Royal Caribbean Group today reported financial results for fiscal 2020 and commented on the business considering the global COVID-19 pandemic.
“The COVID-19 pandemic is having a profound and painful impact on our world and our business; this crisis is without doubt the most difficult in the Company’s history. But we are impressed and grateful for the ingenuity and agility of our team in responding to these unprecedented challenges. Most importantly, we remain confident in our Company’s ability to recover and return to the positive trajectory we were previously on, “said Richard D. Fain, President and CEO. “We are encouraged to see the sharp decline in cases and the increasing availability of vaccines. We can’t wait to get back into the business of showing people the world and creating great memories.”
Full Year 2020 Results:
As part of the global containment effort resulting from the COVID-19 pandemic, the Company implemented a voluntary suspension of its cruise operations effective March 13, 2020, which has been extended for most of the ships until at least April 30, 2021..
For the full year, the Company reported a US GAAP Net Loss of $ (5.8) billion or $ (27.05) per share compared to US GAAP Net Income of $ 1.9 billion or $ 8.95 per share in the prior year. The Company also reported an Adjusted Net Loss of $ (3.9) billion or $ (18.31) per share for the full year 2020 compared to Adjusted Net Income of $ 2.0 billion or $ 9.54 per share in the prior year.
2020 Fourth Quarter Results:
US GAAP net loss for the fourth quarter was $ (1.4) billion or $ (6.09) per share and adjusted net loss was $ (1.1) billion or $ (5.02) per share. action. Last year, US GAAP net income was $ 273.1 million or $ 1.30 per share, and adjusted net income was $ 297.4 million or $ 1.42 per share for the fourth quarter.
The net loss and adjusted net loss for the fourth quarter and full year of 2020 are the result of the impact of the COVID-19 pandemic on the business.
“These results reflect the staggering impact the pandemic brought to our company and the entire industry during 2020,” said Jason T. Liberty, executive vice president and chief financial officer. “I want to thank all of our teams who have risen to the occasion, handling the most difficult year in Royal Caribbean history.”
Health and Safety Protocols, Business Update
The company continues to work and collaborate with the Healthy Sailing Panel, epidemiologists, health authorities, and various governments around the world to ensure a healthy and safe return to the cruise ship for guests, crew and passengers. communities visited. While the situation remains highly fluid, knowledge of the virus and how it spreads continues to improve.
The shipping company has already started some limited operations. For example, in December, Quantum of the Seas began operating in Singapore. In addition, our subsidiary TUI Cruises has had three ships operating in the Canary Islands since November. “Guests are sharing very positive reviews and we are also seeing a higher proportion of first-time cruises than expected. We believe these cruises, even before vaccines are available, are helping us learn and demonstrate to others how we can operate. successfully under the current COVID-19 environment, “noted Mr. Fain.
The firm also continues to prepare and develop its plan to comply with the Framework for the Conditional Navigation Order issued by the U.S. Centers for Disease Control and Prevention (CDC) for U.S. travel. framework represents an important step toward getting back into service, there are still many uncertainties in the details, time and cost of implementing your requirements. In general, and due to the challenges posed by the pandemic, the Company expects to restart its global cruise operation in a phased manner with the initial cruises with lower passenger occupancy, modified itineraries and improved health and safety protocols.
On January 29, 2021, the Company announced that it had entered into a definitive agreement to sell its Azamara brand in a cash transaction for $ 201 million. The agreement includes Azamara’s fleet of three ships and associated intellectual property.
“We remain focused on improving our liquidity position, managing our operating expenses and ensuring that our family of brands is ready for return to service,” noted Mr. Liberty. “We are well positioned to emerge competitively stronger and we are eager to begin offering world-class vacations, which we hope will lead to compelling returns and a strong balance sheet.”
As of 2022, the Company has two ship deliveries scheduled, both with committed financing: Wonder of the Seas and Celebrity Beyond. Excluding new construction deliveries, capital expenditures for 2022 will depend on the Company’s schedule to return to service.
Since the suspension of operations and during 2020, the Company divested three ships from its fleet: Celebrity Xperience, Majesty of the Seas and Empress of the Seas. The Company also divested three ships used by its Pullmantur subsidiary. In addition, the Company announced that it signed a definitive agreement to sell its Azamara brand that includes three vessels: Azamara Journey, Azamara Quest and Azamara Pursuit.
Reservation Update Reservations
activity for the second half of 2021 is aligned with the anticipated resumption of cruises by the Company. The price of these reservations is higher than in 2019, both including and excluding the dilutive impact of future cruise credits (FCC).
While the brands are still in the process of opening for sale for the remainder of their 2022/2023 seasons, the first and second quarter 2022 outlets have been open for some time. Accumulated anticipated reserves for the first half of 2022 are within historical ranges and at higher prices. This was achieved with minimal spending on sales and marketing which, according to the Company, highlights strong long-term demand for cruise ships.
Since the last commercial update, approximately 75% of the reservations made for 2021 are new and 25% are due to the FCC exchange and the “Lift & Shift” program. The Company continues to provide guests on suspended trips the option to request a refund, receive an FCC, or “lift and change” their reservation the following year.
As of December 31, 2020, the Company had $ 1.8 billion in customer deposits, of which 50% are related to FCC. Since the suspension of operations, approximately 53% of guests booked on canceled trips have requested cash refunds.
The Company’s operation is still subject to the impact of COVID-19. Consequently, the Company cannot reasonably estimate its financial or operating results. Notwithstanding the foregoing, the Company expects to incur a net loss both under US GAAP and on an adjusted basis for its first quarter and fiscal 2021, the extent of which will depend on many factors, including the timing and extent of the return to service.