What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-25 compared with 2024-04-25 · 171 added, 101 removed, 252 unchanged (52% of the section changed)

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Furthermore, they are subject to risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements.

Examples of these risks, uncertainties and other factors include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q and, in particular, the risks discussed under the caption "Risk Factors" in Part II, Item 1A herein.

Examples of these risks, uncertainties and other factors include, but are not limited to, those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and, in particular, the risks discussed under the caption "Risk Factors" in Part I, Item 1A therein.

All forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date of this filing.

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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 ended March 31, 2024, compared to the same period in 2023;

• a discussion of our results of operations for the quarter and six months ended June 30, 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 periods presented , these items included (i) other expense;

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

(ii) gain on sale of controlling interest;

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

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

(iv) restructuring charges and other initiative expenses, and (v) impa irment and credit losses (recoveries).

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

to Adjusted EBITDA is provided below under Results of Operations.

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

Adjusted Earnings per Share ("Adjusted EPS") is a non-GAAP measure that represents Adjusted Net Income 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.

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

is a non-GAAP measure that represents Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

is a non-GAAP measure that represents Net Income attributable to Royal Caribbean Cruises Ltd.

excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis.

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(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.

(vi) restructuring charges and other initiative expenses;

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

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

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

to Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

is provided below under Results of Operations.

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We use this measure to perform capacity and rate analysis to identify our main non-capacity drivers that cause our cruise revenue and expenses to vary.

EBITDA is a non-GAAP measure that represents Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

EBITDA is a non-GAAP measure that represents Net Income attributable to Royal Caribbean Cruises Ltd.

excluding (i) interest income;

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

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

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

t o EBITDA is provided below under Results of Operations.

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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;

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

(ii) impairment and credit losses (recoveries);

and (iii) restructuring and other initiative expenses .

Gross Margin Yield represent Gross Margin per APCD.

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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.

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.

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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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 ha ve 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.

Results of Operations

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and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

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.

for the second quarter of 2024 was $854 million and $882 million, compared to Net Income and Adjusted Net Income of $459 million and $492 million, respectively, for the second quarter of 2023.

Net Income attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

for the six months ended June 30, 2024 was $1,214 million and $1,359 million, compared to Net Income and Adjusted Net Income of $411 million and $433 million, respectively, for the six months ended June 30, 2023

Significant items for the quarter and six months ended June 30, 2024 include:

• Total revenues, increased $587 million and $1,430 million for the quarter and six months ended June 30, 2024 as compared to the same period in 2023.

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

• Total cruise operating expenses, increased $197 million and $462 million for the quarter and six months ended June 30, 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.

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

• During the quarter ended June 30, 2024, we repaid $839 million of outstanding deferred amounts under our export credit facilities,

• In May 2024, we took delivery of Silver Nova .

Refer to Note 6 .

Debt to our consolidated financial statements for further information on the financing of the ship.

• In June 2024, we took delivery of Utopia of the Seas .

Refer to Note 6 .

Debt to our consolidated financial statements for further information on the financing of the ship.

• In June 2024, TUI Cruises, our 50% joint venture, took delivery of Mein Schiff 7.

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

Debt to our consolidated financial statements.

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,

Operating results for the quarter ended June 30, 2024 compared to the same period in 2023 are shown in the following table (in millions, except per share data):

Quarter Ended June 30,

Revenues % of Total

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Equity investment income 56 1.4 % 42 1.2 %

Other (expense) income (8) (0.2) % 5 0.2 %

Other expense (3) (0.1) % (5) (0.1) %

(241) (5.9) % (308) (8.7) %

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

Net Income 858 20.9 % 463 13.1 %

Net Income attributable to noncontrolling interest 4 0.1 % 4 0.1 %

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

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 854 20.8 % $ 459 13.0 %

Diluted Earnings (Loss) per Share $ 1.35 $ (0.19)

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 millions, except per share data):

Quarter Ended March 31,

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

Diluted Earnings per Share $ 3.11 $ 1.70

Six Months Ended June 30,

Revenues % of Total

Passenger ticket revenues $ 5,429 69.3 % $ 4,340 67.7 %

Onboard and other revenues 2,409 30.7 % 2,068 32.3 %

Total revenues 7,838 100.0 % 6,408 100.0 %

Cruise operating expenses:

Commissions, transportation and other 1,070 13.7 % 919 14.3 %

Onboard and other 437 5.6 % 379 5.9 %

Payroll and related 631 8.1 % 594 9.3 %

Food 446 5.7 % 402 6.3 %

Fuel 586 7.5 % 577 9.0 %

Other operating 1,039 13.3 % 876 13.7 %

Total cruise operating expenses 4,209 53.7 % 3,747 58.5 %

Marketing, selling and administrative expenses 1,001 12.8 % 896 14.0 %

Depreciation and amortization expenses 780 10.0 % 721 11.3 %

Operating Income 1,848 23.6 % 1,044 16.3 %

Other income (expense):

Interest income 9 0.1 % 24 0.4 %

Interest expense, net of interest capitalized (721) (9.2) % (714) (11.1) %

Equity investment income 97 1.2 % 62 1.0 %

Other expense (11) (0.1) % (1) — %

(626) (8.0) % (629) (9.8) %

Net Income 1,222 15.6 % 415 6.5 %

Net Income attributable to noncontrolling interest 8 0.1 % 4 0.1 %

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,214 15.5 % $ 411 6.4 %

Diluted Earnings per Share $ 4.46 $ 1.60

Net Income attributable to Royal Caribbean Cruises Ltd.

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

Quarter Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 854 $ 459 $ 1,214 $ 411

Loss on extinguishment of debt 17 30 133 44

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Silver Whisper deferred tax liability release (4) — — — (26)

Restructuring charges and other initiative expenses 3 5 3 5

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

Impairment and credit losses (recoveries) (5) 6 — 6 (7)

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

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

Adjusted Earnings (Loss) per Share $ 1.86 $ (0.23)

Earnings (Loss) per Share (6) $ 1.35 $ (0.19)

Adjusted Earnings (Loss) per Share (6) $ 1.77 $ (0.23)

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

$ 882 $ 492 $ 1,359 $ 433

Earnings per Share $ 3.32 $ 1.79 $ 4.72 $ 1.61

Adjusted Earnings per Share $ 3.43 $ 1.92 $ 5.29 $ 1.69

Earnings per Share (6) $ 3.11 $ 1.70 $ 4.46 $ 1.60

Adjusted Earnings per Share (6) $ 3.21 $ 1.82 $ 4.97 $ 1.69

Weighted-Average Shares Outstanding:

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

(5) For 2023, represents asset impairments and credit loss recoveries for notes receivables for which credit losses were previously recorded.

(5) For 2024, represents property and equipment impairment charges related to certain construction in progress assets which we determined would no longer be completed.

For 2023, represents asset impairments and credit losses 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).

(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.

(6) Diluted EPS and Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $19 million and $38 million for the quarter and six months ended June 30, 2024, respectively, and $21 million and $4 million for the quarter and six months ended June 30, 2023, respectively.

Refer to Note 4 .

Earnings (Loss) Per Share to our consolidated financial statements for further information.

Earnings Per Share to our consolidated financial statements for further information.

Selected statistical information is shown in the following table:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Passengers Carried 2,040,242 1,900,810 4,094,624 3,707,079

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

Quarter Ended March 31,

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

Quarter Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 854 $ 459 $ 1,214 $ 411

Interest income (4) (10) (9) (24)

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EBITDA 1,558 1,174 2,729 1,821

Other expense (2) 2 3

Other (income) expense (2) (14) (3) (12) 2

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

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

Restructuring charges and other initiative expenses 3 5 3 5

Impairment and credit losses (recoveries) (4) 6 — 6 (7)

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

(4) For 2023, represents asset impairments and credit loss recoveries for notes receivables for which credit losses were previously recorded.

(4) For 2024, represents property and equipment impairment charges related to certain construction in progress assets.

For 2023, represents asset impairments and credit losses 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).

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,

Quarter Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Total revenue $ 4,110 $ 3,523 $ 7,838 $ 6,408

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Payroll and related 313 284 631 594

Food 225 203 446 402

Fuel 282 276 586 577

Other operating 516 456 1,039 876

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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,

Quarter Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Total cruise operating expenses $ 2,152 $ 1,955 $ 4,209 $ 3,747

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Impairment and credit loss (recoveries) (2) 6 — 6 (7)

Restructuring charges and other initiative expenses (3) 3 5 3 5

Net Cruise Costs 1,793 1,649 3,694 3,350

Fuel 282 276 586 577

Net Cruise Costs Excluding Fuel $ 1,511 $ 1,373 $ 3,108 $ 2,773

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

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

(2) For 2024, represents property and equipment impairment charges related to certain construction in progress assets.

For 2023, represents asset impairments and credit losses 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).

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.

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

Quarter Ended June 30, 2024 Compared to Quarter Ended June 30, 2023

In this section, references to 2024 refer to the quarter ended June 30, 2024 and references to 2023 refer to the quarter ended June 30, 2023.

Total revenues for 2024 increased $587 million to $4.1 billion from $3.5 billion in 2023.

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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%.

• a $334 million increase driven by increases in our occupancy of 3.2% and ticket prices on a per passenger basis on existing hardware as well as the benefit of new hardware, compared to the same period in 2023;

• a 4.5% increase in capacity which increased Passenger ticket revenues by $109 million, due to the additions of Icon of the Seas, Celebrity Ascent, and Silver Nova compared to the same period in 2023.

The remaining 30% of 2024 total revenues was comprised of Onboard and other revenues , which increased $144 million, or 13.3% to $1.2 billion in 2024 from $1.1 billion in 2023.

The increase was primarily due to:

• 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.

• $84 million driven by improved pricing and an increase in load factors of 3.2% in 2024 compared to the same period in 2023;

• $48 million driven by increase capacity noted above due to the addition of new hardware.

Cruise Operating Expenses

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The increase was primarily due to:

• 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 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.

• the 4.5% increase in capacity noted above increased cruise operating expenses by $88 million;

• $97 million of the increase is driven by various factors including higher drydock and maintenance related expenses;

an increase in Commissions, transportation and other expenses due to the increase in load factors of 3.2% in 2024 compared to the same period in 2023.

Other Income (Expense)

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.

Interest expense, net of interest capitalized for 2024 decreased $57 million, or (16.1)%, to $298 million from $355 million in 2023.

The decrease was primarily due to lower interest expense of $88 million in 2024 resulting from the redemption of our 11.50% Secured Notes during 2023 and the redemption of our 11.625% Senior Notes in March 2024.

The decrease was partially offset by an increase of $43 million primarily related to the debt of our new ship deliveries between June and December 2023, as well as deliveries through June 2024.

Other Comprehensive Income (Loss)

Other comprehensive loss was $(37) million in 2024 compared to Other comprehensive loss of $(1) million for the same period in 2023 .

The increase of $(36) million was primarily due to a Loss on cash flow derivative hedges in 2024 of $31 million compared to a Gain on cash flow derivative hedges in 2023 of $5 million, mostly as a result of an increase in fair value of our foreign currency forwards in 2024 compared to 2023 .

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

In this section, references to 2024 refer to the six months ended June 30, 2024 and references to 2023 refer to the six months ended June 30, 2023.

Total revenues for 2024 increased $1.4 billion to $7.8 billion from $6.4 billion in 2023.

Passenger ticket revenues comprised 69% of our 2024 total revenues.

Passenger ticket revenues for 2024 increased by $1.1 billion, or 25% to $5.4 billion from $4.3 billion in 2023.

The increase was primarily due to:

• a $790 million increase driven by increases in our occupancy of 4.0% and ticket prices on a per passenger basis on existing hardware as well as the benefit of new hardware, compared to the same period in 2023;

• a 6.9% increase in capacity which increased Passenger ticket revenues by $298 million, primarily due to the additions of Icon of the Seas, Celebrity Ascent, and Silver Nova compared to the same period in 2023.

The remaining 31% of 2024 total revenues was comprised of Onboard and other revenues , which increased $341 million, or 16.5% to $2.4 billion in 2024 from $2.1 billion in 2023.

The increase was primarily due to:

• a $142 million increase driven by a 6.9% increase in capacity due to the additions of new hardware noted above in 2024 compared to the same period in 2023;

• $141 million increase driven by improved pricing and an increase in load factors of 4.0% in 2024 compared to the same period in 2023.

Cruise Operating Expenses

Total Cruise operating expenses for 2024 increased $0.5 billion to $4.2 billion from $3.7 billion in 2023.

The increase was primarily due to:

• the 6.9% increase in capacity noted above increased cruise operating expenses by $258 million;

• $213 million of the increase is driven by various factors including an increase ticket prices noted above;

higher drydock and maintenance related expenses;

and an increase in Commissions, and head taxes expenses due to the increase in load factors of 4.0% in 2024 compared to the same period in 2023.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2024 increased $105 million, or 11.7%, to $1 billion from $896 million in 2023.

The increase was primarily due to an increase in payroll and benefits expense driven by an increase in headcount and higher stock price related to our performance share awards in 2024 compared to the same period in 2023, and higher spending on advertisement and media promotions.

Other Comprehensive Income (Loss)

Other comprehensive income was $20 million in 2024 compared to Other comprehensive loss of $(37) million for the same period in 2023 .

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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.

Net cash provided by operating activities was $2.9 billion and $2.7 billion for the six months ended June 30, 2024, and 2023, respectively.

Cash flows from operating activities increased $0.2 billion primarily driven by an increase in operating income of $0.8 billion during 2024, offset by a decrease in the change in customer deposits of $(0.6) billion in 2024 compared to the same period in 2023.

Net cash used in investing activities was $2.5 billion for the six months ended June 30, 2024, compared to $1.0 billion for the same period in 2023.

Cash flows used in investing activities were primarily attributable by an increase in capital expenditures of $1.3 billion during 2024, compared to the same period in 2023 due to the delivery of Utopia of the Seas and Silver Ray in 2024, compared to the delivery of Silver Nova during the same period in 2023.

Net cash used in financing activities was $0.5 billion for the six months ended June 30, 2024, compared to $2.9 billion for the same period in 2023.

The change of $2.4 billion was primarily attributable to repayments of debt of $5.0 billion, offset by debt proceeds of $4.7 billion in 2024 compared to repayments of debt of $4.2 billion, offset by debt proceeds of $1.2 billion in 2023.

Additionally, during 2023, we received proceeds of $209 million for the sale of noncontrolling interest of PortMiami, 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 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:

As of June 30, 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

Royal Caribbean International —

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

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

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

Silversea Cruises —

Evolution-class:

Silver Ray Meyer Werft 2nd Quarter 2024 730

TUI Cruises (50% joint venture) —

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

Mein Schiff Relax Fincantieri 4th Quarter 2024 4,100

Mein Schiff Relax Fincantieri 1st Quarter 2025 4,100

Unnamed Fincantieri 2nd Quarter 2026 4,100

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Our future capital commitments consist primarily of new ship orders.

As of 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.

As of June 30, 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 $5.7 billion, of which we had deposited $543 million.

Approximately 44.4% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at June 30, 2024.

Refer to Note 8.

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

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.

As of June 30, 2024, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $3.5 billion for 2024.

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

Material Cash Requirements

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

As of June 30, 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 March 31, 2024.

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

Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements, using the applicable rate at June 30, 2024.

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

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

Included in these figures are $4.4 billion in final contractual installments, which have committed financing with sovereign guarantees covering 80% of the cost of the ships on order for our Global Brands.

Included in these figures are $3.0 billion in final contractual installments, which have committed financing with sovereign guarantees covering approximately 80% of the cost of the ships on order for our Global Brands.

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

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Commitments and Contingencies for other agreements.

As of 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.

As of June 30, 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

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 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.

Refer to Note 6 .

Debt and Note 9 .

Shareholders' Equity to our consolidated financial statements for further information.

As of June 30, 2024, we had $3.9 billion of committed financing for our ships on order.

As of June 30, 2024, our obligations due through June 30, 2025 primarily consisted of $1.3 billion related to debt maturities, $1.1 billion related to interest on debt and $0.2 billion related to progress payments on our ship orders and, based on the expected delivery date, the final installment payable due upon the delivery.

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 June 30, 2024, we had liquidity of $3.8 billion, including cash and cash equivalents of $0.4 billion, and $3.4 billion of undrawn revolving credit facility capacity.

If any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms.

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Debt Covenants

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 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.

As of June 30, 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.

In July 2024, we amended all of our export credit facilities to remove the stockholders' equity covenant, which has eliminated the contractual requirement for us to maintain a minimum level of stockholders' equity.

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.

In the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities.

Accordingly, we have not declared a dividend since the first quarter of 2020.

In July 2024, our Board of Directors declared a dividend of $0.40 per share, payable in October 2024.

Quantitative and Qualitative Disclosures About Market Risk

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What changed 10-Q

Item 2. Management’s Discussion and Analysis