What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-29 compared with 2024-07-25 · 108 added, 86 removed, 337 unchanged (37% of the section changed)

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

• a discussion of our results of operations for the quarter and six months ended June 30, 2024, compared to the same period in 2023;

• a discussion of our results of operations for the quarter and nine months ended September 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 (income) expense;

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

(ii) gain on sale of controlling interest;

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

(iii) equity investment impairment and recovery losses;

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

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

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

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

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

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(vi) restructuring charges and other initiative expenses;

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

(vii) equity investment impairment and recovery losses ;

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

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(iii) depreciation and amortization expenses;

and (iv) income tax benefit or expense.

and (iv) income tax expense.

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

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and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

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.

for the third quarter of 2024 was $1.1 billion and $1.4 billion, compared to Net Income and Adjusted Net Income of $1.0 billion and $1.1 billion, respectively, for the third 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.

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

for the nine months ended September 30, 2024 was $2.3 billion and $2.8 billion, compared to Net Income and Adjusted Net Income of $1.4 billion and $1.5 billion, respectively, for the nine months ended September 30, 2023

Significant items for the quarter and nine months ended September 30, 2024 include:

• Total revenues, increased $726 million and $2.2 billion for the quarter and nine months ended September 30, 2024 as compared to the same period in 2023.

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

• Total cruise operating expenses, increased $254 million and $715 million for the quarter and nine months ended September 30, 2024 as compared to the same period in 2023.

The increase was primarily due to an increase in capacity 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 due 2032.

Upon closing, we redeemed all of the outstanding $1.25 billion aggregate principal amount of 11.63% 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 .

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

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

Refer to Note 6 .

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

• In August 2024, we issued $2.0 billion aggregate principal amount of 6.00% senior notes due 2033.

Upon closing, we redeemed all of the outstanding $1.0 billion aggregate principal amount of 9.25% Senior Notes Due 2029, and all of the outstanding $1.0 billion aggregate principal amount of 8.25% Senior Secured Notes Due 2029.

• In August 2024, we completed privately negotiated exchange with certain holders of 6.00% Convertible Senior Notes due 2025 to exchange approximately $827 million in aggregate principal amount for approximately 11.4 million shares of common stock and $827 million in cash.

• In September 2024, we issued $1.5 billion aggregate principal amount of 5.63% senior unsecured notes due 2031.

Upon closing, we redeemed of the outstanding $700 million aggregate principal amount of 7.25% Senior Notes Due 2030.

• In September 2024, we submitted an irrevocable notice to execute the bargain purchase option on the S ilver Dawn finance lease for approximately $232 million.

• In September 2024, we entered into agreements to acquire the Port of Costa Maya and adjacent land in Mahahual, Mexico for approximately $292 million.

The transaction is expected to close in the first half of 2025, subject to regulatory approval and customary closing conditions.

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 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,

Debt, Note 7 .

Leases , and Note 8 .

Commitments and Contingencies, respectively, to our consolidated financial statements.

Operating results for the quarter and nine months ended September 30, 2024 compared to the same periods in 2023 are shown in the following tables (in millions, except per share data):

Quarter Ended September 30,

Revenues % of Total

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Diluted Earnings per Share $ 4.21 $ 3.65

Six Months Ended June 30,

Nine Months Ended September 30,

Revenues % of Total

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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,

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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$ 1,111 $ 1,009 $ 2,325 $ 1,420

Loss on extinguishment of debt 17 30 133 44

Loss on extinguishment of debt and inducement expense (1) 323 38 456 81

Amortization of Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition (2) 2 2 5 5

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Restructuring charges and other initiative expenses 2 — 5 5

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

Equity investments impairment and recovery of losses — 17 — 12

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

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Diluted 264 282 280 284

(1) For 2024, includes $119 million of inducement expense related to the partial settlement of our 6.00% convertible notes due 2025.

Refer to Note 6 .

Debt to our consolidated financial statements for further information.

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

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

(4) For 2024, represents adjustments to tax impacts on the 2023 PortMiami sale of noncontrolling interest.

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).

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

(5) For 2023, represents the release of the deferred tax liability subsequent to the execution of the bargain purchase option for the Silver Whisper .

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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 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.

(7) Diluted EPS includes the add-back of dilutive inducement and interest expense related to our convertible notes of $169 million for the nine months ended September 30, 2024, and $20 million and $68 million for the quarter and nine months ended September 30, 2023, respectively.

For the quarter ended September 30, 2024 the impact of our convertible notes was anti-dilutive.

Refer to Note 4 .

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

(8) Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $13 million and $51 million, and $20 million and $68 million for the quarter nine months ended September 30, 2024 and 2023, respectively.

(9) Weighted-Average Shares Outstanding - Diluted - for the quarter ended September 30, 2024, includes the add-back of 14.7 million shares that are anti-dilutive for diluted EPS purposes, but included for adjusted diluted EPS.

Selected statistical information is shown in the following table:

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Depreciation and amortization expenses 410 365 1,190 1,087

Income tax expense (benefit) (1) 17 8 23 (1)

Income tax expense (1) 23 7 46 6

EBITDA 2,143 1,714 4,872 3,536

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

Other expense (income) (2) 3 1 (9) 3

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

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

Equity investment impairment and recovery losses — 13 — 8

Restructuring charges and other initiative expenses 2 — 5 5

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(2) Represents net non-operating expense.

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

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

(3) For 2023, represents gain on sale of controlling interest in cruise terminal facilities in Italy.

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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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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

Quarter Ended June 30, 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.

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

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

Total revenues for 2024 increased $726 million to $4.9 billion from $4.2 billion in 2023.

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The increase was primarily due to:

• 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.

• a $320 million driven by an increase in capacity of 10.9% due to the additions of Utopia of the Seas, Icon of the Seas, Celebrity Ascent, and Silver Ray compared to the addition of Silver Nova during the same period in 2023;

• a $210 million increase driven by higher load factors and ticket prices on a per passenger basis on existing ships as well as the benefit of new ships, compared to the same period in 2023.

The remaining 29% of 2024 total revenues was comprised of Onboard and other revenues , which increased $196 million, or 16.1% to $1.4 billion in 2024 from $1.2 billion in 2023.

The increase was primarily due to:

• $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.

• $132 million driven by increased capacity noted above due to the addition of new ships;

• $63 million primarily driven by improved pricing and an increase in load factors in 2024 compared to the same period in 2023.

Cruise Operating Expenses

Total Cruise operating expenses for 2024 increased $254 million to $2.4 billion from $2.1 billion in 2023.

The increase was primarily due to:

• 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.

The increase was primarily due to the 10.9% increase in capacity noted above which increased cruise operating expenses by $232 million in 2024 compared to the same period in 2023.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2024 increased $58 million, or 14.8%, to $451 million from $393 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 Income (Expense)

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.

Interest expense, net of interest capitalized for 2024 increased $263 million, to $603 million from $340 million in 2023.

The increase was primarily due to loss on extinguishment of debt of $204 million associated with the full redemption of our 9.25%, 8.25%, and 7.25% Senior Notes, and $119 million inducement expense on the partial settlement of our 2025 Convertible notes in 2024 compared to loss on extinguishment of debt of $38 million during the same period in 2023.

The increase was partially offset by a decrease of $42 million lower interest expense in 2024 compared to the same period in 2023, resulting from the 2024 refinancings.

Other Comprehensive (loss) income

Other comprehensive loss was $(99) million in 2024 compared to Other comprehensive income of $36 million for the same period in 2023 .

The decrease of $(135) million was primarily due to a Loss on cash flow derivative hedges in 2024 of $95 million compared to a Gain on cash flow derivative hedges in 2023 of $20 million, mostly as a result of a significant decrease in the fair value of our fuel swaps in 2024 compared to 2023 .

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

In this section, references to 2024 refer to the nine months ended September 30, 2024 and references to 2023 refer to the nine months ended September 30, 2023.

Total revenues for 2024 increased $2.2 billion to $12.7 billion from $10.6 billion in 2023.

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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.

• an increase of $1 billion driven by increases in ticket prices on a per passenger basis on existing ships as well as the benefit of new ships, compared to the same period in 2023;

• an 8.2% increase in capacity, which increased Passenger ticket revenues by $600 million, primarily due to the additions of Utopia of the Seas, Icon of the Seas, Celebrity Ascent, and Silver Ray compared to the addition of Silver Nova during the same period in 2023.

The remaining 30% of 2024 total revenues was comprised of Onboard and other revenues , which increased $537 million, or 16.3% to $3.8 billion in 2024 from $3.3 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.

• a $271 million increase driven by an 8.2% increase in capacity due to the additions of new ships noted above in 2024 compared to the same period in 2023;

• a $186 million increase driven by improved pricing and an increase in load factors of 3.1% 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.

Total Cruise operating expenses for 2024 increased $715 million to $6.6 billion from $5.9 billion in 2023.

The increase was primarily due to:

• the 8.2% increase in capacity noted above increased cruise operating expenses by $485 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.

• an increase of $190 million driven by various factors including an increase in higher drydock and maintenance related expenses;

and commissions due to the increases in ticket prices noted above 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.

Marketing, selling and administrative expenses for 2024 increased $163 million, or 13%, to $1.5 billion from $1.3 billion in 2023.

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 .

The increase of $57 million , or 154.1% was primarily due to a Gain on cash flow derivative hedges in 2024 of $13 million compared to a Loss on cash flow derivative hedges in 2023 of $(27) million , mostly as a result of a significant increase in fair value of our fuel swaps in 2024 compared to 2023 .

Other Income (Expense)

Interest expense, net of interest capitalized for 2024 increased $269 million, to $1.3 billion from $1.1 billion in 2023.

The increase was primarily due to loss on extinguishment of debt of $337 million associated with the full redemption of our 11.63%, 9.25%, 8.25%, and 7.25% Senior Notes, and $119 million inducement expense on the partial settlement of our 2025 Convertible notes in 2024 compared to loss on extinguishment of debt of $81 million during the same period in 2023.

The increase was partially offset by a decrease of $147 million lower interest expense in 2024 compared to the same period in 2023, resulting from the 2024 refinancings.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2024 increased $103 million, or 9.5%, to $1.2 billion from $1.1 billion in 2023.

The increase was primarily due to the additions of Utopia of the Seas, Icon of the Seas, Celebrity Ascent, and Silver Ray compared to the addition of Silver Nova during the same period in 2023.

Other Comprehensive (loss) income

Other comprehensive loss was $(79) million in 2024 compared to Other comprehensive loss of $(1) million for the same period in 2023 .

The increase of $(78) million , was primarily due to a Loss on cash flow derivative hedges in 2024 of $(82) million compared to a Loss on cash flow derivative hedges in 2023 of $(7) million , mostly as a result of a significant decrease in fair value of our fuel swaps in 2024 compared to 2023 .

Future Application of Accounting Standards

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

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.

Net cash provided by operating activities was $3.8 billion and $3.4 billion for the nine months ended September 30, 2024, and 2023, respectively.

Cash flows from operating activities increased $0.4 billion primarily driven by an increase in operating income.

Net cash used in investing activities was $2.8 billion for the nine months ended September 30, 2024, compared to $1.3 billion for the same period in 2023.

Cash flows used in investing activities were primarily attributable by an increase in capital expenditures of $1.4 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.

Net cash used in financing activities was $1.1 billion for the nine months ended September 30, 2024, compared to $3.3 billion for the same period in 2023.

The change of $2.3 billion was primarily attributable to repayments of debt of $10.0 billion, offset by debt proceeds of $9.4 billion in 2024 compared to repayments of debt of $5.3 billion, offset by debt proceeds of $1.8 billion in 2023.

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Our future capital commitments consist primarily of new ship orders.

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:

As of September 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

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Total Berths 22,650

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.

In addition, during 2024, we entered into an agreement with Meyer Turku Oy and Chantiers de l' Atlantique to build a fourth Icon class ship and a seventh Oasis class ship for delivery 2027 and 2028, respectively.

Both agreements are contingent upon completion of certain conditions precedent including financing.

Our future capital commitments consist primarily of new ship orders.

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.

As of September 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 $5.9 billion, of which we had deposited $619 million.

Approximately 39.6% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, 2024.

Refer to Note 8.

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

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.

As of September 30, 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 June 30, 2024, our material cash requirements were as follows (in millions):

As of September 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 June 30, 2024.

Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 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 September 30, 2024.

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

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Commitments and Contingencies for other agreements.

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.

As of September 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 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.

As of September 30, 2024, we had $4.1 billion of committed financing for our ships on order.

As of September 30, 2024, our obligations due through September 30, 2025 primarily consisted of $1.6 billion related to debt maturities, $1.0 billion related to interest on debt and $1.9 billion related to progress payments on our ship orders and, based on the expected delivery date, the final installment payable due upon the delivery.

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 September 30, 2024, we had liquidity of $3.9 billion, including cash and cash equivalents of $0.4 billion, and $3.5 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 stockholders' 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 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.

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

As of September 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.

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

During the quarter ended September 30, 2024, our Board of Directors declared a cash dividend on our common stock of $0.40 per share, which was paid on October 11, 2024.

Quantitative and Qualitative Disclosures About Market Risk

3 unchanged sentences

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