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Item 7. Management’s Discussion and Analysis

2025-02-14 compared with 2024-02-21 · 235 added, 285 removed, 400 unchanged (57% of the section changed)

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Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the shorter of the improvements' estimated useful lives or that of the associated ship.

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

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

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The goodwill impairment analysis consists of a comparison of the fair value of the reporting unit with its carrying value.

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

We typically estimate the fair value of our reporting units using a probability weighted discounted cash flow model in combination with a market-based valuation approach.

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

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Financial Statements and Supplementary Data for further information on goodwill.

The impairment review for indefinite-life intangible assets can be performed using a qualitative or quantitative impairment assessment.

The impairment review for indefinite-lived intangible assets can be performed using a qualitative or quantitative impairment assessment.

The quantitative assessment consists of a comparison of the fair value of the asset with its carrying value.

We estimate the fair value of these assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method, for trademarks and trade names.

We estimate the fair value of these assets using a probability weighted discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method, for trademarks and trade names.

The principal assumptions used in the discounted cash flow model for our 2024 impairment assessment consisted of:

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Accordingly, we estimate the fair value of a reporting unit and an indefinite-life intangible asset using an expected present value technique.

Royal Caribbean International Reporting Unit

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

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

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

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

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

Royal Caribbean Reporting Unit

During the fourth quarter of 2024, we performed a qualitative analysis as part of our annual impairment review of the Royal Caribbean reporting unit.

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

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

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

The fair value of the reporting unit was determined using a discounted cash flow model in combination with a market-based valuation approach.

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

As of December 31, 2024 and 2023, the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was $296 million.

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

We did not perform interim impairment evaluations of Royal Caribbean's goodwill during 2024 and 2023, as no triggering events were identified.

Silversea Cruises Reporting Unit

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As of November 30, 2024, and November 30, 2023, the fair value of the Silversea Cruises reporting unit was determined using a probability weighted discounted cash flow model in combination with a market-based valuation approach.

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

As a result of the tests, we determined the fair value of the Silversea Cruises reporting unit exceeded its carrying value by approximately 63%, as of November 30, 2024 and 2023, respectively, resulting in no impairment to Silversea Cruises' goodwill.

The carrying value of goodwill attributable to our Silversea Cruises reporting unit was $509 million as of December 31, 2024 and 2023.

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

These instruments are recorded on the balance sheet at their fair

value and the vast majority are designated as hedges.

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

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

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

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

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

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

Cruise Operating Expenses

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

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

(ii) gain on sale of controlling interest;

(iii) impa irment and credit losses;

(iv) restru cturing charges and other initiative expense;

(v) equity investment impairment and recovery of losses;

(vi) Pullmantur reorganization settlement;

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

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

For the p eriods presented, these items included (i) Other (income) expense, which includes the 2024 release of the loss contingency recorded in 2022 in connection with the Havana Docks litigation inclusive of related legal fees and costs;

(ii) impa irment and credit losses ;

(iii) equity investment impairment, recovery of losses and other;

(iv) restru cturing charges and other initiatives expense;

and (v) gain on sale of controlling interest .

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.

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

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

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;

Silver Whisper deferred tax liability release;

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

(vii) restructuring charges and other initiative expenses;

(viii) equity investments impairment and recovery of losses;

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

(x) convertible debt amortization of debt discount;

(xi) the 2021 Pullmantur reorganization settlement;

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

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

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

(ii) litigation loss contingency, which includes the 2024 release of the loss contingency recorded in 2022 in connection with the Havana Docks litigation inclusive of related legal fees and costs;

(iii) impairment and credit losses;

(iv) equity investment impairment, recovery of losses and other;

(v) restructuring charges and other initiatives expense;

(vi) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018;

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

(viii) Silver Whisper deferred tax liability release;

and (ix) gain on sale of controlling interest.

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

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is provided below under Results of Operations.

(ii) equity investment impairment, recovery of losses and other;

(iii) restructuring charges and other initiatives expense;

(iv) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018;

and (v) tax on the sale of PortMiami noncontrolling interest.

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

A reconciliation of Operating Income to Adjusted Operating Income 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.

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

Constant Currency is a significant measure for our revenues and expenses, which are denominated in currencies other than the U.S.

Because our reporting currency is the U.S.

Dollar, the value of these revenues and expenses in U.S.

Dollar will be affected by changes in currency exchange rates.

Although such changes in local currency prices are just one of many elements impacting our revenues and expenses, it can be an important element.

For this reason, we also monitor our revenues and expenses in "Constant Currency" - i.e., as if the current period's currency exchange rates had remained constant with the comparable prior perio d's rates.

For the 2024 period presented, w e calculate "Constant Currency" by applying the average for 2023 period exchange rates for each of the corresponding months, so as to calculate what the results would have been had exchange rates been the same throughout both periods.

We do not make predictions about future exchange rates and use current exchange rates for calculations of future periods.

It should be emphasized that the use of Constant Currency is primarily used by us for comparing short-term changes and/or projections.

Over the longer term, changes in guest sourcing and shifting the amount of purchases between currencies can significantly change the impact of the purely currency-based fluctuations.

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

excluding (i) interest income;

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Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.

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

Gross Margin Yield represent Gross Margin per APCD.

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

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

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

In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs and Net Cruise Costs Excluding Fuel to be the most relevant indicators of our cost performance.

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

(ii) impairment and credit losses;

and (iii) restructuring and other initiative expenses.

For the periods presented, Net Cruise Costs and Net Cruise Costs Excluding Fuel excludes (i) impairment and credit losses;

(ii) restructuring charges and other

initiatives expense;

and (iii) the gain on sale of controlling interests.

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

Gross Margin Yield represent Gross Margin per APCD.

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

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

Net Yields represent Adjusted Gross Margin per APCD.

We utilize Adjusted Gross Margin and Net Yields to manage our business on a day-to-day basis as we believe that they are the most relevant measures of our pricing performance because they reflect the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses, and onboard and other expenses.

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

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

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

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

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

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

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

A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

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

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

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

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

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

Trifecta refers to the multi-year Adjusted EBITDA per APCD, Adjusted EPS and ROIC goals we publicly announced in November 2022.

We designed these goals to help us better execute and achieve our business goals by clearly articulating longer-term financial objectives.

Under Trifecta, we are targeting Adjusted EBITDA per APCD of at least $100, Adjusted EPS of at least $10, and ROIC of 13% or higher by the end of 2025.

On July 25, 2024, we announced the company achieved all three of its Trifecta goals 18 months ahead of schedule, on a trailing twelve-month basis.

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

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

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

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

GAAP projections would require unreasonable effort.

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

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

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

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

Executive Overview

2024 performance was exceptionally strong and significantly exceeded our expectations.

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

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

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

We took delivery of two new ships ( Utopia of the Seas and Silver Ray ), announced the expansion of our private destination portfolio with Royal Beach Club Cozumel and Perfect Day Mexico, and reinstated a dividend to our shareholders.

We achieved strong financial performance, including 23.8% Gross Margin Yield growth as-reported, Net Yields increased 11.5% as-reported (11.6% in Constant-Currency), Net Income of $2.9 billion and Adjusted EBITDA of $6.0 billion, Operating Income of 4.1 billion, and ROIC of 16.1%.

As announced on July 25, 2024, we also achieved our Trifecta goals 18 months ahead of schedule.

In addition, we made significant progress in strengthening our balance sheet, refinancing approximately $6.1 billion of high cost debt, eliminating restrictions on our ability to return capital to shareholders, and eliminating all security and guarantees.

Our 2024 Net Income attributable to Royal Caribbean Cruises Ltd.

was $2.9 billion, or $10.94 per diluted share, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

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

of $1.7 billion, or $6.31 per diluted share in 2023.

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

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of $1.8 billion, or $6.77 per diluted share in 2023.

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

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

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

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

Total revenues in 2024 were $16.5 billion compared to $13.9 billion in 2023 driven by strong ticket revenue and onboard revenue performance, inclusive of capacity growth.

As a result of this, Gross Margin Yields increased 23.8% as-reported, and Net Yields increased 11.5% as-reported (11.6% in Constant-Currency), both compared to 2023.

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

Cruise operating expenses increased from $7.8 billion in 2023 to $8.7 billion in 2024.

Gross Cruise Costs per APCD increased 4.6% as-reported and 4.6% in Constant Currency, compared to 2023.

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

Our disciplined cost control helped mitigate the effects of inflation.

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

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

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

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

Net Cruise Costs, excluding Fuel, per APCD increased 6.8% as-reported and 6.8% in Constant Currency, compared to 2023, primarily driven by a record 22 ships in drydock in 2024, as well as higher incentive based, non-cash compensation expense.

In 2025, we expect our capacity to increase by 5.4% compared to 2024, with the addition of Star of the Seas in late summer and Celebrity Xcel in late 2025, and a full year of operations for Utopia of the Seas and Silver Ray .

In addition, the first Royal Beach Club, at Paradise Island in the Bahamas, is set to open towards the end of the year, and Wonder of the Seas will join Utopia of the Seas focused on short Caribbean itineraries.

We also expect to advance development of the Royal Beach Club Cozumel, Perfect Day Mexico, and Silversea’s new hotel in Puerto Williams, Chile that will provide a further-elevated and seamless guest experience for its Antarctica expeditions.

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

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

Results of Operations

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and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

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

and Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

for the year ended December 31, 2024 was $2.9 billion and $3.2 billion, or $10.94 and $11.80 per share on a diluted basis, respectively, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

of $1.7 billion and $1.8 billion, or $6.31 and $6.77 per share on a diluted basis, respectively, for the year ended December 31, 2023.

• Total revenues increased by $2.6 billion for the year ended December 31, 2024 as compared to the same period in 2023.

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

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

• Total cruise operating expenses increased by $0.9 billion for the year ended December 31, 2024 compared to the same period in 2023.

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

• In February 2023, we issued $700 million aggregate principal amount of 7.25% senior guaranteed notes due January 2030 ("7.25% Priority Guaranteed Notes").

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

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

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

As part of the transaction, we sold 80% of PortMiami for $209 million and retained a 20% minority interest.

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

Virgin Islands.

Refer to Note 7.

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

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

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

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

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 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 8 .

Debt to our consolidated financial statements under Item 8.

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

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

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

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

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

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

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

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

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

Financial Statements and Supplementary Data for further information on the financing of the ship.

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

Refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

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

Financial Statements and Supplementary Data for further information on the financing of the ship.

• 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 9.250% Senior Notes Due 2029, and all of the outstanding $1.0 billion aggregate principal amount of 8.250% 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 the outstanding $700 million aggregate principal amount of 7.25% Senior Notes Due 2030.

• 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.

Refer to Note 17.

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

Financial Statements and Supplementary Data for further information.

• In December 2024, we executed the bargain purchase option on the S ilver Dawn finance lease for approximately $227 million.

• During the quarter ended December 31, 2024, we repaid the remaining $138 million outstanding balance on the Silver Moon .

• During the year ended December 31, 2024, we released approximately $124 million of the loss contingency inclusive of related legal fees and costs in connection with the Havana Docks litigation.

Refer to Note 17.

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

Financial Statements and Supplementary Data for further information.

• In February 2025, TUI Cruises, our 50% joint venture, took delivery of Mein Schiff Relax .

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

Debt, and Note 9 .

Leases to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

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

Certain amounts may not add due to use of rounded numbers):

Year Ended December 31,

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Loss on extinguishment of debt (1) 463 121 94

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

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

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

Litigation loss contingency (2) (124) — 130

Impairment and credit losses (3) 9 8 1

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

Equity investment impairment, recovery of losses and other (1) 12 —

Restructuring charges and other initiatives expense 10 5 12

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

Litigation loss contingency (7) — 130 —

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

Pullmantur reorganization settlement (9) — — 10

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

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

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

Amortization of Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition (4) 6 6 6

PortMiami tax on sale of noncontrolling interest (5) (3) 7 —

Silver Whisper deferred tax liability release (6) — (26) —

Gain on sale of controlling interest (7) — (3) —

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

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Diluted 279 283 255

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

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

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

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

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

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

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

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

These amounts are included in Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss).

Refer to Note 8.

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

(2) For 2024, represents the release of the loss contingency recorded in 2022, in connection with the Havana Docks litigation inclusive of related legal fees and costs.

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

Refer to Note 17.

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

Financial Statements and Supplementary Data for further information.

(3) For 2024, primarily 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).

1 unchanged sentence

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

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

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

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

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

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

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

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

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

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

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

For further information regarding the adoption of ASU 2020-06 as of January 1, 2022, which impacts the accounting of the non-cash debt discount on convertible notes, refer to Note 2 .

Summary of Significant Accounting Policies to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data .

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

reorganization.

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

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

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

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

Year Ended December 31,

Net Income attributable to Royal Caribbean Cruises Ltd.

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

Loss on extinguishment of debt 6

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

Restructuring charges and other initiatives expense (3) 14

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

Noncontrolling interest adjustment (4) 36

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

Earnings per Share $ 8.97

Adjusted Earnings per Share $ 9.56

Earnings per Share $ 8.95

Adjusted Earnings per Share $ 9.54

Weighted-Average Shares Outstanding:

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

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

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

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

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

(5) 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 income (expense) in our consolidated statements of comprehensive income (loss).

(6) 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).

(7) 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).

(8) Diluted EPS includes the add-back of $175 million and $88 million of dilutive inducement and interest expense related to our convertible notes for the years ended December 31, 2024, and 2023, respectively.

(9) Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $56 million and $88 million for the years ended December 31, 2024, and 2023, respectively.

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

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Interest expense, net of interest capitalized (9.6) % (10.1) % (15.4) %

Equity investment income (loss) 1.4 % 0.6 % (8.8) %

Other (expense) income (0.1) % (1.3) % 1.3 %

Equity investment income 1.6 % 1.4 % 0.6 %

Other income (expense) 0.6 % (0.1) % (1.3) %

(7.3) % (8.4) % (15.7) %

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Occupancy 108.5 % 105.6 % 85.1 %

___________________________________________________________________

(1) Due to the elimination of the Silversea Cruises three-month reporting lag in October of 2021, we include Silversea Cruises' metrics from October 1, 2020 through June 30, 2021 and October 1 through December 31, 2021 in the year ended December 31, 2021.

The year ended December 31, 2021 does not include July, August, and September 2021 statistics as Silversea Cruises' results of operations for those months are included within Other (expense) income in our consolidated statements of comprehensive loss for the year ended December 31, 2021.

Refer to Note 1.

General to our consolidated financial statements under Item 8 .

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

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

Refer to Note 1.

General to our consolidated financial statements under Item 8 .

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

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

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin were calculated as follows (in millions, except APCD and per APCD data.

Certain amounts may not add due to use of rounded numbers;

reported EBITDA, Adjusted EBITDA, and per APCD and Margin amounts are calculated from the underlying dollar amounts):

Year Ended December 31,

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Depreciation and amortization expenses 1,600 1,455 1,407

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

Income tax expense (1) 46 6 4

EBITDA 6,097 4,524 583

Other expense (2) 2 115 27

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

Other (income) expense (2) (149) 2 115

Impairment and credit losses (3) 9 8 1

Equity investment impairment, recovery of losses and other 4 8 —

Restructuring charges and other initiatives expense 10 5 12

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

Pullmantur reorganization settlement (6) — — 5

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

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

Gain on sale of controlling interest (4) — (3) —

Adjusted EBITDA $ 5,971 $ 4,544 $ 711

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

(2) Represents net non-operating expense.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

reorganization..

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

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

Year Ended December 31,

2023 2022 2021

Total revenues 16,484 13,900 8,840

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

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

Gross Margin 4,670 817 (2,500)

Payroll and related 1,197 1,288 838

Food 819 653 164

Fuel 1,150 1,073 385

Other operating 1,799 1,648 1,027

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

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

APCD 50,552,731 46,916,259 41,197,650

Gross Margin Yields $ 99.54 $ 19.83 $ (212.45)

Net Yields $ 236.38 $ 167.15 $ 102.57

Net Income (Loss) per APCD $ 56.92 $ 36.17 $ (52.33)

Adjusted EBITDA per APCD $ 118.13 $ 96.85 $ 17.26

Adjusted EBITDA Margin 36.2 % 32.7 % 8.0 %

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

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

For 2024, primarily represents the release of the loss contingency recorded in 2022 in connection with the Havana Docks litigation inclusive of related legal fees and costs.

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

(3) For 2024, primarily 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).

Additionally, for 2023, includes an $11 million impairment related to ceasing the use of certain real

estate assets in our shoreside operations.

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

(4) 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).

Gross Margin Yields, Net Yields and Adjusted Gross Margin per PCD were calculated by dividing Gross Margin and Adjusted Gross Margin by APCD, and Adjusted Gross Margin by PCD as follows (in millions, except APCD, PCD, Yields, and Adjusted Gross Margin per PCD.

Certain amounts may not add due to use of rounded numbers;

reported Yields and per PCD amounts are calculated from the underlying dollar amounts):

Year Ended December 31,

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APCD 50,552,731 50,552,731 46,916,259 41,197,650

Passenger Cruise Days 54,844,780 54,844,780 49,549,127 35,051,935

Gross Margin Yields $ 123.27 $ 123.41 $ 99.54 $ 19.83

Net Yields $ 263.59 $ 263.75 $ 236.38 $ 167.15

Adjusted Gross Margin per PCD $ 242.96 $ 243.11 $ 223.81 $ 196.45

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

Certain amounts may not add due to use of rounded numbers;

reported Gross Cruise Costs, Net Cruise Costs, Net Cruise Costs excluding Fuel, and per APCD amounts are calculated from the underlying dollar amounts):

Year Ended December 31,

2023 2022 2021

2024 2024 On a Constant Currency Basis 2023 2022

Total cruise operating expenses $ 8,652 $ 8,655 $ 7,775 $ 6,616

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Net Cruise Costs including other costs 7,619 7,621 6,757 6,245

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

Impairment and credit losses (1) 9 9 8 1

Restructuring charges and other initiatives expense (2) 10 10 5 12

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

Net Cruise Costs 7,600 7,602 6,747 6,232

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Net Cruise Costs excluding Fuel per APCD $ 127.40 $ 127.43 $ 119.30 $ 125.23

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

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

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

(1) For 2024, primarily 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).

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

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

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

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

Year Ended December 31,

2023 2023 On a Constant Currency Basis 2019

Total cruise operating expenses $ 7,775 $ — $ 6,063

Marketing, selling and administrative expenses 1,792 — 1,559

Gross Cruise Costs 9,567 9,602 7,622

Commissions, transportation and other 2,001 — 1,656

Onboard and other 809 — 640

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

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

Impairment and credit losses (2) 8 — —

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

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

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

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

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

Fuel 1,150 — 698

Net Cruise Costs excluding Fuel $ 5,597 $ 5,619 $ 4,597

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

Gross Cruise Costs per APCD $ 203.92 $ 204.66 $ 183.96

Net Cruise Costs per APCD $ 143.81 $ 144.28 $ 127.80

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

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

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

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

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

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

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

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

Adjusted Operating Income and ROIC, were calculated as follows:

(in millions, except ROIC.

Certain amounts may not add due to use of rounded numbers;

Adjusted operating income, Invested Capital, and ROIC amounts are calculated from the underlying dollar amounts):

For the Twelve Months Ended

December 31, 2024

Operating Income $ 4,106

Equity investment income 260

Income tax expense (46)

Impairment and credit losses (1) 9

Equity investment impairment, recovery of losses and other 4

Restructuring charges and other initiatives expense 10

Amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition (2) 6

PortMiami tax on sale of noncontrolling interest (3) (3)

Adjusted Operating Income $ 4,347

Invested Capital $ 27,074

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

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

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

(3) Represents adjustments to tax impacts on the 2023 PortMiami sale of noncontrolling interest.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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Total revenues increased $2.6 billion, or 18.6%, to $16.5 billion in 2024 from $13.9 billion in 2023.

Capacity was up 7.8% in 2024, driven by the additions of our newest ships Utopia of the Seas, Icon of the Seas, Silver Ray, as well as a full year of operations from Celebrity Ascent and Silver Nova.

Passenger ticket revenues comprised 69.8% of our 2024 total revenues.

Passenger ticket revenues increased by $1.9 billion, or 20.2% to $11.5 billion in 2024 from $9.6 billion in 2023.

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

The increase was primarily due to:

• a 7.8% increase in capacity due to the new ships noted above, an increase in ticket prices on a per passenger basis, and a 2.9% increase in occupancy.

• a $1.2 billion increase driven by higher ticket prices and occupancy in 2024, and a $0.7 billion increase driven by capacity.

The remaining 30.2% of total revenues was comprised of Onboard and other revenues , which increased $0.7 billion, or 15.1% to $5.0 billion in 2024 from $4.3 billion in 2023.

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

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

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

Onboard and other revenues included concession revenues of $472 million in 2023 and $332 million in 2022.

The increase was due to:

• a $336 million increase driven by a 7.8% increase in capacity due to the additions of new ships noted above in 2024 compared to the same period in 2023.

• a $318 million increase driven by improved pricing and an increase in occupancy of 2.9% in 2024 compared to the same period in 2023.

Cruise operating expenses

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

Total Cruise operating expenses increased by $0.9 billion, or 11.3%, to $8.7 billion in 2024 from $7.8 billion in 2023.

The increase was primarily due to:

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

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

• a $166 million increase in Food Costs;

• a $151 million increase in Other operating expenses;

• a $77 million increase in Fuel expense.

The increase in operating expenses noted above reflects full operations in 2023, including additional capacity and higher occupancy compared to the same period in 2022, offset by a decrease of $91 million in Payroll and related due to additional costs incurred during our return to service in 2022, which did not recur in 2023.

• the 7.8% increase in capacity noted above which increased cruise operating expenses by $603 million;

• an increase of $300 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 increased $209 million, or 13.2% to $1.8 billion in 2023 from $1.6 billion in 2022, driven by an increase in payroll and benefits expense primarily driven by an increase in headcount and higher stock price year over year related to our performance share awards.

Marketing, selling and administrative expenses increased $333 million, or 18.6% to $2.1 billion in 2024 from $1.8 billion 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)

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

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

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

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

Other Comprehensive Income (Loss)

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

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

Interest expense, net of interest capitalized for 2024 increased $188 million, to $(1.6) billion from $(1.4) billion in 2023.

The increase was due to loss on extinguishment of debt of $344 million primarily associated with the full redemption of our 11.625%, 9.250%, 8.250%, 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 $121 million during the same period in 2023.

The increase was partially offset by a decrease of $146 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 $145 million, or 10.0%, to $1.6 billion from $1.5 billion in 2023.

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

Equity investment income for 2024 was $260 million compared to $200 million in 2023.

The increase in income was primarily due to income from TUI Cruises, one of our equity method investments, in 2024 compared to 2023.

Other income (expense) increased $111 million, to other income in 2024, from other expense of $(8) million in 2023.

The increase was primarily due to the release of the loss contingency of $124 million recorded in 2022 in connection with the Havana Docks litigation.

Future Application of Accounting Standards

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Sources and Uses of Cash

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

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

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

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

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

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

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

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

Net cash provided by operating activities increased by $0.8 billion to $5.3 billion for the year ended December 31, 2024, compared to cash provided of $4.5 billion for the same period in 2023.

The increase was primarily driven by higher operating income in 2024 compared to the same period in 2023.

Net cash used in investing activities decreased by $0.5 billion to $3.4 billion for the year ended December 31, 2024, compared to cash used of $3.9 billion for the same period in 2023.

The decrease of $0.5 billion was primarily attributable to increased capital expenditures associated with taking delivery of Icon of the Seas, Celebrity Ascent, and Silver Nova in 2023 compared to Utopia of the Seas and Silver Ray in 2024.

Net cash (used in) provided by financing activities was $(1.9) billion for the year ended December 31, 2024, compared to cash used of $(2.0) billion for the same period in 2023.

The change of $0.1 billion was primarily attributable to an increase in debt repayments of $2.1 billion, an increase in premiums on repayments of debt of $0.2 billion, an increase of $0.1 billion related to our return to payment of dividends in 2024, and proceeds of $0.2 billion for the sale of noncontrolling interest of PortMiami, which did not recur in 2024.

The change was offset by an increase of $2.7 billion related to debt proceeds in 2024 compared to the same period in 2023.

Future Capital Commitments

1 unchanged sentence

Our future capital commitments consist primarily of new ship orders.

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

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

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

As of December 31, 2024, we have two Icon-class ships and one Oasis-class ship on order for our Royal Caribbean brand with an aggregate capacity of approximately 16,900 berths.

In addition, as of December 31, 2024, we have one Edge-class ship on order for our Celebrity Cruises brand, with a capacity of approximately 3,250 berths.

Refer to Item 1.

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

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

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

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

As of December 31, 2024, the aggregate cost of our ships on order, excluding any ships on order by our Partner Brands, was approximately $7.8 billion, of which we had deposited $815 million.

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Payments due by period

2024 2025 2026 2027 2028

2025 2026 2027 2028 2029 Thereafter Total

13 unchanged sentences

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

Included in these figures are $4.5 billion in final contractual installments, which have committed financing covering 80% of the cost of the ships on order for our Global Brands, all of which include sovereign financing guarantees.

Included in these figures are $4.9 billion in final contractual installments, which have committed financing covering approximately 80% of the cost of the ships on order for our Global Brands, all of which include sovereign financing guarantees.

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

12 unchanged sentences

Refer to Note 8 .

Revenue to our consolidated financial statements under Item 8.

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

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for export credit agency guarantees.

Refer to Note 7.

8 unchanged sentences

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

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

As of December 31, 2024, our obligations due through December 31, 2025 primarily consisted of $1.6 billion related to debt maturities, $1.0 billion related to interest on debt and $2.4 billion related to progress payments on our ship orders and, based on expected delivery date, the final installments payable due upon the delivery of Star of the Seas and Celebrity Xcel .

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

As of December 31, 2024, we had liquidity of $4.1 billion, including cash and cash equivalents of $0.4 billion and $3.7 billion of undrawn revolving credit facility capacity.

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

Refer to Note 8 .

Debt and Note 10 .

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

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

5 unchanged sentences

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 .

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 December 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.

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 December 2024, our Board of Directors declared a cash dividend on our common stock of $0.55 per share, which was paid in January 2025.

During the third quarter of 2024, our Board of Directors declared a cash dividend on our common stock of $0.40 per share, which was paid in the fourth quarter of 2024.

In February 2025, our Board of Directors declared a dividend of $0.75 per share, payable in April 2025.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis