What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-28 compared with 2026-04-30 · 130 added, 56 removed, 290 unchanged (39% 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, 2026, compared to the same period in 2025;

• a discussion of our results of operations for the quarter and six months ended June 30, 2026, compared to the same period in 2025;

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

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

and (ii) restructuring charges and other initiative expenses.

(ii) restructuring charges and other initiative expenses;

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

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

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

(ii) restructuring charges and other initiatives expenses;

and (iii) the amortization of the Silversea intangible assets resulting from the Silversea acquisition.

(ii) restructuring charges and other initiative expenses;

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

(iv) gain on sale of noncontrolling interest;

and (v) equity investment impairment, recovery of losses, and other.

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

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and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

for the first quarter of 2026 was $941 million and $975 million, respectively, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

for the second quarter of 2026 was $1.1 billion, respectively, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

of $730 million and $744 million, respectively, for the first quarter of 2025.

Significant items for the quarter ended March 31, 2026 include:

• Total revenues increased $453 million for the quarter ended March 31, 2026 as compared to the same period in 2025.

The increase was primarily due to an increase in capacity and yield growth as a result of higher pricing in 2026 compared to the same period in 2025.

• Total cruise operating expenses increased $168 million for the quarter ended March 31, 2026 as compared to the same period in 2025.

of $1.2 billion, respectively, for the second quarter of 2025.

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, 2026 was $2.1 billion, respectively, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

of $1.9 billion, respectively, for the six months ended June 30, 2025.

Significant items for the quarter and six months ended June 30, 2026 include:

• Total revenues increased $294 million and $747 million for the quarter and six months ended June 30, 2026 as compared to the same period in 2025.

The increase was primarily due to an increase in capacity and higher pricing in 2026 compared to the same period in 2025.

• Total cruise operating expenses increased $264 million and $433 million for the quarter and six months ended June 30, 2026 as compared to the same period in 2025.

The increase was primarily due to an increase in capacity in 2026 compared to the same period in 2025.

• In February 2026, we issued $1.25 billion of senior notes due in 2033 and $1.25 billion of senior notes due in 2038 for net proceeds of approximately $2.5 billion.

• In June 2026, we took delivery of Legend of the Seas.

• In June 2026, TUI Cruises, our 50% joint venture, took delivery of Mein Schiff Flow .

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

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Financial Statements .

Operating results for the quarter ended March 31, 2026 compared to the same period in 2025 are shown in the following table (in millions, except per share data):

Quarter Ended March 31,

Operating results for the quarters and six months ended June 30, 2026 compared to the same period in 2025 are shown in the following tables (in millions, except per share data):

Quarter Ended June 30,

Revenues % of Total

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$ 1,128 23.3 % $ 1,210 26.7 %

Diluted Earnings per Share 4.20 4.41

Six Months Ended June 30,

Revenues % of Total

Passenger ticket revenues $ 6,365 68.6 % $ 5,942 69.6 %

Onboard and other revenues 2,919 31.4 % 2,595 30.4 %

Total revenues 9,284 100.0 % 8,537 100.0 %

Cruise operating expenses:

Commissions, transportation and other 1,186 12.8 % 1,128 13.2 %

Onboard and other 501 5.4 % 463 5.4 %

Payroll and related 806 8.7 % 669 7.8 %

Food 526 5.7 % 486 5.7 %

Fuel 619 6.7 % 557 6.5 %

Other operating 1,157 12.5 % 1,061 12.4 %

Total cruise operating expenses 4,795 51.6 % 4,362 51.1 %

Marketing, selling and administrative expenses 1,095 11.8 % 1,071 12.5 %

Depreciation and amortization expenses 925 10.0 % 829 9.7 %

Operating Income 2,469 26.6 % 2,275 26.6 %

Other income (expense):

Interest income 10 0.1 % 15 0.2 %

Interest expense, net of interest capitalized (514) (5.5) % (477) (5.6) %

Equity investment income 151 1.6 % 155 1.8 %

Other income 9 0.1 % 15 0.2 %

Income before income taxes 2,126 22.9 % 1,983 23.2 %

Provision for income taxes (39) (0.4) % (33) (0.4) %

Net Income 2,086 22.5 % 1,950 22.8 %

Net Income attributable to noncontrolling interest 16 0.2 % 10 0.1 %

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 2,070 22.3 % $ 1,940 22.7 %

Diluted Earnings per Share 7.68 7.10

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd., and Adjusted Earnings per Share are calculated as follows (in millions, except per share data.

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,128 $ 1,210 $ 2,070 $ 1,940

Loss on extinguishment of debt and inducement expense (1) — — 29 10

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Amortization of Silversea intangible assets resulting from the Silversea acquisition (3) 2 2 3 3

Gain on sale of noncontrolling interest (4) — (11) — (11)

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

Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,130 $ 1,202 $ 2,105 $ 1,946

Earnings per Share $ 4.21 $ 4.45 $ 7.70 $ 7.17

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(1) For 2026, includes the loss on extinguishment of debt associated with redemptions of the senior notes maturing in 2026.

Refer to Note 6.

Debt to our consolidated financial statements under Item 1.

Financial Statements for further information.

For 2025, includes $10 million of inducement expense related to the settlements of the 2025 6.00% convertible notes.

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

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

(4) For 2025, 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).

(5) For 2025, 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.

Refer to Note 4 .

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Financial Statements for further information.

(5) For 2025, Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $5 million for the quarter ended March 31, 2025.

(6) For 2025, 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.

Selected statistical information is shown in the following table:

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Passengers Carried 2,399,066 2,254,057 4,908,738 4,495,730

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,128 $ 1,210 $ 2,070 $ 1,940

Interest income (5) (12) (10) (15)

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Restructuring charges and other initiative expenses (1) — 3 3 6

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

Adjusted EBITDA $ 1,830 $ 1,851 $ 3,532 $ 3,252

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Total revenues $ 4,832 $ 4,538 $ 9,284 $ 8,537

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Payroll and related 405 329 806 669

Food 262 246 526 486

Fuel 355 279 619 557

Other operating 615 561 1,157 1,061

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Total cruise operating expenses $ 2,547 $ 2,283 $ 4,795 $ 4,362

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Net Cruise Costs 2,150 1,920 4,200 3,837

Fuel 355 279 619 557

Net Cruise Costs excluding Fuel $ 1,796 $ 1,641 $ 3,581 $ 3,280

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

Quarter Ended March 31, 2026 Compared to Quarter Ended March 31, 2025

In this section, references to 2026 refer to the quarter ended March 31, 2026 and references to 2025 refer to the quarter ended March 31, 2025.

Total revenues increased $0.5 billion, or 11.3%, to $4.5 billion in 2026 from $4 billion in 2025.

Quarter Ended June 30, 2026 Compared to Quarter Ended June 30, 2025

In this section, references to 2026 refer to the quarter ended June 30, 2026 and references to 2025 refer to the quarter ended June 30, 2025.

Total revenues increased $294 million, or 6.5%, to $4.8 billion in 2026 from $4.5 billion in 2025.

Passenger ticket revenues comprised 69% of our 2026 total revenues.

Passenger ticket revenues increased by $145 million, or 4.5% to $3.3 billion in 2026 from $3.2 billion in 2025.

The increase was primarily due to:

• $226 million driven by 8.3% capacity growth as a result of the addition of Star of the Seas and Celebrity Xcel as well as existing hardware compared to the same period in 2025;

• $51 million driven by yield growth as a result of higher pricing compared to the same period in 2025.

The increase was primarily driven by a 4.9% capacity growth as a result of the addition of Star of the Seas and Celebrity Xcel compared to the same period in 2025.

The remaining 31% of 2026 total revenues was comprised of Onboard and other revenues , which increased $149 million, or 11% to $1.5 billion in 2026 from $1.3 billion in 2025.

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• $65 million driven by 4.9% capacity growth as a result of the addition of Star of the Seas and Celebrity Xcel compared to the same period in 2025;

• $72 million driven by yield growth as a result of higher onboard spending on a per passenger basis in 2026 compared to the same period in 2025.

• $83 million driven by higher onboard spending on a per passenger basis in 2026 compared to the same period in 2025.

Cruise Operating Expenses

Total Cruise operating expenses increased by $264 million, or 11.6%, to $2.5 billion in 2026 from $2.3 billion in 2025.

The increase was primarily due to the capacity growth which increased cruise operating expenses in 2026 compared to the same period in 2025.

The increase was primarily due to:

• a $111 million increase due to the 4.9% increase in capacity compared to the same period in 2025;

• a $76 million increase in crew payroll and related expenses primarily driven by addition of new ships compared to the same period in 2025;

• a $76 million increase in fuel expenses related to higher rates per metric ton compared to the same period in 2025.

Other comprehensive income

Other comprehensive income for 2026 increased by $113 million, or 105.6%, to $220 million in 2026 from $106.8 million in 2025 .

The increase was primarily due to Gain on cash flow derivative hedges of $221 million in 2026 compared to $128 million in 2025, mostly as a result of a significant increase in the fair value of our fuel swaps in 2026 compared to 2025, partially offset by a significant decrease in the fair value of our FX forward swaps in 2026 compared to 2025.

Other comprehensive (loss) income for 2026 decreased by $307 million, or 174.4%, to a loss of $(131) million in 2026 from a gain of $176 million in 2025 .

The decrease was primarily due to a ( loss) on cash flow derivative hedges of $(137) million in 2026 compared to a gain of $181 million in 2025, mostly as a result of a significant decrease in the fair value of our FX forward swaps and fuel swaps in 2026 compared to 2025.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

In this section, references to 2026 refer to the six months ended June 30, 2026 and references to 2025 refer to the six months ended June 30, 2025.

Total revenues for 2026 increased $0.7 billion to $9.3 billion from $8.5 billion in 2025.

Passenger ticket revenues comprised 69% of our 2026 total revenues.

Passenger ticket revenues for 2026 increased by $423 million, or 7.1% to $6.4 billion from $5.9 billion in 2025.

The increase was primarily due to a 6.5% capacity growth as a result of the addition of Star of the Seas and Celebrity Xcel, compared to the same period in 2025.

The remaining 31% of 2026 total revenues was comprised of Onboard and other revenues , which increased $324 million, or 12.5% to $2.9 billion in 2026 from $2.6 billion in 2025.

The increase was primarily due to:

• a $170 million increase driven by a 6.5% capacity growth as a result of the additions of new ships noted above compared to the same period in 2025;

• a $155 million increase driven by higher pricing on both existing ships and new ships in 2026 compared to the same period in 2025.

Cruise Operating Expenses

Total Cruise operating expenses for 2026 increased $433 million to $4.8 billion from $4.4 billion in 2025.

The increase was primarily due to:

• a $285 million increase due to the 6.5% increase in capacity noted above;

• a $137 million increase in crew payroll and related expenses primarily driven by addition of new ships compared to the same period in 2025.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2026 increased $96 million, or 11.6%, to $925 million from $829 million in 2025.

The increase was primarily due to the addition of new ships noted above compared to the same period in 2025.

Other comprehensive income (loss)

Other comprehensive income was $88 million in 2026 compared to $283 million for the same period in 2025 .

The decrease of $195 million in income was primarily due to a gain on cash flow derivative hedges of $84 million in 2026 compared to a gain of $309 million in 2025 , mostly as a result of a significant decrease in the fair value of our FX forward swaps in 2026 compared to 2025 , partially offset by a significant increase in the fair value of our fuel swaps in 2026 compared to 2025 .

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 $1.8 billion for the three months ended March 31, 2026, compared to $1.6 billion in 2025.

Net cash used in investing activities increased by $89 million to $0.5 billion for the three months ended March 31, 2026, compared to $0.4 billion in 2025.

The change of $89 million was primarily attributable to increased capital expenditures in 2026 compared to 2025.

Net cash used in financing activities increased by $0.4 billion to $1.6 billion for three months ended March 31, 2026, compared to $1.2 billion in 2025.

The change of $0.4 billion was primarily attributable to an increase in debt proceeds of $2.3 billion related to the issuance of senior notes, offset by repayment of debt of $1.9 billion in 2026 compared to the same period in 2025.

Additionally, an increase of $0.6 billion in repurchase of common stock in 2026 part of the previously authorized share repurchase program compared to the same period in 2025, an increase of $0.1 billion on dividend payments, and an increase of $0.1 billion related to payments of withholding tax on stock awards in 2026 compared to the same period in 2025.

Net cash provided by operating activities was $3.7 billion for the six months ended June 30, 2026, compared to $3.4 billion in 2025.

Net cash used in investing activities increased by $2.1 billion to $3.2 billion for the six months ended June 30, 2026, compared to $1.1 billion in 2025.

The change of $2.1 billion was primarily attributable to increased capital expenditures in 2026 compared to 2025.

Net cash used in financing activities decreased by $1.4 billion to $0.4 billion for the six months ended June 30, 2026, compared to $1.9 billion in 2025.

The change of $1.4 billion was primarily attributable to an increase in debt proceeds of $5 billion related to the issuance of senior notes and the loan to finance Legend of the Seas , offset by repayment of debt of $2.2 billion in 2026 compared to the same period in 2025.

Additionally, an increase of $0.8 billion in repurchases of common stock in 2026 part of the previously authorized share repurchase program compared to the same period in 2025, an increase of $326 million on dividend payments, and an increase of $129 million related to payments of withholding tax on stock awards in 2026 compared to the same period in 2025.

Future Capital Commitments

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Our future capital commitments consist primarily of new ship orders.

As of March 31, 2026, 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, 2026, 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 Dates Approximate

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

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

Hero of the Seas Meyer Turku Oy 3rd Quarter 2027 5,600

Unnamed Meyer Turku Oy 2nd Quarter 2028 5,600

Unnamed Meyer Turku Oy 2nd Quarter 2029 5,600

Discovery-class:

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Unnamed TeamCo Shipyard 2nd Quarter 2028 170

Mein Schiff Flow Fincantieri 2nd Quarter 2026 4,100

Unnamed Fincantieri 1st Quarter 2031 4,100

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Our future capital commitments consist primarily of new ship orders.

As of March 31, 2026, the aggregate expected cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $16.2 billion, of which we had deposited $1.3 billion.

Approximately 52.9% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2026.

As of June 30, 2026, the aggregate expected cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $16.5 billion, of which we had deposited $1.3 billion.

Approximately 52.6% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at June 30, 2026.

Refer to Note 8 .

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Financial Statements for further information.

As of March 31, 2026, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $5 billion for 2026 .

As of June 30, 2026, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $4.7 billion for 2026 .

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

Material Cash Requirements

As of March 31, 2026, our material cash requirements were as follows (in millions):

As of June 30, 2026, our material cash requirements were as follows (in millions):

2026 2027 2028 2029 2030 Thereafter Total

Operating Activities:

Operating lease obligations (1)

$ 70 $ 124 $ 113 $ 61 $ 51 $ 995 $ 1,414

Interest on debt (2)

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Total $ 1,168 $ 3,906 $ 5,709 $ 4,583 $ 1,042 $ 6,164 $ 22,572

(1) We are obligated under noncancelable operating leases primarily for preferred berthing arrangements, real estate and shipboard equipment.

Amounts represent contractual obligations with initial terms in excess of one year.

(2) Long-term debt obligations mature at various dates through fiscal year 2042 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, 2026.

Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2026.

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, 2026.

Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2026.

(3) 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 maturities related to debt.

Refer to Note 7.

Leases to our consolidated financial statements under Item 1.

Financial Statements for maturities related to lease liabilities.

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

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Financial Statements for other agreements.

As of March 31, 2026, 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, 2026, 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, 2026, we had approximately $14.0 billion of committed financing for our ships on order, which excludes ships on order for Celebrity River Cruises.

As of March 31, 2026 , our obligations due through March 31, 2027 primarily consisted of $1.4 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, including the final installments payable due upon the delivery of Legend of the Seas given the expected delivery date in 2026 .

As of June 30, 2026, we had approximately $14.3 billion of committed financing for our ships on order, which excludes ships on order for Celebrity River Cruises.

As of June 30, 2026 , our obligations due through June 30, 2027 primarily consisted of $1.6 billion related to debt maturities, $1.1 billion related to interest on debt and $0.8 billion related to progress payments on our ship orders.

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, 2026, we had liquidity of $6.9 billion, including cash and cash equivalents of $0.5 billion, and $6.4 billion of undrawn revolving credit facility capacity.

As of June 30, 2026, we had liquidity of $6.9 billion, including cash and cash equivalents of $0.9 billion, and $6 billion of undrawn revolving credit facility capacity.

We may be obligated to prepay indebtedness outstanding under our credit facilities 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 is made up of persons who were not (i) members of the Board on the first day of such period, (ii) nominated by persons who were members of the Board on the first day of such period, or (iii) nominated by directors who themselves were nominated under clauses (i) or (ii) above.

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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, and limit our net debt-to-capital ratio.

As of March 31, 2026, 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, 2026, 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 that a dividend is prudent at that time in consideration of the needs of the business.

During the quarter ended March 31, 2026, our Board declared a dividend of $1.50 per share, which was paid in April 2026.

During the quarter ended June 30, 2026, our Board declared a dividend of $1.50 per share, which was paid in July 2026.

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