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Item 7. Management’s Discussion and Analysis

2024-02-21 compared with 2023-02-23 · 311 added, 258 removed, 374 unchanged (60% of the section changed)

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A discussion of our results of operations, and sources and uses of cash for the year ended December 31, 2022 compared to the year ended December 31, 2021 is included in Part II.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2021 , filed with the SEC on March 1, 2022 and is incorporated by reference into this Form 10-K.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022 , filed with the SEC on February 23, 2023 and is incorporated by reference into this Form 10-K.

Critical Accounting Policies and Estimates

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We have discussed these accounting policies and estimates with the audit committee of our board of directors.

We believe our most critical accounting policies and estimates are as follows:

Management's Plan and Liquidity

In the face of the global pandemic impact of COVID-19, we paused our guest cruise operations in March 2020 and began resuming guest cruise operations in 2021, with our full fleet in service by June 2022.

As part of our liquidity management, we rely on estimates of our future liquidity which include numerous assumptions that are subject to various risks and uncertainties.

The principal assumptions used to estimate our future liquidity consist of:

• Expected timing of cash collections for cruise bookings;

• Expected sustained increase in revenue per available passenger cruise day;

• Expected increase in occupancy levels, reaching historical levels in the spring of 2023;

• Inflationary increases to our operating costs, mostly impacting the expected cost of fuel and food as compared to 2019.

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

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 believe our critical accounting policies and estimates are as follows:

Ship Accounting

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The 30-35 year useful life and 10%-15% residual value is the weighted-average of all major components of a ship.

Our useful life and residual value estimates take into consideration the impact of anticipated technological changes, long-term cruise and vacation market conditions and historical useful lives of similarly-built ships.

Our useful life and residual value estimates take into consideration the impact of anticipated technological changes, environmental regulations, long-term cruise and vacation market conditions and historical useful lives of similarly-built ships.

In addition, we take into consideration our estimates of the weighted-average useful lives of the ships' major component systems, such as hull, superstructure, main electric, engines and cabins.

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The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized within Cruise operating expenses in our Consolidated Statements of Comprehensive Loss.

We periodically review estimated useful lives and residual values for ongoing reasonableness, considering long term views on our intended use of each class of ships and the planned level of improvements to maintain and enhance vessels within those classes.

We periodically review estimated useful lives and residual values for ongoing reasonableness, considering long term views on our intended use of each class of ships the planned level of improvements to maintain, enhance, and to comply with environmental regulations for vessels within those classes.

In the event a factor is identified that may trigger a change in the estimated useful lives and residual values of our ships, a review of the estimate is completed.

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The activities associated with those drydocking costs cannot be performed while the vessel is in service and, as such, are done during a drydock as a planned major maintenance activity.

significant deferred drydock costs consist of hauling and wharfage services provided by the drydock facility, hull inspection and related activities (e.g., scraping, pressure cleaning, bottom painting), maintenance to steering propulsion, thruster equipment and ballast tanks, port services such as tugs, pilotage and line handling, and freight associated with these items.

The significant deferred drydock costs consist of hauling and wharfage services provided by the drydock facility, hull inspection and related activities (e.g., scraping, pressure cleaning, bottom painting), maintenance to steering propulsion, thruster equipment and ballast tanks, port services such as tugs, pilotage and line handling, and freight associated with these items.

We perform a detailed analysis of the various activities performed for each drydock and only defer those costs that are directly related to planned major maintenance activities necessary to maintain Class.

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However, should certain factors or circumstances cause us to revise our estimates of ship useful lives or projected residual values, depreciation expense could be materially higher or lower.

If circumstances cause us to change our assumptions in making determinations as to whether ship improvements should be capitalized, the amounts we expense each year as repairs and maintenance costs could increase, partially offset by a decrease in depreciation expense.

If circumstances cause us to change our assumptions in making determinations as to whether ship

improvements should be capitalized, the amounts we expense each year as repairs and maintenance costs could increase, partially offset by a decrease in depreciation expense.

If we had reduced our estimated average ship useful life by one year, depreciation expense for 2023 would have increased by approximately $100 million.

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We have evaluated our estimated ship useful lives and projected residual values in light of our current environment and determined that there are no changes to these estimates.

Refer to Note 6 .

Property and Equipment to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information on our ships .

Valuation of Goodwill, Indefinite-Lived Intangible Assets and Long-Lived Assets

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We typically estimate the fair value of our reporting units using a discounted cash flow model, which may also include a combination of a market-based valuation approach.

The estimation of fair value utilizing discounted expected future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as assumptions regarding the cruise vacation industry's competitive environment and general economic and business conditions, among other factors.

The estimation of fair value utilizing discounted expected future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, and assumptions regarding the cruise vacation industry's competitive environment and general economic and business conditions, among other factors.

The principal assumptions used in the discounted cash flow model for our 2023 impairment assessment consisted of:

• Forecasted revenues per available passenger cruise day;

• Occupancy rates from existing and expected ship deliveries;

• Occupancy rates from existing vessels;

• Vessel operating expenses;

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If the fair value of the reporting unit exceeds its carrying value, no write-down of goodwill is required.

As amended by ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment , if the fair value of the reporting unit is less than the carrying value of its net assets, an impairment is recognized based on the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

If the fair value of the reporting unit is less than the carrying value of its net assets, an impairment is recognized based on the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

Refer to Note 4 .

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• Forecasted revenues per available passenger cruise day;

• Occupancy rates from existing and expected ship deliveries;

• Occupancy rates from existing vessels ;

• Terminal growth rate;

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Refer to Note 5.

Intangible Assets to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information on indefinite-life intangible assets.

Intangible Assets to

our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information on indefinite-life and finite-life intangible assets.

We review our ships and other long-lived assets, including right-of-use assets for impairment whenever events or changes in circumstances indicate, based on recent and projected cash flow performance and remaining useful lives, that the carrying value of these assets may not be fully recoverable.

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Royal Caribbean International Reporting Unit

During the fourth quarter of 2023, we performed a quantitative analysis as part of our annual impairment review of the Royal Caribbean International reporting unit.

As of November 30, 2023, the fair value of the Royal Caribbean International reporting unit was determined using a discounted cash flow model in combination with a market-based valuation approach.

As a result of the test, we determined the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by more than 100% as of November 30, 2023, resulting in no impairment to Royal Caribbean International's goodwill.

During the fourth quarter of 2022, we performed a qualitative assessment of the Royal Caribbean International reporting unit.

Based on our qualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the Royal Caribbean International reporting unit exceeded its carrying value and thus, we did not proceed to the two-step goodwill impairment test.

No indicators of impairment exist primarily because the reporting unit's fair value has consistently exceeded its carrying value by a significant margin and forecasts of operating results expected to be generated by the reporting unit appear sufficient to support its carrying value.

As of December 31, 2022, the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was $296.4 million.

We did not perform interim impairment evaluations of Royal Caribbean International's goodwill during 2022 as no triggering events were identified.

Based on our qualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the reporting unit exceeded its carrying value and thus, we did not proceed to the goodwill impairment test.

As of December 31, 2023 and 2022, the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was $296.4 million.

We did not perform interim impairment evaluations of Royal Caribbean International's goodwill during 2023 and 2022, as no triggering events were identified.

Silversea Cruises Reporting Unit

During the fourth quarters of 2022 and 2021, we performed our annual impairment review of Silversea Cruises goodwill.

We did not perform qualitative assessments but instead proceeded directly to the goodwill impairment tests.

As of November 30, 2022, and November 30, 2021, the fair value of the Silversea Cruises reporting unit was determined using a discounted cash flow model in combination with a market-based valuation approach.

During the fourth quarters of 2023 and 2022, we performed a quantitative analysis as part of our annual impairment review of the Silversea Cruises reporting unit.

As of November 30, 2023, and November 30, 2022, the fair value of the Silversea Cruises reporting unit was determined using a probability weighted discounted cash flow model in combination with a market-based valuation approach.

As a result of the tests, we determined the fair value of the Silversea Cruises reporting unit exceeded its carrying value by approximately 63% and 26% as of November 30, 2023 and 2022, respectively, resulting in no impairment to Silversea Cruises' goodwill.

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As of December 31, 2023 and 2022 , the carrying value of indefinite-life intangible assets was $321 million, which primarily relates to the Silversea Cruises trade name.

We did not perform interim impairment evaluations of Silversea Cruises's goodwill or trade names during 2022 and 2021, as no triggering events were identified.

We did not perform interim impairment evaluations of Silversea Cruises' goodwill or trade names during 2023 and 2022, as no triggering events were identified.

Derivative Instruments

We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices.

These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges.

These instruments are recorded on the balance sheet at their fair

value and the vast majority are designated as hedges.

We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments.

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In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have historically focused on deployment to the Caribbean, Asia and Australia during that period.

This seasonal trend was disrupted with the voluntary suspension of our global cruise operations effective March 2020 in response to the COVID-19 outbreak.

We resumed our global cruise operations commencing in the second half of 2021, with our full fleet in service by June 2022.

Since our full fleet is in service, we expect to return to seasonal trends

Financial Presentation

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• Passenger ticket revenues , which consist of revenue recognized from the sale of passenger tickets and the sale of air transportation to and from our ships;

• Onboard and other revenues , which consist primarily of revenues from the sale of goods and/or services onboard our ships not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities.

Onboard and other revenues also include revenues we receive from independent third party concessionaires that pay us a percentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships, as well as revenues received for procurement and management related services we perform on behalf of our unconsolidated affiliates.

• Onboard and other revenues , which consist primarily of revenues from the sale of goods and/or services onboard our ships not included in passenger ticket prices, casino operations, cancellation fees, sales of vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities.

Onboard and other revenues also include revenues we receive from independent third party concessionaires that pay us a percentage of their

revenues in exchange for the right to provide selected goods and/or services onboard our ships, as well as revenues received for procurement and management related services we perform on behalf of our unconsolidated affiliates.

Cruise Operating Expenses

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As discussed in more detail herein, certain of these metrics are non-GAAP financial measures.

These non-GAAP financial measures are provided along with the related GAAP financial measures as we believe they provide useful information to investors as a supplement to our consolidated financial statements, which are prepared and presented in

accordance with GAAP.

The presentation of non-GAAP 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.

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 p eriods presented, these items included (i) other expenses, which includes our loss contingency in connection with the ongoing Havana Docks litigation recorded in 2022;

(ii) impa irment and credit losses;

(iii) restru cturing charges and other initiative expenses;

(iv) equity investment asset impairments;

(v) net insurance recoveries or costs related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas ;

For the p eriods presented, these items included (i) Other expense, which includes the loss contingency in connection with the ongoing Havana Docks litigation recorded in other expenses in 2022;

(ii) gain on sale of controlling interest;

(iii) impa irment and credit losses;

(iv) restru cturing charges and other initiative expense;

(v) equity investment impairment and recovery of losses;

(vi) Pullmantur reorganization settlement;

(vii) the net gain recognized in 2021 in relation to the sale of the Azamara brand;

(viii) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.

and (ix) transaction costs related to the 2018 Silversea Cruises acquisition.

(vii) net insurance recoveries or costs related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas ;

and (viii) the net gain recognized in 2021 in relation to the sale of the Azamara brand;

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

to Adjusted EBITDA is provided below under Results of Operations.

Adjusted Loss per Share ("Adjusted EPS") is a non-GAAP measure that represents Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

Adjusted Earnings (Loss) per Share ("Adjusted EPS") is a non-GAAP measure that represents Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

(as defined below) 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.

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

Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

is a non-GAAP measure that represents net loss 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) loss on the extinguishment of debt; (ii) the amortization of non-cash debt discount on our convertible notes; (iii) the estimated cash refund expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A.

reorganization; (iv) impairment and credit losses; (v) equity investment asset impairments; (vi) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; (vii) restructuring charges and other initiative expenses ; (viii) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018;

for 2020, the change in the fair value in the Silversea Cruises contingent consideration;(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.

(previously known as Silversea Cruises Group Ltd.) noncontrolling interest in Silversea Cruises, which noncontrolling interest we acquired on July 9, 2020; (x) the net gain recognized in the first quarter of 2021 in relation to the sale of the Azamara brand; (xi) currency translation losses recognized during the second quarter of 2020, in connection with the ships classified as assets held-for-sale that were previously chartered to Pullmantur; (xii) the net loss recognized in the fourth quarter of 2021 related to the elimination of the three-month reporting lag for Silversea Cruises;

and (xiii) loss contingency recorded in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs .

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

to Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

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

is a non-GAAP measure that represents net income (loss) 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) loss on extinguishment of debt;

(ii) gain on sale of controlling interest;

(iii) tax on the sale of PortMiami noncontrolling interest;

Silver Whisper deferred tax liability release;

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

(vii) restructuring charges and other initiative expenses;

(viii) equity investments impairment and recovery of losses;

(ix) loss contingency recorded in 2022 in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs;

(x) convertible debt amortization of debt discount;

(xi) the 2021 Pullmantur reorganization settlement;

(xii) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas incident;

(xiii) the net gain recognized in 2021 in relation to the sale of the Azamara brand;

and (xiv) the net loss recognized in 2021 related to the elimination of the three-month reporting lag for Silversea Cruises.

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

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

is provided below under Results of Operations.

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Carbon Intensity is our measurement of carbon dioxide emissions per gross tonne nautical mile (well-to-wake).

Net Cruise Costs and Net C ruise Costs Excluding Fuel are non-GAAP measures that 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 (each of which is described above under the Description of Certain Line Items heading).

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.

A reconciliation of Gross Cruise

Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of Operations.

For the 2022 period presented, Net Cruise Costs and Net Cruise Costs Excluding Fuel excludes restructuring and other initiative expenses.

Net Cruise Costs and Net C ruise Costs excluding Fuel are non-GAAP measures that represent Gross Cruise Costs excluding commissions, transportation and other expenses, onboard and other expenses and, in the case of Net Cruise Costs excluding Fuel, fuel expenses (each of which is described above under the Description of Certain Line Items heading).

For the 2023 period presented, Net Cruise Costs and Net Cruise Costs Excluding Fuel excludes (i) gain on sale of controlling interest;

(ii) impairment and credit losses;

and (iii) restructuring and other initiative expenses.

A reconciliation of Gross Cruise Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of Operations.

Gross Margin Yield represent Gross Margin per APCD.

Adjusted Gross Margin represent Gross Margin, adjusted for payroll and related, food, fuel, other operating, and depreciation and amortization expenses.

Gross Margin is calculated pursuant to GAAP as total revenues less total cruise operating expenses, and depreciation and amortization.

Net Yields represent Adjusted Gross Margin per APCD.

We utilize Adjusted Gross Margin and Net Yields to manage our business on a day-to-day basis as we believe that they are the most relevant measures of our pricing performance because they reflect 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.

Invested Capital represents the most recent five-quarter average of total debt (i.e., Current portion of long-term debt plus Long-term debt) plus the most recent five-quarter average of Total shareholders' equity.

We use this measure to calculate ROIC (as defined below).

Adjusted Operating Income (Loss) is a non-GAAP measure that represents operating income (loss) including income (loss) from equity investments and income taxes but excluding certain items that we believe adjusting for is meaningful when assessing our operating performance on a comparative basis.

We use this non-GAAP measure to calculate ROIC (as defined below).

Return on Invested Capital ("ROIC") represents Adjusted Operating Income (Loss) divided by Invested Capital.

We believe ROIC is a meaningful measure because it quantifies how efficiently we generated operating income relative to the capital we have invested in the business.

ROIC is also used as a key metric in our long-term incentive compensation program for our executive officers.

Occupancy ("Load factor") , in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days (as defined below) by APCD.

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Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

Although discussed in prior periods, we did not disclose or reconcile in this report our Gross Yields and Net Yields, as defined in our Annual Report on Form 10-K for the year ended December 31, 2019.

Historically, we have utilized these financial metrics to measure relevant rate comparisons to other periods.

However, our 2022 and 2021 reduction in capacity and revenues, due to the impact of the COVID-19 pandemic on our operations, do not allow for a meaningful analysis and comparison of these metrics and as such these metrics have been excluded from this report.

For Gross Cruise Costs, Net Cruise Costs, and Net Cruise Costs excluding Fuel we present amounts in constant currency compared to 2019, which is the last year of normalized operations.

The use of certain non-GAAP measures, such as Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel, allows us to perform capacity and rate analysis to separate the impact of known capacity changes from other less predictable changes which affect our business.

We believe these non-GAAP measures provide expanded insight to measure revenue and cost performance in addition to the standard GAAP based financial measures.

There are no specific rules or regulations for determining non-GAAP measures, and as such, they may not be comparable to other companies within the industry.

We have not provided a quantitative reconciliation of projected non-GAAP financial measures to the most comparable GAAP financial measures because preparation of meaningful U.S.

GAAP projections would require unreasonable effort.

Due to significant uncertainty, we are unable to predict, without unreasonable effort, the future movement of foreign exchange rates, fuel prices and interest rates inclusive of our related hedging programs.

In addition, we are unable to determine the future impact of non-core business related gains and losses which may result from strategic initiatives.

These items are uncertain and could be material to our results of operations in accordance with U.S GAAP.

Due to this uncertainty, we do not believe that reconciling information for such projected figures would be meaningful.

Executive Overview

2022 was a transitional year filled with numerous accomplishments.

We returned our entire fleet into operations, took delivery of Celebrity Beyond and Wonder of the Seas , and acquired Silver Endeavour .

Additionally, we achieved positive EBITDA and operating cash flow for the year, controlled costs to minimize the impacts of inflation, and saw record shipboard revenues for the year.

Our 2022 Net Loss was $(2.2) billion, or $(8.45) per diluted share, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

2023 performance was exceptionally strong and significantly exceeded our expectations.

We took delivery of three new ships ( Silver Nova, Celebrity Ascen t and Icon of the Seas ), expanded Perfect Day at CocoCay’s capacity with the launch of Hideaway Beach, and successfully returned to normalized load factors of 105.6%, with peak summer sailings reaching load factors of 110%.

We achieved strong financial performance, including EBITDA of $4.5 billion in 2023, record Adjusted EBITDA per APCD and record ROIC.

In addition, 2023 delivered record Net Yields and Adjusted EBITDA, and we made significant progress in repairing our balance sheet, repaying approximately $4.0 billion of debt.

Our 2023 Net Income attributable to Royal Caribbean Cruises Ltd.

was $1.7 billion, or $6.31 per diluted share, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

of $1.9 billion, or $8.95 per diluted share in 2019, the most recent year of normalized operations.

Adjusted Net Loss for 2022 was $(1.9) billion, or $(7.50) per diluted share, compared to Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

for 2023 was $1.8 billion, or $6.77 per diluted share, compared to Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

of $2.0 billion, or $9.54 per diluted share in 2019.

2022 adjusted EBITDA was $711.6 million, compared to adjusted EBITDA of $3.6 billion in 2019.

We started 2022 by operating 51 ships and sailing at 57% load factor in the first quarter of 2022.

We successfully completed the return of our entire fleet into operations during the second quarter and achieved 96% load factors in the third quarter with the Caribbean eclipsing triple digits at close to 105% during the third quarter.

We finished the year sailing at almost 100% load factor in December 2022, with holiday sailings close to 110% during the fourth quarter.

Despite only partially operating for the first half of the year, total revenues were $8.8 billion in 2022, compared to $11.0 billion in 2019.

Load factors for 2022 were 85%, and 96% for the second half of the year.

Additionally, total revenue per passenger cruise day in 2022 was higher than record 2019 levels, driven by strong onboard revenue performance.

2023 Adjusted EBITDA was $4.5 billion, compared to Adjusted EBITDA of $3.6 billion in 2019.

Total revenues in 2023 were $13.9 billion, exceeding the previous record of $11.0 billion in 2019 driven by strong ticket revenue and onboard revenue performance, inclusive of capacity growth.

As a result of this, Gross Margin Yields increased 13.2% as-reported, and Net Yields increased 13.5% in Constant-Currency, both compared to 2019.

The strength in revenue and improved cash flow, combined with our margin expansion efforts allowed us to accelerate debt repayment, improving our debt maturity profile.

Cruise operating expenses increased from $6.1 billion in 2019 to $7.8 billion in 2023.

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Net Cruise Costs, excluding Fuel, per APCD increased 7.5% as-reported and 7.9% in Constant Currency, compared to 2019.

Our cost-conscious mindset has helped to mitigate the effects of inflation, and we benefited from reduced costs related to health protocols as the year went on.

For the year Net Cruise Costs included $5.97 per APCD of transitory costs related to health protocols, and one-time lagging costs related to fleet ramp up.

2022 also included Galveston terminal construction costs and increased costs associated with CocoCay, which were not present in 2019.

In 2023, we expect our capacity to increase by 14% compared to 2019, despite the reduction in capacity resulting from the divestiture of Azamara and the sale of older ships.

Since 2019 we have welcomed 9 new ships across our five brands, and with the addition of Celebrity Ascent and Silver Nova in 2023 we expect a total of 11 new vessels operating by year end.

These new ships, along with enhanced onboard offerings and continued investment in destinations, are expected to help drive increases in both Net Yields and Total revenues as our capacity expands.

We also plan to continue investing in both more efficient newbuilds and retrofitting our existing fleet with technology to help reach our long-term goals to reduce carbon intensity.

Lastly, we anticipate taking delivery of Icon of the Seas by the end of the year, to begin operating revenue sailings in 2024.

Our disciplined cost control helped mitigate the effects of inflation.

For 2023, Net Cruise Costs included $2.31 per APCD of structural costs which were not present in 2019, including increased costs associated with Perfect Day at CocoCay, our Galveston terminal, and roll-out of Starlink internet onboard our fleet.

In 2024, we expect our capacity to increase by 8.5% compared to 2023, with the addition of Silver Ray and Utopia of the Seas and a full year of operations for Silver Nova , Celebrity Ascent , and Icon of the Seas (which began revenue sailings in January 2024).

Utopia of the Seas will be the first Oasis class ship focused on short Caribbean itineraries, and we also return to China for the first time since 2019 with Spectrum of the Seas.

In addition, we will continue the construction of the first Royal Beach Club at Paradise Island, Bahamas, set to open in 2025.

Our new ships, optimized deployment, continued load factor growth and enhanced onboard offerings are expected to drive growth in Net Yields and Total Revenues.

During 2024, we are expected to have 20 ships in drydock, due to our growing fleet combined with the timing of restarting our entire fleet, and we plan to continue investing in newbuilds and retrofitting our existing fleet with technology to help reach our long-term goals to reduce carbon intensity.

Results of Operations

In addition to the items discussed above under "Executive Overview," significant items for 2023 include:

• Our Net Loss attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

for the year ended December 31, 2022 was $(2.2) billion and $(1.9) billion, or $(8.45) and $(7.50) per share on a diluted basis, respectively, reflecting our return to full operations, compared to Net Loss attributable to Royal Caribbean Cruises Ltd.

• Net Income attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

for the year ended December 31, 2023 was $1.7 billion and $1.8 billion, or $6.31 and $6.77 per share on a diluted basis, respectively, compared to Net Loss attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

of $(2.2) billion and $(1.9) billion, or $(8.45) and $(7.50) per share on a diluted basis, respectively, for the year ended December 31, 2022.

• Total revenues, excluding the effect of changes in foreign currency rates, increased by $7.5 billion for the year ended December 31, 2022 as compared to the same period in 2021.

The increase reflects our full return to operations by June 2022 compared to 2021 when the suspension of our global cruise operations was in effect for a substantial portion of our fleet.

APCDs for the year ended December 31, 2022 was 41,197,650 compared to 11,767,441, in the same period in 2021.

• The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions, denominated in currencies other than the United States dollar, resulted in a decrease in total revenues of $149.0 million for the year ended December 31, 2022 compared to the same period in 2021.

• Total cruise operating expenses, excluding the effect of changes in foreign currency rate, increased by $4.0 billion for the year ended December 31, 2022 compared to the same period in 2021, which reflects our return to operations in 2022 compared to 2021 when the suspension of our global cruise operations was in effect for the substantial portion of our fleet.

• The effect of changes in foreign currency exchange rates related to our cruise operating expenses, denominated in currencies other than the United States dollar, resulted in a decrease in total operating expenses of $79.5 million for the year ended December 31, 2022 compared to the same period in 2021.

• In January 2022 and April 2022, we took delivery of Wonder of the Seas and Celebrity Beyond , respectively.

To finance the purchases, we borrowed $1.3 billion and €0.7 billion, or approximately $0.7 billion based on the exchange rate at December 31, 2022, respectively, under previously committed unsecured term loans.

• Total revenues increased by $5.1 billion for the year ended December 31, 2023 as compared to the same period in 2022.

The increase was primarily driven by our full operations at higher occupancy, capacity, and ticket prices in 2023 , compared to partial to full operations during the first half and second half of 2022, respectively, at lower occupancy and capacity rates.

• Total cruise operating expenses increased by $1.2 billion for the year ended December 31, 2023 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 February 2023, we issued $700 million aggregate principal amount of 7.25% senior guaranteed notes due January 2030 ("7.25% Priority Guaranteed Notes").

Upon closing, we terminated our commitment for the $700 million 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 $209 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.

Refer to Note 7.

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

Wonder of the Seas and Celebrity Beyond entered service in the first and second quarters of 2022, respectively.

• In July 2022, we purchased the Silver Endeavour for our Silversea Cruises brand.

To finance the purchase, we assumed $277 million of debt.

Silver Endeavour entered service in the fourth quarter of 2022.

Investments and Other Assets in our consolidated financial statements for further information on the transaction.

• In June 2023, our 4.25% Convertible Senior Notes with an outstanding balance of $350 million were settled using a combination of $338 million in cash, and the issuance of approximately 374,000 shares of common stock.

The issuance of equity increased additional paid in capital by an immaterial amount.

• In June 2023, we took delivery of Silver Nova, and in November 2023, we took delivery of Celebrity Ascent, and Icon of the Seas.

Refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

• During the year ended December 31, 2022, we executed and amended various financing arrangements, we refinanced $6.9 billion of 2022 and 2023 maturities, which resulted in a total loss on extinguishment of debt of $93.8 million.

Refer to Note 8 .

Financial Statements and Supplementary Dat a for further information on the financing of the ships.

Silver Nova , Celebrity Ascent, and Icon of the Seas entered service in the third and fourth quarters of 2023, and the first quarter of 2024, respectively.

• In November 2023, we settled $225 million of our 2.875% Convertible Senior Notes.

The notes were settled using a combination of $225 million in cash and the issuance of approximately 147,000 shares of common stock.

The issuance of equity increased additional paid in capital by an immaterial amount.

• During the year ended December 31, 2023, we executed and amended various financing arrangements on our two unsecured revolving credit facilities.

Following these refinancings, our aggregate revolving credit commitments are $3.5 billion, with $1.7 billion scheduled to mature in October 2026, and $1.7 billion scheduled to mature in October 2028, and $97 million scheduled to mature in April 2025.

• During the year ended December 31, 2023, we fully repaid the $1.4 billion outstanding balance on our 11.50% secured senior notes due in June 2025.

For further information regarding the debt transactions discussed above, refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information on our 2023 financing activity .

• During the year ended December 31, 2022, we recorded a loss contingency of $130.0 million inclusive of related legal fees and costs in connection with the ongoing Havana Docks litigation.

Refer to Note 17.

Commitments and Contingencies to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

We reported Net Loss attributable to Royal Caribbean Cruises Ltd., Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd., Loss per Share and Adjusted Loss per Share as shown in the following table (in thousands, except per share data):

We reported Net Income (Loss) attributable to Royal Caribbean Cruises Ltd., Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd., Earnings (Loss) per Share and Adjusted Earnings (Loss) per Share as shown in the following table (in millions, except per share data):

Year Ended December 31,

2023 2022 2021

Net Loss attributable to Royal Caribbean Cruises Ltd.

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

$ 1,697 $ (2,156) $ (5,260)

Loss on extinguishment of debt 121 94 139

Gain on sale of controlling interest (1) (3) — —

PortMiami tax on sale of noncontrolling interest (2) 7 — —

Silver Whisper deferred tax liability release (3) (26) — —

Impairment and credit losses (4) 8 1 82

Amortization of Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition (5) 6 6 6

Restructuring charges and other initiatives expense 5 12 2

Equity investment impairment and recovery of losses (6) 12 — 31

Litigation loss contingency (7) — 130 —

Convertible debt amortization of debt discount (8) — — 104

Pullmantur reorganization settlement (9) — — 10

Impairment and credit losses (4) 562 82,001 1,566,380

Equity investment impairment (5) — 31,344 39,735

Oasis of the Seas incident (10) — — (7)

Restructuring charges and other initiatives expense (7) 11,625 1,831 51,853

Amortization of Silversea Cruises intangible assets and change in the fair value of contingent consideration related to Silversea Cruises acquisition (8) 6,493 6,493 (33,814)

Noncontrolling interest adjustment (9) — — 72,331

Net gain related to the sale of Azamara brand (11) — — (3)

Currency translation adjustment losses (11) — — 69,044

Net loss related to the elimination of the Silversea Cruises reporting lag (12) — — 63

Litigation loss contingency (13) 130,033 — —

Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

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

$ 1,827 $ (1,913) $ (4,833)

Loss per Share $ (8.45) $ (20.89) $ (27.05)

Adjusted Loss per Share $ (7.50) $ (19.19) $ (18.31)

Loss per Share $ (8.45) $ (20.89) $ (27.05)

Adjusted Loss per Share $ (7.50) $ (19.19) $ (18.31)

Earnings (Loss) per Share $ 6.63 $ (8.45) $ (20.89)

Adjusted Earnings (Loss) per Share $ 7.14 $ (7.50) $ (19.19)

Earnings (Loss) per Share (13) $ 6.31 $ (8.45) $ (20.89)

Adjusted Earnings (Loss) per Share (13) $ 6.77 $ (7.50) $ (19.19)

Weighted-Average Shares Outstanding:

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Diluted 283 255 252

(1) Represents net losses related to the early repayment of debt.

For further information regarding the repayment transactions, refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data .

(1) Represents gain on sale of controlling interest in cruise terminal facilities in Italy.

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

(2) Represents tax on the PortMiami sale of noncontrolling interest.

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

(3) Represents the release of the deferred tax liability subsequent to the execution of the bargain purchase option for the Silver Whisper.

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

(4) Represents asset impairments and credit loss recoveries for notes receivables for which credit losses were previously recorded.

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

Additionally, for 2023 includes an $11 million impairment related to ceasing the use of certain real estate assets in our shoreside operations.

This amount is included in Marketing, selling and administrative expenses within our consolidated statements of comprehensive income (loss).

For 2022 and 2021, amounts represents asset impairment and credit losses as a result of the impact of COVID-19, net of the recovery of credit losses previously recognized

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

(6) For 2023, represents equity method impairments of $13 million and recognition of deferred currency translation adjustment losses of $4 million.

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

Additionally, 2023, includes a $4 million recovery of losses from one of our equity method investees recognized during the second quarter of 2023.

For 2021, amount represents equity investment asset impairment, primarily for our investments in TUI Cruises GmbH as a result of the impact of COVID-19.

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

(7) Represents the 2022 loss contingency recorded in connection with the ongoing Havana Docks litigation inclusive of post-judgment interest and related legal fees and costs.

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

(8) Represents the amortization of non-cash debt discount on our convertible notes.

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reorganization.

(4) Represents asset impairment and credit losses as a result of the impact of COVID-19, with 2022 and 2021 amounts net of the recovery of credit losses previously recognized.

(5) Represents equity investment asset impairment, primarily for our investments in TUI Cruises GmbH in 2021 and Grand Bahama Shipyard in 2020, as a result of the impact of COVID-19.

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

(6) In 2021 and 2020, amounts include net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

(7) Represents primarily restructuring charges incurred in relation to the reduction in our U.S.

workforce and other initiatives expenses.

(8) In 2022 and 2021, represents the amortization of the Silversea Cruises intangible assets resulting from the 2018 Silversea Cruises acquisition.

In 2020, represents the change in the fair value in the Silversea Cruises contingent consideration recorded within Other (expense) income, offset by the amortization of the Silversea Cruises intangible assets.

(9) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest, which noncontrolling interest we acquired on July 9, 2020.

(10) Represents the net gain recognized in the first quarter of 2021 in relation to the sale of the Azamara brand.

(11) Represents currency translation losses recognized in connection with the ships sold in 2020 that were previously chartered to Pullmantur.

Refer to Note 7.

Other Assets to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

(10) Amounts include net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

(11) Represents the net gain recognized in 2021 in relation to the sale of the Azamara brand.

(12) Represents the net loss related to the elimination of the Silversea Cruises reporting lag.

(13) Represents our loss contingency recorded in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs.

(13) For 2023, diluted EPS and adjusted EPS includes the add-back of dilutive interest expense related to our convertible notes of $88 million.

Year Ended December 31,

Net Income attributable to Royal Caribbean Cruises Ltd.

Oasis of the Seas incident, Grand Bahama's drydock write-off and other incidental expenses (1) 35

Loss on extinguishment of debt 6

Change in the fair value of contingent consideration and amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition (2) 31

Restructuring charges and other initiatives expense (3) 14

Transaction and integration costs related to the Silversea Cruises acquisition (2) 2

Noncontrolling interest adjustment (4) 36

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

Earnings per Share $ 8.97

Adjusted Earnings per Share $ 9.56

Earnings per Share $ 8.95

Adjusted Earnings per Share $ 9.54

Weighted-Average Shares Outstanding:

(1) Amount includes incidental costs, net of insurance recoveries of $14 million related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas , which were reported primarily within Other operating expenses in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019;

and $21 million regarding the Grand Bahama incident involving one of its drydocks, included in our equity investment income within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019.

(2) Represents the change in the fair value of the contingent consideration and the amortization of the Silversea Cruises intangible assets resulting from the 2018 Silversea Cruises acquisition.

(3) Represents restructuring charges incurred in relation to the reorganization of our international sales and marketing structure and other initiatives expenses.

(4) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Silversea Cruises Group Ltd.'s noncontrolling interest.

The following table presents operating results as a percentage of total revenues for the last three years:

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Depreciation and amortization expenses 10.5 % 15.9 % 84.4 %

Impairment and credit losses — % 5.4 % 70.9 %

Operating Loss (8.6) % (252.6) % (208.3) %

Operating Income (Loss) 20.7 % (8.7) % (252.6) %

Other income (expense):

4 unchanged sentences

(8.4) % (15.7) % (90.7) %

Net Loss (24.4) % (343.3) % (261.5) %

Net Income (Loss) 12.3 % (24.4) % (343.3) %

Net Income attributable to noncontrolling interest 0.1 % — % — %

Net Loss attributable to Royal Caribbean Cruises Ltd.

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

12.2 % (24.4) % (343.3) %

12 unchanged sentences

Financial Statements and Supplementary Data for more information on the three-month reporting lag.

(2) Due to the three-month reporting lag effective through September 30, 2021, we include Silversea Cruises' metrics from October 1, 2019 through September 30, 2020 in the year ended December 31, 2020.

(2) For the year ended December, 31, 2021, we include Azamara Cruises' metrics through March 19, 2021, the effective sale date of the brand.

1 unchanged sentence

General to our consolidated financial statements under Item 8 .

Financial Statements and Supplementary

Data for more information on the sale of the Azamara Cruises brand.

For the year ended December 31, 2020, we include Azamara Cruises' metrics for the full year.

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

Financial Statements and Supplementary Data for more information on the sale of the Azamara Cruises brand.

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

Year Ended December 31,

2023 2022 2021

Net Loss attributable to Royal Caribbean Cruises Ltd.

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

$ 1,697 $ (2,156) $ (5,260)

2 unchanged sentences

Depreciation and amortization expenses 1,455 1,407 1,293

Income tax (benefit) expense (1) 4,153 (47,167) (14,990)

Income tax expense (benefit) (1) 6 4 (47)

EBITDA 4,524 583 (2,739)

Other expense (2) 2 115 27

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

Impairment and credit losses (4) 8 1 82

Restructuring charges and other initiatives expense 5 12 2

Equity investment impairment (3) — 31,344 39,735

Oasis of the Seas incident (4) — (6,584) (1,938)

Equity investment impairment and recovery of losses (5) 8 — 31

Pullmantur reorganization settlement (6) — — 5

Net gain related to the sale of the Azamara brand — (3,371) —

Noncontrolling interest adjustment (6) — — 72,331

Oasis of the Seas incident (7) — — (7)

Net gain related to the sale of Azamara brand — — (3)

Adjusted EBITDA $ 4,544 $ 711 $ (2,602)

(1) Included within Other (expense) income in our consolidated statements of comprehensive loss.

(2) Represents net non-operating income or expense.

For 2022, primarily relates to our loss contingency recorded of approximately $130 million in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs, as well as amounts related to changes in fair value of fuel swaps for which cash flow hedge accounting was discounted.

For 2021 and 2020, primarily relates to changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued.

The amounts excludes income tax (benefit) expense, included in the EBITDA calculation above.

(3) Represents equity investment asset impairment, primarily for our investments in TUI Cruises GmbH in 2021 and Grand Bahama Shipyard in 2020, as a result of the impact of COVID-19.

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

(2) Represents net non-operating expense.

For 2022, primarily represents our loss contingency recorded in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs.

For 2021 primarily relates to changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued.

The amount excludes income tax expense (benefit), included in the EBITDA calculation above.

(3) Represents gain on sale of controlling interest in cruise terminal facilities in Italy.

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

(4) Represents asset impairments and credit loss recoveries for notes receivables for which credit losses were previously recorded.

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

Additionally, for 2023 includes an $11 million impairment related to ceasing the use of certain real estate assets in our shoreside operations.

This amount is included in Marketing, selling and administrative expenses within our consolidated statements of comprehensive income (loss).

For 2022 and 2021, amounts represents asset impairment and credit losses as a result of the impact of COVID-19, net of the recovery of credit losses previously recognized.

(5) For 2023, represents equity method impairments of $13 million recognized during the third quarter of 2023, and a $4 million recovery of losses from one of our equity method investees recognized during the second quarter of 2023.

For 2021, amount represents equity investment asset impairment, primarily for our investments in TUI Cruises GmbH, as a result of the impact of COVID-19.

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

(4) Represents net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

(5) Represents expenses other than estimated cash refunds incurred as part of the Pullmantur S.A.

(6) Represents estimated cash refunds expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A.

reorganization..

(6) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest, which noncontrolling interest we acquired on July 9, 2020.

EBITDA and Adjusted EBITDA for 2019 were calculated as follows (in thousands, except APCD and per APCD data):

(7) Represents net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

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

Year Ended December 31,

Net Income attributable to Royal Caribbean Cruises Ltd.

Interest income (26,945)

Interest expense, net of interest capitalized 408,513

2023 2022 2021

Total revenues $ 13,900 $ 8,840 $ 1,532

Cruise operating expenses 7,775 6,616 2,739

Depreciation and amortization expenses 1,455 1,407 1,293

Income tax expense (1) 32,602

EBITDA 3,538,999

Other income (2) (8,089)

Restructuring charges and other initiatives expense 13,707

Oasis of the Seas incident, Grand Bahama's drydock write-off and other incidental expenses (3) 35,239

Transaction and integration costs related to the 2018 Silversea acquisition 2,048

Non-controlling interest adjustment (4) 35,965

Adjusted EBITDA $ 3,617,869

(1) Included within Other income (expense) in our consolidated statements of comprehensive income (loss).

(2) Excludes income tax expense, included in the EBITDA calculation above.

(3) Amount includes incidental costs, net of insurance recoveries of $14.5 million related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas , which were reported primarily within Other operating expenses in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019; and $20.7 million regarding the Grand Bahama incident involving one of its drydocks, included in our equity investment income within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019.

(4) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest, which noncontrolling interest we acquired on July 9, 2020.

Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD):

Gross Margin 4,670 817 (2,500)

Payroll and related 1,197 1,288 838

Food 819 653 164

Fuel 1,150 1,073 385

Other operating 1,799 1,648 1,027

Depreciation and amortization expenses 1,455 1,407 1,293

Adjusted Gross Margin $ 11,090 $ 6,886 $ 1,207

APCD 46,916,259 41,197,650 11,767,441

Gross Margin Yields $ 99.54 $ 19.83 $ (212.45)

Net Yields $ 236.38 $ 167.15 $ 102.57

Year Ended December 31,

2023 2023 On a Constant Currency Basis 2019

Total revenues $ 13,900 $ — $ 10,951

Cruise operating expenses 7,775 — 6,063

Depreciation and amortization expenses 1,455 — 1,246

Gross Margin 4,670 4,699 3,642

Payroll and related 1,197 — 1,079

Food 819 — 584

Fuel 1,150 — 698

Other operating 1,799 — 1,406

Depreciation and amortization expenses 1,455 — 1,246

Adjusted Gross Margin $ 11,090 $ 11,123 $ 8,655

APCD 46,916,259 46,916,259 41,432,451

Gross Margin Yields $ 99.54 $ 100.16 $ 87.90

Net Yields $ 236.38 $ 237.08 $ 208.89

Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs excluding Fuel were calculated as follows (in millions, except APCD and costs per APCD):

Year Ended December 31,

2023 2022 2021

5 unchanged sentences

Net Cruise Costs including other costs 6,757 6,245 3,784

Gain on sale of controlling interests (1) (3) — —

Impairment and credit losses (2) 8 1 82

Restructuring charges and other initiatives expense (3) 5 12 2

6 unchanged sentences

Net Cruise Costs excluding Fuel per APCD $ 119.30 $ 125.23 $ 281.71

(1) Included within Marketing, selling and administrative expenses in our consolidated statements of comprehensive loss.

Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD), on a Constant Currency basis:

(1) Represents gain on sale of controlling interest in cruise terminal facilities in Italy.

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

(2) Represents asset impairments and credit loss recoveries for notes receivables for which credit losses were previously recorded.

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

Additionally, for 2023 includes an $11 million impairment related to ceasing the use of certain real estate assets in our shoreside operations.

This amount is included in Marketing, selling and administrative expenses within our consolidated statements of comprehensive income (loss).

For 2022 and 2021, amounts represents asset impairment and credit losses as a result of the impact of COVID-19, net of the recovery of credit losses previously recognized.

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

Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs excluding Fuel were calculated as follows (in millions, except APCD and costs per APCD):

Year Ended December 31,

6 unchanged sentences

Net Cruise Costs including other costs 6,757 5,326

Gain on sale of controlling interests (1) (3) — —

Impairment and credit losses (2) 8 — —

Restructuring charges and other initiatives expense (3) 5 — 14

1 unchanged sentence

Transaction costs related to Silversea Cruises acquisition (3) — — 1

Costs, net of insurance recoveries, related to the Oasis of the Seas incident (2) — — 14,530

Incidental costs related to the Oasis of the Seas incident included within other operating expenses — — 15

Net Cruise Costs 6,747 6,769 5,295

5 unchanged sentences

Net Cruise Costs excluding Fuel per APCD $ 119.30 $ 119.77 $ 110.95

(1) Included within Marketing, selling and administrative expenses in our consolidated statements of comprehensive loss.

(2) Included within Total cruise operating expenses in our consolidated statements of comprehensive loss.

(1) Represents gain on sale of controlling interest in cruise terminal facilities in Italy.

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

(2) Represents asset impairments and credit loss recoveries for notes receivables for which credit losses were previously recorded.

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

Additionally, for 2023 includes an $11 million impairment related to ceasing the use of certain real estate assets in our shoreside operations.

This amount is included in Marketing, selling and administrative expenses within our consolidated statements of comprehensive income (loss).

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

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

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Passenger ticket revenues comprised 68.8% of our 2023 total revenues.

Passenger ticket revenues increased by $4.9 billion, or 515.6% to $5.8 billion in 2022 from $0.9 billion in 2021 and was partially offset by unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $129.8 million.

The remaining 34.5% of total revenues was comprised of Onboard and other revenues , which increased $2.5 billion, or 415.6% to $3.0 billion in 2022 from $591.0 million in 2021 and was partially offset by unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $19.2 million .

The increase in total revenues was due to our return of operations, with our full fleet in service by June 2022, compared to 2021 when we began resuming guest cruise operations.

Passenger ticket revenues increased by $3.8 billion, or 65.2% to $9.6 billion in 2023 from $5.8 billion in 2022.

The increase was primarily driven by a 20.5% higher occupancy, 13.9% increase in capacity, and higher ticket prices in 2023, compared to the same period in 2022.

The remaining 31.2% of total revenues was comprised of Onboard and other revenues , which increased $1.3 billion, or 42.2% to $4.3 billion in 2023 from $3.0 billion in 2022.

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

The increase in revenues reflect our full operations in 2023 at higher occupancy, capacity, and prices, compared to a partial return to operations during the first half of 2022, full operations in the second half of 2022 at lower occupancy and capacity rates.

Occupancy in 2023 was 105.6% compared to 85.1% in 2022.

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Total C r uise operating expenses increased by $1.2 billion, or 17.5%, to $7.8 billion in 2023 from $6.6 billion in 2022.

The increase in Cruise operating expenses was driven by the return to operations in 2022, with the majority of our fleet in service compared to 2021, when the suspension of our global cruise operations was in effect.

The 2022 operating expenses include the overhead costs associated with bringing our ships back to service and our crew back on board our ships.

Additionally, inflationary pressures have impacted our operating costs, especially in fuel and food expense.

Our cost of fuel (net of the financial impact of fuel swap agreements) for 2 022 increased 43% per metric ton compared to 2021 mainly due to the increase in fuel price.

The increase was primarily due to:

• a $644 million increase in Commissions, transportation and other expenses;

• a $212 million increase in Onboard and other expenses;

• a $166 million increase in Food Costs;

• a $151 million increase in Other operating expenses;

• a $77 million increase in Fuel 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 $91 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 increased $0.2 billion, or 15.5% to $1.6 billion in 2022 from $1.4 billion in 2021.

The increase was due to the ramp up of our global sales and marketing efforts starting in the second half of 2021 as we commenced our resumption of operations.

Additionally, having our full fleet in service as of June 30, 2022 increased overall expenses compared to 2021.

Depreciation and Amortization Expenses

Depreciation and amortization expenses increased $0.1 billion, or 8.8%, to $1.4 billion in 2022 compared to $1.3 billion.

The increase was primarily due to the addition of Wonder of the Seas and Celebrity Beyond to our fleet in January 2022 and April 2022, respectively, and depreciation for Odyssey of the Seas and Silver Dawn, which were delivered in March 2021 and November 2021, respectively.

Impairment and Credit Losses

Impairment and c redit losses for 2022 was $0.6 million compared to $82.0 million in 2021.

The decrease in impairment loss was primarily due to 2021 impairment charges of ce rtain construction in progress projects that were reduced in scope or terminated as a result of COVID-19, which did not recur in 2022.

Marketing, selling and administrative expenses increased $209 million, or 13.2% to $1.8 billion in 2023 from $1.6 billion in 2022, driven by an increase in payroll and benefits expense primarily 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 , increased $72.4 million, or 5.6%, to $1.4 billion in 2022 from $1.3 billion in 2021.

The increase was primarily due to additional indebtedness associated with new ship deliveries.

Equity investment income for 2022 was $56.7 million compared to Equity investment Loss of $135.5 million in 2021.

The increase in income was primarily due to income from TUI Cruises, one of our equity investments, in 2022 compared to losses in 2021.

Other (expense) income decreased $140.7 million, or 693.5%, to other expense of $120.4 million in 2022 from other income of $20.3 million in 2021.

The decrease was primarily due to a loss contingency of $130.0 million recorded in connection with the ongoing Havana Docks litigation.

Other Comprehensive Income

Other comprehensive income in 2022 was $67.7 million compared to $28.5 million in 2021.

The change was primarily due to Changes in defined benefits plan in 2022 of $48.9 million compared to $8.7 million in 2021.

Equity investment income (loss) increased $143 million, or 250.9%, to $200 million in 2023 from $57 million in 2022.

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

Other expense was $8 million in 2023 compared to other expense of $119 million in 2022.

The $111 million improvement is mainly driven by the loss contingency of $130 million recorded in 2022 in connection with the ongoing Havana Docks litigation, which did not recur in 2023.

Other Comprehensive Income (Loss)

Other comprehensive loss in 2023 was $30 million compared to Other comprehensive income of $67 million in 2022.

The decrease of $97 million was primarily due a Loss on cash flow derivative hedges in 2023 of 27 million compared to a Gain on cash flow derivative hedges of $8 million in 2022, and a decrease of $43 million in change in defined benefit plans in 2023 compared to 2022.

Future Application of Accounting Standards

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Sources and Uses of Cash

Net cash provided by (used in) operating activities increased by $2.4 billion to cash provided of $0.5 billion for the year ended December 31, 2022, compared to cash used of $1.9 billion for the same period in 2021.

Our full resumption of operations in 2022 generated an increase in guest ticket and onboard collections for the twelve months ended December 31, 2022, compared to a partial resumption of operations in 2021.

Net cash used in investing activities increased by $843.0 million to cash used of $3.0 billion for the year ended December 31, 2022, compared to cash used of $2.1 billion for the same period in 2021.

The increase in cash used in investing activities was primarily attributable to an increase in capital expenditures of $480.4 million due to the increased cost associated with taking delivery of Wonder of the Seas and Celebrity Beyond in 2022 compared to taking delivery of Odyssey of the Seas and Silver Dawn in 2021, and an increase in cash paid on settlement of derivative financial instruments of $281.7 million in 2022 compared to 2021.

Net cash provided by financing activities was $1.7 billion in 2022 compared to cash provided of $3.0 billion in 2021.

The decrease of $1.3 billion was primarily attributable to proceeds from common stock issuances of $1.6 billion during the twelve months ended December 31, 2021, compared to none during the same period in 2022, and offset by repayments of commercial paper notes of $414.6 million during the twelve months ended December 31, 2021, compared to none during the same period in 2022.

Net cash provided by operating activities increased by $4.0 billion to cash provided of $4.5 billion for the year ended December 31, 2023, compared to cash provided of $0.5 billion for the same period in 2022.

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

Net cash used in investing activities increased by $0.9 billion to cash used of $3.9 billion for the year ended December 31, 2023, compared to cash used of $3.0 billion for the same period in 2022.

The increase was primarily attributable to a increase in capital expenditures of $1.2 billion during 2023, compared to the same period in 2022 due to the increased cost associated with taking delivery of Silver Nova, Celebrity Ascent and Icon of the Seas in 2023, compared to the delivery of Wonder of the Seas, Celebrity Beyond, and Silver Endeavour during the same period in 2022.

The increase was partially offset by a decrease in cash paid on settlement of derivative financial instruments of $270 million during 2022 compared to 2023.

Net cash (used in) provided by financing activities was $(2) billion for the year ended December 31, 2023, compared to cash provided of $1.7 billion for the same period in 2022.

The change of $3.7 billion was primarily attributable to decrease of debt proceeds of $2.1 billion in 2023 compared to the same period in 2022, and an increase in repayment of debt of $1.8 billion in 2023 compared to the same period in 2022.

The change was partially offset by proceeds received of $209 million for the sale of noncontrolling interest of PortMiami during 2023.

Future Capital Commitments

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Our future capital commitments consist primarily of new ship orders.

As of December 31, 2022, we have one Oasis-class ship, and three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 22,500 berths.

As of December 31, 2023, we have one Oasis-class ship, and two ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 16,900 berths.

As of December 31, 2023, we have one Edge-class ship on order for our Celebrity Cruises brand, with a capacity of approximately 3,250 berths.

Additionally, as of December 31, 2022, we have two ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 1,460 berths.

Additionally, as of December 31, 2023, we have one Evolution-class ship on order for our Silversea Cruises brand with an aggregate capacity of approximately 730 berths.

Refer to Item 1.

Business-Operations for further information on our ships on order.

We have committed financing arrangements in place covering 80% of the cost of the ship for the seven ships on order for our Global Brands, all of which include sovereign financing guarantees.

Additionally, we have an agreement in place with Chantiers de l’Atlantique to build an additional Edge-class ship for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

We have committed financing arrangements in place covering 80% of the cost of the ship for the five ships on order for our Global Brands, all of which include sovereign financing guarantees.

During the year ended December 31, 2023 we received commitments for the unsecured financing of the fifth Edge-class ship, estimated for delivery in 2025.

As of December 31, 2023, the aggregate cost of our ships on order, excluding any ships on order by our Partner Brands, was approximately $7.9 billion, of which we had deposited $698 million.

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Financial Statements and Supplementary Data .

We have been, and may continue to be, negatively impacted on our cash flows, liquidity and financial position by the COVID-19 pandemic.

In order to preserve liquidity, we deferred a significant portion of our planned 2020, 2021 and 2022 capital expenditures.

As of December 31, 2023, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $3.3 billion for 2024.

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Material Cash Requirements

As of December 31, 2022, our material cash requirements were as follows (in thousands):

As of December 31, 2023, our material cash requirements were as follows (in millions):

Payments due by period

2024 2025 2026 2027 2028

Thereafter Total

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$ 1,222 $ 1,141 $ 1,004 $ 834 $ 512 $ 1,104 $ 5,817

157 149 173 141 116 925 1,661

Investing Activities:

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Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 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 $5.7 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 $4.5 billion in final contractual installments, which have committed financing covering 80% of the cost of the ships on order for our Global Brands, all of which include sovereign financing guarantees.

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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Refer to Note 3 .

Other Assets to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for ownership restrictions related to TUI Cruises.

Revenue to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for credit card processor agreements for export credit agency guarantees.

Refer to Note 7.

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for export credit agency guarantees.

Investments and Other Assets to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for ownership restrictions related to TUI Cruises.

Refer to Note 17.

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Funding Needs and Sources

Historically, we relied on a combination of cash flows provided by operations, draw-downs under our available credit facilities, the incurrence of additional debt and/or the refinancing of our existing debt and the issuance of additional shares of equity securities to fund our obligations.

COVID-19 resulted in our voluntary suspension of global cruise operations from March 2020 up to our full fleet returning to service during the second quarter of 2022.

The suspension of operations strained our sources of cash flow and liquidity, causing us to take actions resulting in reductions in our operating expenses, reductions in our capital expenses and new financings and other liquidity actions.

The Company continually identifies and evaluates actions to maintain adequate liquidity.

These include, and are not limited to:

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

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

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 December 31, 2023, we had approximately $6.0 billion of committed financing for our ships on order.

As of December 31, 2022, our obligations due through December 31, 2023 primarily consisted of $2.1 billion related to debt maturities, $1.3 billion related to interest on debt and $2.7 billion related to progress payments on our ship orders and, based on expected delivery date, the final installments payable due upon the delivery of Silver Nova, Icon of the Seas, and Celebrity Ascent .

As of December 31, 2022, we had liquidity of $2.9 billion, including cash and cash equivalents of $1.9 billion, $0.3 billion of undrawn revolving credit facility capacity, and a $0.7 billion commitment for a 364-day term loan facility which was terminated in February 2023 in connection with our completion of the $700 million 7.25% Priority Guaranteed Notes offering.

Our revolving credit facilities were partially utilized through a combination of amounts drawn and letters of credit issued under the facilities as of December 31, 2022, which were subsequently amended in January 2023, as described in Note 8 .

Debt to our consolidated financial statements.

As of December 31, 2023, our obligations due through December 31, 2024 primarily consisted of $1.7 billion related to debt maturities, $1.2 billion related to interest on debt and $2.0 billion related to progress payments on our ship orders and, based on expected delivery date, the final installments payable due upon the delivery of Utopia of the Seas, and Silver Ray .

We have historically relied on a combination of cash flows provided by operations, draw-downs under our available credit facilities, the incurrence of additional debt and/or the refinancing of our existing debt and the issuance of additional shares of equity securities to fund our obligations.

As of December 31, 2023, we had liquidity of $3.1 billion, including cash and cash equivalents of $0.5 billion, and $2.6 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.

Refer to Note 8 .

Debt and Note 10 .

Shareholders' Equity to our consolidated financial statements under Item 8.

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However, there is no assurance that our assumptions and estimates are accurate as there is inherent uncertainty in our ability to predict future liquidity requirements.

Refer to Note 1 .

General, Management’s Plan and Liquidity, to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

Debt Covenants

Our export credit facilities, our non-export credit facilities, and certain of our credit card processing agreements contain covenants that require us, among other things, to maintain a fixed charge coverage ratio, limit our net debt-to-capital ratio, and maintain minimum liquidity, and under certain facilities, to maintain a minimum level of stockholders' equity.

The fixed charge coverage ratio is calculated by dividing net cash from operations for the past four quarters by the sum of dividend payments plus scheduled principal debt payments in excess of any new financings for the past four quarters.

Our minimum stockholders' equity and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total stockholders' equity .

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

Our export credit facilities and our non-export credit facilities, and certain of our credit card processing agreements contain covenants that require us, among other things, to maintain a fixed charge coverage ratio, limit our net debt-to-capital ratio, and maintain a minimum liquidity, and under certain facilities, to maintain a minimum level of shareholders' equity.

Our minimum stockholders' equity and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total shareholders’ equity .

As of December 31, 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.

Any further covenant waivers may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as may be agreed with our lenders.

There can be no assurance that we would be able to obtain additional waivers in a timely manner, or on acceptable terms.

If we require additional waivers and are not able to obtain them or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contracts.

Refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information regarding debt covenants.

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-K

Item 7. Management’s Discussion and Analysis