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Item 2. Management’s Discussion and Analysis

2025-07-29 compared with 2025-04-29 · 156 added, 59 removed, 283 unchanged (43% 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 ended March 31, 2025, compared to the same period in 2024;

• a discussion of our results of operations for the quarter and six months ended June 30, 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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Adjusted EBITDA is a non-GAAP measure that represents EBITDA (as defined below) excluding certain items that we believe adjusting for is meaningful whe n assessing our profitability on a comparative basis.

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

For the periods presented , these items included (i) other income, (ii) equity investment impairment, recovery of losses, and other, (iii) restructuring charges and other initiative expenses, and (iv) impairment losses.

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.

Adjusted Gross Margin represents 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.

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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;

and (iii) restructuring charges and other initiative expenses.

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) restructuring charges and other initiative expenses, (iv) equity investments impairment, recovery of losses, and other, (v) impairment losses, and (vi) gain on sale of noncontrolling interest.

A reconciliation of 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.

Gross Margin Yields 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.

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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 restructuring and other initiative expenses .

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

Net Yields represent Adjusted Gross Margin per APCD.

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and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

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.

for the second quarter of 2025 was $1.21 billion and $1.20 billion, compared to Net Income and Adjusted Net Income of $854 million and $882 million, respectively, for the second quarter of 2024.

Net Income attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

for the six months ended June 30, 2025 was $1.94 billion and $1.95 billion, compared to Net Income and Adjusted Net Income of $1.2 billion and $1.4 billion, respectively, for the six months ended June 30, 2024.

Significant items for the quarter and six months ended June 30, 2025 include:

• Total revenues increased $428 million and $699 million for the quarter and six months ended June 30, 2025 as compared to the same periods 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.

• Total cruise operating expenses, increased $131 million and $153 million for the quarter and six months ended June 30, 2025 as compared to the same periods in 2024.

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

• 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 .

• In May 2025, we amended our two revolving credit facilities, bringing our aggregate revolving credit capacity to $6.4 billion, and extended the termination date of one of the revolving credit facilities from October 2026 to October 2030.

For further information regarding the debt transactions 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,

Operating results for the quarters and six months ended June 30, 2025 compared to the same periods in 2024 are shown in the following tables (in millions, except per share data):

Quarter Ended June 30,

Revenues % of Total

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Diluted Earnings per Share $ 4.41 $ 3.11

Six Months Ended June 30,

Revenues % of Total

Passenger ticket revenues $ 5,942 69.6 % $ 5,429 69.3 %

Onboard and other revenues 2,595 30.4 % 2,409 30.7 %

Total revenues 8,537 100.0 % 7,838 100.0 %

Cruise operating expenses:

Commissions, transportation and other 1,128 13.2 % 1,070 13.7 %

Onboard and other 463 5.4 % 437 5.6 %

Payroll and related 669 7.8 % 631 8.1 %

Food 486 5.7 % 446 5.7 %

Fuel 557 6.5 % 586 7.5 %

Other operating 1,061 12.4 % 1,039 13.3 %

Total cruise operating expenses 4,362 51.1 % 4,209 53.7 %

Marketing, selling and administrative expenses 1,071 12.5 % 1,001 12.8 %

Depreciation and amortization expenses 829 9.7 % 780 10.0 %

Operating Income 2,275 26.6 % 1,848 23.6 %

Other income (expense):

Interest income 15 0.2 % 9 0.1 %

Interest expense, net of interest capitalized (477) (5.6) % (721) (9.2) %

Equity investment income 155 1.8 % 97 1.2 %

Other expense (17) (0.2) % (11) (0.1) %

(325) (3.8) % (626) (8.0) %

Net Income 1,950 22.8 % 1,222 15.6 %

Net Income attributable to noncontrolling interest 10 0.1 % 8 0.1 %

Net Income attributable to Royal Caribbean Cruises Ltd.

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

Quarter Ended March 31,

$ 1,940 22.7 % $ 1,214 15.5 %

Diluted Earnings per Share $ 7.10 $ 4.46

We reported Net Income attributable to Royal Caribbean Cruises Ltd., Adjusted Net Income attributable to Royal Caribbean Cruises Ltd., Earnings per Share and Adjusted Earnings 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):

Quarter Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,210 $ 854 $ 1,940 $ 1,214

Loss on extinguishment of debt and inducement expense (1) — 17 10 133

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Restructuring charges and other initiative expenses (3) 3 3 6 3

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

Impairment losses (4) — 6 — 6

Gain on sale of noncontrolling interest (5) (11) — (11) —

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,202 $ 882 $ 1,946 $ 1,359

Earnings per Share $ 4.45 $ 3.32 $ 7.17 $ 4.72

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(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.

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

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

(5) Represents gain on sale of noncontrolling interest of Floating Docks and Grand Bahama Shipyard.

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

(6) Diluted EPS includes the add-back of dilutive inducement and interest expense related to our convertible notes of $1 million and $16 million for the quarter and for the six months ended June 30, 2025, respectively, and $19 million and $38 million for the quarter and six months ended June 30, 2024, respectively.

Refer to Note 4 .

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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.

(7) Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $1 million and $6 million for the quarter and six months ended June 30, 2025, respectively, and $19 million and $38 million for the quarter and six months ended June 30, 2024, respectively.

Selected statistical information is shown in the following table:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Passengers Carried 2,254,057 2,040,242 4,495,730 4,094,624

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Occupancy 110.3 % 108.2 % 109.6 % 107.6 %

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

Quarter Ended March 31,

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):

Quarter Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,210 $ 854 $ 1,940 $ 1,214

Interest income (12) (4) (15) (9)

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EBITDA 1,860 1,558 3,264 2,729

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

Other income (2) (11) (14) (15) (12)

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

Restructuring charges and other initiative expenses (3) 3 3 6 3

Impairment losses (4) — 6 — 6

Adjusted EBITDA $ 1,851 $ 1,553 $ 3,252 $ 2,726

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

(2) Represents net non-operating expense.

(2) Represents net non-operating income.

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

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

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

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

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

Quarter Ended March 31,

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

reported Adjusted Gross Margin and Yields are calculated from the underlying dollar amounts):

Quarter Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Total revenue $ 4,538 $ 4,110 $ 8,537 $ 7,838

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Payroll and related 329 313 669 631

Food 246 225 486 446

Fuel 279 282 557 586

Other operating 561 516 1,061 1,039

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APCD 12,942,385 12,233,196 25,600,377 24,519,026

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

Gross Margin Yields $ 142.00 $ 127.94 $ 130.67 $ 116.21

Net Yields $ 283.56 $ 269.38 $ 271.33 $ 258.23

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 March 31,

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):

Quarter Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Total cruise operating expenses $ 2,283 $ 2,152 $ 4,362 $ 4,209

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Net Cruise Costs including other costs 1,923 1,802 3,842 3,703

Impairment losses (1) — 6 — 6

Restructuring charges and other initiative expenses (2) 3 3 6 3

Net Cruise Costs 1,920 1,793 3,837 3,694

Fuel 279 282 557 586

Net Cruise Costs Excluding Fuel $ 1,641 $ 1,511 $ 3,280 $ 3,108

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Net Cruise Costs Excluding Fuel per APCD $ 126.76 $ 123.65 $ 128.14 $ 126.78

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

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

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

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.

Quarter Ended June 30, 2025 Compared to Quarter Ended June 30, 2024

In this section, references to 2025 refer to the quarter ended June 30, 2025 and references to 2024 refer to the quarter ended June 30, 2024.

Total revenues for 2025 increased $428 million to $4.5 billion from $4.1 billion in 2024.

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The increase was primarily due to:

• $167 million driven by 5.8% capacity growth as a result of the additions of Utopia of the Seas and Silver Ray compared to same period in 2024, and

• $144 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 29.5% of 2025 total revenues was comprised of Onboard and other revenues , which increased $116 million, or 9.5% to $1.3 billion in 2025 from $1.2 billion in 2024.

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• $45 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.

Cruise Operating Expenses

Total Cruise operating expenses for 2025 increased $131 million to $2.3 billion from $2.2 billion in 2024.

The increase was primarily due to the 5.8% increase in capacity noted above which increased cruise operating expenses by $125 million in 2025 compared to the same period in 2024.

Other Income (Expense)

Interest expense, net of interest capitalized for 2025 decreased $70 million, to $228 million from $298 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 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 .

The decrease was primarily due lower interest expense resulting from the extinguishment and refinancing of certain indebtedness at lower rates compared to the same period in 2024.

Additionally, loss on extinguishment of debt of $17 million in 2024 compared to none in during the same period in 2025.

Equity investment incom e for 2025 increased $51 million, to $107 million from $57 million in 2024.

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

Other comprehensive income (loss)

Other comprehensive income (loss) was $176 million in 2025 compared to a loss of $(37) million for the same period in 2024 .

The increase of $213 million was primarily due to a Gain on cash flow derivative hedges of $181 million in 2025 compared to loss of $(31) 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 .

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

In this section, references to 2025 refer to the six months ended June 30, 2025 and references to 2024 refer to the six months ended June 30, 2024.

Total revenues for 2025 increased $0.7 billion to $8.5 billion from $7.8 billion in 2024.

Passenger ticket revenues comprised 69.6% of our 2025 total revenues.

Passenger ticket revenues for 2025 increased by $0.5 billion, or 9.4% to $5.9 billion from $5.4 billion in 2024.

The increase was primarily due to:

• an increase of $274 million driven by yield growth as a result of higher load factors and higher pricing on both existing ships as well as the benefit of new ships, compared to the same period in 2024;

• an increase of $239 million driven by 4.4% capacity growth as a result of the additions of Utopia of the Seas and Silver Ray compared to the same period in 2024.

The remaining 30.4% of 2025 total revenues was comprised of Onboard and other revenues , which increased $186 million, or 7.7% to $2.6 billion in 2025 from $2.4 billion in 2024.

The increase was primarily due to:

• a $106 million increase driven by an 4.4% capacity growth as a result of the additions of new ships noted above compared to the same period in 2024;

• a $79 million increase driven by yield growth as a result of higher load factors and higher pricing on both existing ships and new ships in 2025 compared to the same period in 2024.

Cruise Operating Expenses

Total Cruise operating expenses for 2025 increased $153 million to $4.4 billion from $4.2 billion in 2024.

The increase was primarily due to:

• the increase in capacity noted above increased cruise operating expenses by $186 million, offset by:

• a decrease of $29 million reduced fuel expenses in 2025 compared to the same period in 2024.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2025 increased $70 million, or 7%, to $1.1 billion from $1.0 billion in 2024.

This increase primarily relates to an increase in payroll and benefits expense driven by increased headcount and higher spending on marketing in 2025 compared to the same period in 2024.

Other Income (Expense)

Interest expense, net of interest capitalized for 2025 decreased $244 million, to $0.5 billion from $0.7 billion in 2024.

The decrease was primarily due to the $133 million loss on extinguishment of debt in 2024 compared to an immaterial amount during the same period in 2025.

Additionally, lower interest expense resulting from extinguishment and refinancing of certain indebtedness at lower rates compared to the same period in 2024.

Equity investment incom e for 2025 increased $58 million, to $155 million from $97 million in 2024.

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

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2025 increased $49 million, or 6.3%, to $829 million from $780 million in 2024.

The increase was primarily due to the additions of Utopia of the Seas and Silver Ray compared to the same period in 2024.

Other comprehensive income (loss)

Other comprehensive income was $283 million in 2025 compared to $20 million for the same period in 2024 .

The increase of $263 million , was primarily due to a Gain on cash flow derivative hedges of $309 million in 2025 compared to $13 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

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

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

Net cash provided by operating activities was $3.4 billion and $2.9 billion for the six months ended June 30, 2025, and 2024, respectively.

Cash flows from operating activities increased $0.5 billion primarily driven by an increase in operating income.

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.

Net cash used in investing activities was $1.1 billion for the six months ended June 30, 2025, compared to $2.5 billion for the same period in 2024.

The decrease of $1.3 billion in Cash flows used in investing activities was primarily attributable capital expenditures related to the delivery of Utopia of the Seas and Silver Ray in 2024, compared to no ship deliveries during the same period in 2025.

Net cash used in financing activities was $1.9 billion for the six months ended June 30, 2025, compared to $0.5 billion for the same period in 2024.

The change of $1.4 billion was primarily attributable to a net decrease in debt proceeds of $939 million, and $589 million related to payment of dividends and purchase of treasury stock, offset by 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 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:

As of June 30, 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

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

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

Star of the Seas (1)

Meyer Turku Oy 3rd Quarter 2025 5,600

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

Unnamed Meyer Turku Oy 3rd Quarter 2027 5,600

Celebrity Cruises —

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

Unnamed Chantiers de l'Atlantique 4th Quarter 2028 3,250

Mein Schiff —

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Total Berths 33,100

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.

(1) In July 2025, we took delivery of Star of the Seas.

Our future capital commitments consist primarily of new ship orders.

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.

As of June 30, 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 $12.1 billion, of which we had deposited $1.4 billion.

Approximately 50.2% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at June 30, 2025.

Refer to Note 8.

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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.

As of June 30, 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 March 31, 2025, our material cash requirements were as follows (in millions):

As of June 30, 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 March 31, 2025.

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

Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements, using the applicable rate at June 30, 2025.

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

As of June 30, 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 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 .

As of June 30, 2025, we had $7.8 billion of committed financing for our ships on order.

As of June 30, 2025, our obligations due through June 30, 2026 primarily consisted of $938 million related to debt maturities, $887 million related to interest on debt and $4.6 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.

As of June 30, 2025, we had liquidity of $7.1 billion, including cash and cash equivalents of $0.7 billion, and $6.4 billion of undrawn revolving credit facility capacity.

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

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Debt Covenants

Our export credit facilities and our non-export credit facilities, and certain of our credit card processing agreements contain covenants that require us, among other things, to maintain a fixed charge coverage ratio, limit our net debt-to-capital ratio, and to maintain minimum liquidity.

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.

As of June 30, 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 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.

During the quarter ended June 30, 2025, our Board of Directors declared a cash dividend on our common stock of $0.75 per share, which was paid in July 2025.

Quantitative and Qualitative Disclosures About Market Risk

3 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis