to any other off-balance sheet arrangements, including guarantee contracts, retained or contingent interest, certain derivative instruments and variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial position.

Funding Needs and Sources

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reductions in capital expenditures, operating expenses and administrative costs and additional financings.

Additionally, we will continue to pursue various opportunities to raise capital to fund obligations associated with future debt maturities and/or to extend the maturity dates associated with our existing indebtedness or facilities.

Additionally, we will continue, as appropriate, to pursue various opportunities to raise capital to fund obligations associated with future debt maturities and/or to extend the maturity dates associated with our existing indebtedness or facilities.

If needed, actions to raise capital may include issuances of debt, convertible debt or equity in private or public transactions or entering into new or extended credit facilities.

We have significant contractual obligations of which our debt service obligations and the capital expenditures associated with our ship purchases represent our largest funding needs.

As of June 30, 2023, we had $8.3 billion of committed financing for our ships on order.

As of June 30, 2023, our obligations due through June 30, 2024 primarily consisted of $1.7 billion related to debt maturities, $1.3 billion related to interest on debt and $4.1 billion related to progress payments on our ship orders and, based on the expected delivery date, the final installment payable due upon the delivery of Icon of the Seas, Celebrity Ascent, Utopia of the Seas, and Silver Ray .

As of June 30, 2023, we had liquidity of $3.7 billion, including cash and cash equivalents of $0.7 billion, and $3.0 billion of undrawn revolving credit facility capacity.

As of September 30, 2023, we had $8.2 billion of committed financing for our ships on order.

As of September 30, 2023, our obligations due through September 30, 2024 primarily consisted of $2.0 billion related to debt maturities, $1.2 billion related to interest on debt and $3.9 billion related to progress payments on our ship orders and, based on the expected delivery date, the final installment payable due upon the delivery of Icon of the Seas, Celebrity Ascent, Utopia of the Seas, and Silver Ray .

As of September 30, 2023, we had liquidity of $3.3 billion, including cash and cash equivalents of $0.6 billion, and $2.7 billion of undrawn revolving credit facility capacity.

We have agreed with certain of our lenders not to pay dividends or engage in stock repurchases unless we repay the remaining principal payments that were deferred under our export credit facilities in 2020 and 2021.

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In 2021 and 2022, the financial covenant levels were modified for 2023 and 2024.

As of June 30, 2023, we were in compliance with our financial covenants and we estimate that we will be in compliance for at least the next twelve months.

As of September 30, 2023, we were in compliance with our financial covenants and we estimate that we will be in compliance for at least the next twelve months.

The declaration of dividends shall at all times be subject to the final determination of our board of directors that a dividend is prudent at that time in consideration of the needs of the business.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis