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Item 2. Management’s Discussion and Analysis

2025-04-29 compared with 2024-10-29 · 119 added, 222 removed, 223 unchanged (60% of the section changed)

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

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

• a discussion of our results of operations for the quarter ended March 31, 2025, compared to the same period in 2024;

• a discussion of our liquidity and capital resources, including our future capital and material cash requirements and potential funding sources.

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The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

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

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

(ii) gain on sale of controlling interest;

(iii) equity investment impairment and recovery losses;

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

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

to Adjusted EBITDA is provided below under Results of Operations.

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

For the periods presented , these items included (i) other (income) expense, and (ii) restructuring charges and other initiative expenses .

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

to Adjusted EBITDA is provided below under Results of Operations.

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

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

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

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

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

is a non-GAAP measure that represents net income less net income attributable to noncontrolling interest, excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis.

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

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

(iii) gain on sale of controlling interest;

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

(v) Silver Whisper deferred tax liability release;

(vi) restructuring charges and other initiative expenses;

(vii) equity investment impairment and recovery losses ;

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

and (iii) restructuring charges and other initiative expenses.

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

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is provided below under Results of Operations.

Adjusted Operating Income represents operating income including income from equity investments and income taxes but excluding certain items for which 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).

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.

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 period's rates.

For the 2025 period presented, we calculate "Constant Currency" by applying the average for 2024 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 attributable to Royal Caribbean Cruises Ltd.

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

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, and onboard and other expenses and, in the case of Net Cruise Costs Excluding Fuel, fuel expenses (each of which is described above under the Description of Certain Line Items heading).

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

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

(ii) impairment and credit losses (recoveries);

and (iii) restructuring and other initiative expenses .

Gross Margin Yield represent Gross Margin per APCD.

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

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

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

Net Yields represent Adjusted Gross Margin per APCD.

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

reflect the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses, and onboard and other expenses.

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

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

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 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.

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

Perfecta Program refers to the multi-year Adjusted EPS and ROIC goals we are seeking to achieve by end of 2027.

Under our Perfecta Program, we are targeting 20% compound annual growth rate in Adjusted EPS compared to 2024 and ROIC of 17% or higher by the end of 2027.

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

The use of certain significant n on-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.

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and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

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 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.

for the first quarter of 2025 was $730 million and $744 million, compared to Net Income and Adjusted Net Income of $360 million and $478 million, respectively, for the first quarter of 2024.

Significant items for the quarter ended March 31, 2025 include:

• Total revenues, increased $271 million for the quarter ended March 31, 2025 as compared to the same period in 2024.

The increase was primarily due to an increase in capacity, ticket prices and onboard spending in 2025, compared to same period in 2024.

• Total cruise operating expenses, increased $23 million for the quarter ended March 31, 2025 as compared to the same period in 2024.

The increase was primarily due to an increase in capacity in 2025 compared to the same period in 2024.

• 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 6 .

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

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

Refer to Note 6 .

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

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

• 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, 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

Passenger ticket revenues $ 3,471 71.0 % $ 2,941 70.7 %

Onboard and other revenues 1,415 29.0 % 1,219 29.3 %

Total revenues 4,886 100.0 % 4,160 100.0 %

Cruise operating expenses:

Commissions, transportation and other 688 14.1 % 632 15.2 %

Onboard and other 289 5.9 % 261 6.3 %

Payroll and related 328 6.7 % 294 7.1 %

Food 251 5.1 % 212 5.1 %

Fuel 290 5.9 % 272 6.5 %

Other operating 545 11.2 % 466 11.2 %

Total cruise operating expenses 2,391 48.9 % 2,137 51.4 %

Marketing, selling and administrative expenses 451 9.2 % 393 9.4 %

Depreciation and amortization expenses 410 8.4 % 365 8.8 %

Operating Income 1,634 33.4 % 1,265 30.4 %

Other income (expense):

Interest income 4 0.1 % 7 0.2 %

Interest expense, net of interest capitalized (603) (12.3) % (340) (8.2) %

Equity investment income 106 2.2 % 87 2.1 %

Other expense (26) (0.5) % (8) (0.2) %

(519) (10.6) % (254) (6.1) %

Net Income 1,115 22.8 % 1,011 24.3 %

Net Income attributable to noncontrolling interest 4 0.1 % 2 — %

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,111 22.7 % $ 1,009 24.3 %

Diluted Earnings per Share $ 4.21 $ 3.65

Nine Months Ended September 30,

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

• In March 2025, we completed privately negotiated exchange with certain holders of 6.00% Convertible Senior Notes due 2025 to exchange approximately $213 million in aggregate principal amount for approximately 3 million shares of common stock and $214 million in cash.

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

Debt to our consolidated financial statements under Item 1.

Financial Statements .

Operating results for the quarter ended March 31, 2025 compared to the same periods in 2024 are shown in the following tables (in millions, except per share data):

Quarter Ended March 31,

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 September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Quarter Ended March 31,

Net Income attributable to Royal Caribbean Cruises Ltd.

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

Loss on extinguishment of debt and inducement expense (1) 10 116

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

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

PortMiami tax on sale of noncontrolling interest (4) (3) — (3) 10

Silver Whisper deferred tax liability release (5) — — — (26)

Restructuring charges and other initiative expenses (3) 2 —

Equity investments impairment and recovery of losses — 17 — 12

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

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,435 $ 1,066 $ 2,794 $ 1,497

Earnings per Share $ 2.71 $ 1.40

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(1) For 2025, includes $10 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 6 .

Debt to our consolidated financial statements for further information.

Debt to our consolidated financial statements under Item 1.

Financial Statements for further information.

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

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

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

(4) 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 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 .

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

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

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

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

(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.

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

(4) Diluted EPS includes the add-back of dilutive inducement and interest expense related to our convertible notes of $15 million for the three months ended March 31, 2025, and $19 million for the three months ended March 31, 2024, respectively.

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.

Earnings Per Share to our consolidated financial statements under Item 1.

Financial Statements for further information.

(5) Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $5 million, and $19 million for the three months ended March 31, 2025 and 2024, respectively.

Selected statistical information is shown in the following table:

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Quarter Ended March 31,

Passengers Carried 2,241,673 2,054,382

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

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Quarter Ended March 31,

Net Income attributable to Royal Caribbean Cruises Ltd.

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

Interest income (2) (5)

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EBITDA 1,405 1,172

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

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

Equity investment impairment and recovery losses — 13 — 8

Other (income) expense (2) (5) 2

Restructuring charges and other initiative expenses (3) 2 —

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

Adjusted EBITDA $ 1,402 $ 1,174

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

Total revenues $ 3,999 $ 3,728

APCD 12,657,992 12,285,830

Net Income attributable to Royal Caribbean Cruises Ltd.

per APCD $ 57.66 $ 29.30

Adjusted EBITDA per APCD $ 110.73 $ 95.56

Adjusted EBITDA Margin 35.1 % 31.5 %

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

(2) Represents net non-operating expense.

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.

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

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

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

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

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

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

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Quarter Ended March 31,

Total revenue $ 3,999 $ 3,728

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Payroll and related 340 318

Food 251 212 697 614

Fuel 290 272 876 850

Other operating 500 522

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APCD 12,657,992 12,285,830

Passenger Cruise Days 13,768,332 13,149,708

Gross Margin Yields $ 119.09 $ 104.59

Net Yields $ 258.83 $ 247.20

Adjusted Gross Margin per PCD $ 237.96 $ 230.96

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 September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Quarter Ended March 31,

Total cruise operating expenses $ 2,079 $ 2,056

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Net Cruise Costs including other costs 1,919 1,900

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

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

Restructuring charges and other initiative expenses (1) 2 —

Net Cruise Costs 1,917 1,900

Fuel 290 272 876 850

Net Cruise Costs Excluding Fuel $ 1,640 $ 1,596

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Net Cruise Costs Excluding Fuel per APCD $ 129.54 $ 129.91

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

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

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

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

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.

Quarter Ended March 31, 2025 Compared to Quarter Ended March 31, 2024

In this section, references to 2025 refer to the quarter ended March 31, 2025 and references to 2024 refer to the quarter ended March 31, 2024.

Total revenues for 2025 increased $271 million to $4 billion from $3.7 billion in 2024.

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The increase was primarily due to:

• 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:

• $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 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 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.

Passenger ticket revenues comprised 70% of our 2024 total revenues.

Passenger ticket revenues for 2024 increased by $1.6 billion, or 22% to $8.9 billion from $7.3 billion in 2023.

The increase was primarily due to:

• 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.

• $125 million driven by yield growth as a result of higher load factors and higher pricing on both existing ships and new hardware in 2025 compared to the same period in 2024;

• $77 million driven by 3.0% capacity growth as a result of the additions of Utopia of the Seas and Silver Ray compared to same period in 2024.

The remaining 31% of 2025 total revenues was comprised of Onboard and other revenues , which increased $69 million, or 5.8% to $1.3 billion in 2025 from $1.2 billion in 2024.

The increase was primarily due to:

• 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 $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;

• 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 $163 million, or 13%, to $1.5 billion from $1.3 billion in 2023.

• $36 million driven by 3.0% capacity growth as a result of the additions of Utopia of the Seas and Silver Ray compared to same period in 2024;

• $33 million driven by yield growth as a result of higher load factors and higher pricing on both existing ships and new hardware in 2025 compared to the same period in 2024.

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.

Interest expense, net of interest capitalized for 2025 decreased $175 million, to $249 million from $424 million in 2024.

The decrease was primarily due to the 2024 loss on extinguishment of debt of $116 million, compared to $10.2 million inducement expense on the partial settlement of our 2025 Convertible notes in 2025.

Additionally, interest expense decrease of $51 million in 2025 compared to the same period in 2024, due to proactive refinancing of certain indebtedness.

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 .

Other comprehensive income was $107 million in 2025 compared of $57 million for the same period in 2024 .

The increase of $50 million was primarily due to a Gain on cash flow derivative hedges in 2025 of $128 million compared to $44 million in 2024, mostly as a result of a significant increase in the fair value of our FX forward swaps in 2025 compared to 2024 .

Future Application of Accounting Standards

Refer to Note 2 .

Summary of Significant Accounting Policies to our consolidated financial statements.

Summary of Significant Accounting Policies to our consolidated financial statements under Item 1.

Financial Statements .

Liquidity and Capital Resources

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

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.

Net cash provided by operating activities was $1.6 billion and $1.3 billion for the three months ended March 31, 2025, and 2024, respectively.

Cash flows from operating activities increased $0.3 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 $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.

Additionally, during 2023, we received proceeds of $209 million for the sale of noncontrolling interest of PortMiami, which did not recur in 2024.

Net cash used in investing activities was $0.4 billion for the three months ended March 31, 2025, compared to $0.3 billion for the same period in 2024.

Cash flows used in investing activities were primarily attributable by an increase in capital expenditures of $0.2 billion during 2025, compared to the same period in 2024.

Net cash used in financing activities was $1.2 billion for the three months ended March 31, 2025, compared to $1.1 billion for the same period in 2024.

The change of $0.1 billion was primarily attributable to cash used of $389 million related to payment of dividends and purchase of treasury stock, offset by a decrease of $187 million primarily related to net repayment of debt, and a decrease of $102 million of premium on repayments of debt in 2025 compared to the same period in 2024.

Future Capital Commitments

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Our future capital commitments consist primarily of new ship orders.

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:

As of March 31, 2025, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, and their approximate berths are as follows:

Ship Shipyard Expected delivery Approximate

Royal Caribbean International —

Royal Caribbean —

Unnamed Chantiers de l'Atlantique 2nd Quarter 2028 5,700

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

Unnamed Meyer Turku Oy 2nd Quarter 2026 5,600

Legend of the Seas Meyer Turku Oy 2nd Quarter 2026 5,600

Celebrity Cruises —

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

TUI Cruises (50% joint venture) —

Mein Schiff Relax Fincantieri 1st Quarter 2025 4,100

Unnamed Fincantieri 2nd Quarter 2026 4,100

Mein Schiff —

Mein Schiff Flow Fincantieri 2nd Quarter 2026 4,100

Total Berths 24,250

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.

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 for delivery in 2027 and a sixth Edge-class ship for delivery in 2028.

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

Our future capital commitments consist primarily of new ship orders.

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.

As of March 31, 2025, the aggregate expected cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $7.9 billion, of which we had deposited $1.0 billion.

Approximately 36.5% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2025.

Refer to Note 8.

Commitments and Contingencies and Note 11 .

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

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.

Fair Value Measurements and Derivative Instruments to our consolidated financial statements under Item 1.

Financial Statements for further information.

As of March 31, 2025, we anticipate overall 2025 capital expenditures of approximately $5 billion, primarily related to our existing ships on order, and land-based destination initiatives.

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

Material Cash Requirements

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

As of March 31, 2025, our material cash requirements were as follows (in millions):

2025 2026 2027 2028 2029 Thereafter Total

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(1) Long-term debt obligations mature at various dates through fiscal year 2037 and bear interest at fixed and variable rates.

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

Debt denominated in other currencies is calculated based on the applicable exchange rate at September 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 March 31, 2025.

Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2025.

(2) Amounts primarily represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts.

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Refer to Note 6 .

Debt for maturities related to debt.

Debt to our consolidated financial statements under Item 1.

Financial Statements for maturities related to debt.

Refer to Note 7 .

Leases for maturities related to lease liabilities.

Leases to our consolidated financial statements under Item 1.

Financial Statements for maturities related to lease liabilities.

Refer to Funding Needs and Sources for discussion on the planned funding of the above material cash requirements.

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Refer to Note 5 .

Investments and Other Assets for ownership restrictions related to TUI Cruises.

Investments and Other Assets to our consolidated financial statements under Item 1.

Financial Statements for ownership restrictions related to TUI Cruises.

Refer to Note 3 .

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

Revenue to our consolidated financial statements under Item 1.

Financial Statements for credit card processor agreements for export credit agency guarantees.

Refer to Note 8 .

Commitments and Contingencies for other agreements.

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.

Commitments and Contingencies to our consolidated financial statements under Item 1.

Financial Statements for other agreements.

As of March 31, 2025, other than the items described 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 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.

As of March 31, 2025, we had $6.1 billion of committed financing for our ships on order.

As of March 31, 2025, our obligations due through March 31, 2026 primarily consisted of $1.4 billion related to debt maturities, $0.9 billion related to interest on debt and $2.5 billion related to progress payments on our ship orders and, based on the expected delivery date, the final installments payable due upon the delivery of Star of the Seas and Celebrity Xcel .

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

As of March 31, 2025, we had liquidity of $4.5 billion, including cash and cash equivalents of $0.4 billion, and $4.1 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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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 to maintain minimum liquidity.

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.

As of March 31, 2025, 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.

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.

During the quarter ended March 31, 2025, our Board of Directors declared a cash dividend on our common stock of $0.75 per share, which was paid in April 2025.

Quantitative and Qualitative Disclosures About Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis