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Item 2. Management’s Discussion and Analysis

2024-04-25 compared with 2023-10-26 · 88 added, 197 removed, 265 unchanged (52% 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 nine months ended September 30, 2023, compared to the same period in 2022;

• a discussion of our results of operations for the quarter ended March 31, 2024, compared to the same period in 2023;

• 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 expense (income);

For the periods presented , these items included (i) other expense;

(ii) gain on sale of controlling interest;

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

(iv) restructuring charges and other initiative expenses;

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

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

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 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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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;

(iv) Silver Whisper deferred tax liability release;

(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.

(ii) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition;

(iii) gain on sale of controlling interest;

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

(v) Silver Whisper deferred tax liability release;

and (vi) impairment and credit losses (recoveries).

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

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

Loss is provided below under Results of Operations.

is provided below under Results of Operations.

Available Passenger Cruise Days ( “APCD” ) is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period, which excludes canceled cruise days and cabins not available for sale.

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

(ii) impairment and credit losses (recoveries);

and (iii) restructuring and other initiative expenses.

and (ii) impairment and credit losses (recoveries) .

Gross Margin Yield represent Gross Margin per APCD.

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and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

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 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 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 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.

Refer to Note 5 .

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

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

• 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 the first quarter of 2024 was $360 million and $478 million, compared to Net loss and Adjusted Net loss of $(48) million and $(59) million, respectively, for the first quarter of 2023.

Significant items for the quarter ended March 31, 2024 include:

• Total revenues, increased $842 million for the quarter ended March 31, 2024 as compared to the same period in 2023.

The increase was primarily due to an increase in capacity and an increase in ticket prices and onboard spending in 2024, compared to same periods in 2023.

• Total cruise operating expenses, increased $263 million for the quarter ended March 31, 2024 as compared to the same period in 2023.

The increase was primarily due to an increase in capacity and occupancy, and additional drydock days in 2024 compared to the same period in 2023.

• In March 2024, we issued $1.25 billion aggregate principal amount of 6.25% senior notes.

Upon closing, we redeemed all of the outstanding $1.25 billion aggregate principal amount of 11.625% Senior Notes Due 2027.

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 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,

Operating results for the quarter ended March 31, 2024 compared to the same period in 2023 are shown in the following table (in millions, except per share data):

Quarter Ended March 31,

Revenues % of Total

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(386) (10.4) % (320) (11.1) %

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

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

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

Nine Months Ended September 30,

Revenues % of Total

Passenger ticket revenues $ 7,281,503 68.9 % $ 4,091,035 65.6 %

Onboard and other revenues 3,287,078 31.1 % 2,145,513 34.4 %

Total revenues 10,568,581 100.0 % 6,236,548 100.0 %

Cruise operating expenses:

Commissions, transportation and other 1,551,012 14.7 % 964,256 15.5 %

Onboard and other 640,175 6.1 % 450,225 7.2 %

Payroll and related 887,999 8.4 % 981,128 15.7 %

Food 613,795 5.8 % 450,376 7.2 %

Fuel 849,839 8.0 % 779,873 12.5 %

Other operating 1,341,821 12.7 % 1,205,452 19.3 %

Total cruise operating expenses 5,884,641 55.7 % 4,831,310 77.5 %

Marketing, selling and administrative expenses 1,288,719 12.2 % 1,138,571 18.3 %

Depreciation and amortization expenses 1,086,923 10.3 % 1,046,094 16.8 %

Operating Income (Loss) 2,308,298 21.8 % (779,427) (12.5) %

Other income (expense):

Interest income 31,863 0.3 % 21,765 0.3 %

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

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

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

(883,220) (8.4) % (876,329) (14.1) %

Net Income (Loss) 364 9.8 % (48) (1.7) %

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

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

Quarter Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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

Quarter Ended March 31,

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

$ 1,009,076 $ 32,968 $ 1,419,927 $ (1,655,756)

Loss on extinguishment of debt 116 13

Amortization of Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition (1) 2 2

Gain on sale of controlling interest (2) — (3)

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Impairment and credit losses (recoveries) (5) — (7)

Amortization of Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition (5) 1,623 1,623 4,869 4,870

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.

$ 1,065,294 $ 65,799 $ 1,498,085 $ (1,628,573)

Earnings (Loss) per Share $ 1.40 $ (0.19)

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Diluted 281 255

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

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

(2) For 2023, 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.

(3) For 2023, 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).

Refer to Note 5 .

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

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

(4) For 2023, 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.

(5) For 2023, 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).

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

(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.

(6) Diluted EPS and Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $19 million for the three months ended March 31, 2024.

Refer to Note 4 .

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Selected statistical information is shown in the following table:

Quarter Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Quarter Ended March 31,

Passengers Carried 2,054,382 1,806,270

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Occupancy 107.0 % 102.1 %

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

Quarter Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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

Quarter Ended March 31,

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

$ 1,009,076 $ 32,968 $ 1,419,927 $ (1,655,756)

Interest income (5) (15)

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EBITDA 1,172 649

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

Other expense (2) 2 3

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

Impairment and credit losses (recoveries) (4) — (7)

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 $ 1,174 $ 642

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

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

For the periods reported, primarily relates to gains or losses arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies.

(2) Represents net non-operating expense.

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.

(3) For 2023, 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.

(4) For 2023, 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).

(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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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):

Quarter Ended March 31,

Total revenue $ 3,728 $ 2,886

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Payroll and related 318 310

Food 211,709 194,966 613,795 450,376

Fuel 272,408 316,214 849,839 779,873

Other operating 522 420

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Net Yields $ 247.20 $ 206.88

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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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

Quarter Ended March 31,

Total cruise operating expenses $ 2,056 $ 1,793

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

Impairment and credit recoveries (2) — 10,186 (6,990) (584)

Restructuring charges and other initiative expenses (3) — 4,573 5,288 6,448

Impairment and credit loss (recoveries) (2) — (7)

Net Cruise Costs 1,900 1,702

Fuel 272,408 316,214 849,839 779,873

Net Cruise Costs Excluding Fuel $ 1,596 $ 1,400

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These amounts are included in Other operating 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).

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.

Quarter Ended March 31, 2024 Compared to Quarter Ended March 31, 2023

In this section, references to 2024 refer to the quarter ended March 31, 2024 and references to 2023 refer to the quarter ended March 31, 2023.

Total revenues for 2024 increased $842 million to $3.7 billion from $2.9 billion in 2023.

Passenger ticket revenues comprised 68.2% of our 2024 total revenues.

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 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.

Passenger ticket revenues for 2024 increased by $645 million, or 34.0% to $2.5 billion from $1.9 billion in 2023.

The increase was primarily due to:

• an increase in ticket prices primarily driven by the improvement in our ticket price on a per passenger basis on existing hardware and the addition of Icon of the Seas , Celebrity Ascent , and Silver Nova , compared to the same period in 2023;

• a 9.4% increase in capacity, primarily due to the additions of Icon of the Seas, Celebrity Ascent, and Silver Nova compared to the same period in 2023.

Additionally, the increase is complemented by an increase in occupancy of 4.9%.

The remaining 31.8% of 2024 total revenues was comprised of Onboard and other revenues , which increased $197 million, or 19.9% to $1.2 billion in 2024 from $1.0 billion in 2023.

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 $170.4 million to $2.1 billion from $2.0 billion in 2022.

The increase was primarily due to:

• a $148.0 million increase in Commissions, transportation and other expenses;

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

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 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.

Passenger ticket revenues comprised 68.9% of our 2023 total revenues.

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 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 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.

Onboard and other revenues included concession revenues of $347.7 million in 2023 and $233.4 million in 2022.

• a 9.4% increase in capacity noted above in 2024 compared to the same period in 2023.

• improved pricing in 2024 compared to the same period in 2023.

Cruise Operating Expenses

Total Cruise operating expenses for 2023 increased $1.1 billion to $5.9 billion from $4.8 billion in 2022.

Total Cruise operating expenses for 2024 increased $263 million to $2.1 billion from $1.8 billion in 2023.

The increase was primarily due to:

• a $586.8 million increase in Commissions, transportation and other expenses ;

• a $190.0 million increase in Onboard and other expenses ;

• 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 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.

• a $102 million increase in Other operating primarily driven by the higher drydock and maintenance related expenses in 2024 compared to the same period in 2023;

• a $95 million increase in Commissions, transportation and other expenses primarily driven by the increase in ticket prices.

Marketing, Selling and Administrative Expenses

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.

Marketing, selling and administrative expenses for 2024 increased $74 million, or 16.1%, to $535 million from $461 million in 2023.

The increase was primarily due to 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, and higher spending on advertisement and media promotions.

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 .

Interest expense, net of interest capitalized for 2024 increased $(64) million, or 17.8%, to $(424) million from $(360) million in 2023.

The increase was primarily due to loss on extinguishment of debt of $116 million compared to $13 million during the same period in 2023.

The increase is partially offset due to debt repayment and lower cost refinancing transactions in 2023 and 2024.

Other Comprehensive Income (Loss)

Other comprehensive income was $57 million in 2024 compared to Other comprehensive loss of $(35) million for the same period in 2023 .

The increase of $92 million, or 262.9% was primarily due to a Gain on cash flow derivative hedges in 2024 of $44 million compared to a Loss on cash flow derivative hedges in 2023 of $(32) million, mostly as a result of a significant increase in fair value of our fuel swaps in 2024 compared to 2023 .

Future Application of Accounting Standards

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Sources and Uses of Cash

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.

Cash flow generated from operations provides us with a significant source of liquidity.

Net cash provided by operating activities was $1.3 billion for the three months ended March 31, 2024, and 2023, respectively.

Cash flows from operating activities continued to be primarily driven by the change in customer deposits of $729 million in 2024, compared to $1.1 billion during the same period in 2023.

Net cash used in investing activities was $296 million for the three months ended March 31, 2024, compared to $234 million for the same period in 2023.

Cash flows used in investing activities were primarily attributable to capital expenditures of $242 million, and cash paid on the settlement of derivative financial instruments of $35 million during 2024, compared to $252 million, and $6 million respectively, during the same period in 2023.

Net cash used in financing activities was $1.1 billion for the three months ended March 31, 2024, compared to $1.8 billion for the same period in 2023.

The change of $0.7 billion was primarily attributable to repayments of debt of $3.1 billion, offset by debt proceeds of $2.2 billion in 2024 compared to $2.7 billion repayments of debt in 2023, which were only offset by $0.7 billion of debt proceeds in 2023.

The change was partially offset by proceeds received of $209 million for the sale of noncontrolling interest of PortMiami during the 2023, which did not recur in 2024.

Future Capital Commitments

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Our future capital commitments consist primarily of new ship orders.

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:

As of March 31, 2024, 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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Utopia of the Seas Chantiers de l'Atlantique 2nd Quarter 2024 5,700

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

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

Star of the Seas Meyer Turku Oy 3rd Quarter 2025 5,600

Unnamed Meyer Turku Oy 2nd Quarter 2026 5,600

Celebrity Cruises —

Celebrity Ascent Chantiers de l'Atlantique 4th Quarter 2023 3,250

Unnamed Chantiers de l'Atlantique 4th Quarter 2025 3,250

Celebrity Xcel Chantiers de l'Atlantique 4th Quarter 2025 3,250

Silversea Cruises —

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Total Berths 31,980

During the quarter ended June 30, 2023, we received commitments for the unsecured financing of the fifth Edge-class ship, estimated for delivery in 2025.

In addition, in February 2024, we entered into an agreement with Chantiers de l’Atlantique to build an additional Oasis class ship for delivery in 2028, which is contingent upon completion of certain conditions precedent including financing.

Our future capital commitments consist primarily of new ship orders.

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.

As of March 31, 2024, the aggregate expected cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $8.1 billion, of which we had deposited $748 million.

Approximately 44.1% of the aggregate cost was exposed to fluctuations in the Euro

exchange rate at March 31, 2024.

Refer to Note 8.

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

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.

As of March 31, 2024, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $3.4 billion for 2024.

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

Material Cash Requirements

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

As of March 31, 2024, our material cash requirements were as follows (in millions):

2024 2025 2026 2027 2028 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 September 30, 2023.

Debt denominated in other currencies is calculated based on the applicable exchange rate at September 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 March 31, 2024.

Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2024.

(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.

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Refer to Note 3 .

Revenues for credit card processor agreements for export credit agency guarantees.

Revenue for credit card processor agreements for export credit agency guarantees.

Refer to Note 8 .

Commitments and Contingencies for other agreements.

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.

As of March 31, 2024, 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

Historically, we have 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.

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

These include, and are not limited to:

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

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 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.

As of March 31, 2024, we had $5.9 billion of committed financing for our ships on order.

As of March 31, 2024, our obligations due through March 31, 2025 primarily consisted of $1.6 billion related to debt maturities, $1.1 billion related to interest on debt and $2.0 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 Utopia of the Seas and Silver Ray .

W e 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 March 31, 2024, we had liquidity of $3.7 billion, including cash and cash equivalents of $0.4 billion, and $3.3 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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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, to our consolidated financial statements under Part I.

Financial Statements for further information.

Debt Covenants

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

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

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.

As of March 31, 2024, 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