Royal Caribbean reports first quarter 2021 financial results
Jason T. Liberty, Executive Vice President and Chief Financial Officer stated "we are optimistic about our future"
Royal Caribbean Group published a statement providing an update on its operation considering the global COVID-19 pandemic and reported financial results for the first quarter of 2021.
Since the last commercial update, the Company has announced new itineraries for this summer for eleven additional ships from the Caribbean and Europe, in addition to the four ships that are already sailing. The initial reaction to these announcements has been positive, highlighting the strong demand for cruise ships. These cruises are conducted with adjusted passenger capacity and improved health protocols developed with the government and health authorities, and with the guidance of the Healthy Sailing Panel.
"We look forward to resuming operations at various ports around the world in the coming months. Additionally, we have had very constructive dialogues with the Centers for Disease Control and Prevention (CDC) in recent weeks regarding the resumption of US cruises. In a safe and healthy way, "said Richard D. Fain, President and CEO. "Last night, the CDC notified us of some clarifications and extensions to their Conditional Shipping Order that addressed the uncertainties and concerns that we had raised. They have addressed many of these items in a constructive way that takes into account recent advances in vaccines and medical science. Although this is only one part of a very complex process, it encourages us to now see a path towards a healthy and achievable return to service,
First Quarter 2021
On March 13, 2020, the company voluntarily suspended its global cruise operations due to the COVID-19 pandemic and that suspension was extended for most ships until at least June 30, 2021. Most recently, the Company resumed limited cruise operations outside of the US and has announced a number of overseas itineraries.
The Company reported a US GAAP Net Loss for the first quarter 2021 of $ (1.1) billion or $ (4.66) per share compared to a US GAAP Net Loss of $ (1.4) billion or $ (6.91) per share in the previous year. The Company also reported an Adjusted Net Loss of $ (1.1) billion or $ (4.44) per share for the first quarter of 2021 compared to an Adjusted Net Loss of $ (310.4) million or $ ( 1.48) per share in the previous year. Net Loss and Adjusted Net Loss for the quarter are the result of the impact of the COVID-19 pandemic on the business.
The average monthly cash burn rate for the first quarter of 2021 was approximately $ 300 million. This is slightly higher than the previously announced range driven primarily by expenses and fleet-wide reset time.
Update on liquidity shares and ongoing uses of cash
Since the suspension of operations in March 2020, the company has raised approximately $ 12.3 billion through a combination of bond issues, common stock offerings and other lines of credit. Given the current environment, the Company continues to strengthen its liquidity. Among its latest actions carried out during the first quarter of 2021, the Company highlighted the following:
- Completed a $ 1.5 billion stock offering at a price of $ 91 per share;
- Issued $ 1.5 billion of 5.5% senior unsecured notes due 2028, the proceeds of which have been and will be used to repay principal on debt that is due or due in 2021 and 2022;
- It amended its $ 1.0 billion term loan due April 2022 to extend the maturity date for consenting lenders by 18 months and, in connection with that, repaid $ 138.5 million of line of credit principal using the income from senior notes;
- Amended its $ 1.55 billion revolving credit facility due October 2022 to extend the maturity date for consenting lenders by 18 months and, in connection with this, repaid $ 277.6 million of line principal using proceeds from senior notes (with corresponding reduction in commitments)
- Completed the balance of previously announced amendments to its export credit lines, which in total defer $ 1,150 million in principal amortization before April 2022 and exempt from financial agreements until at least the end of the third quarter of 2022 and ;
- It amended most of its commercial banking services and credit card agreements to waive financial covenants until at least the end of the third quarter of 2022.
As the company returns to operations, it expects to incur incremental expenses related to returning ships to operational condition, returning crew members to ships, and implementing improved health and safety protocols. The decision to return each vessel takes into account many variables, including deployment opportunities, business potential, cost of operations, and cash flow. Given the fluidity of return-to-service decisions and the costs related to the increase, the company cannot reasonably estimate an average monthly cash burn rate related to said increase. The monthly average cash burn rate for ships that are in storage is expected to remain consistent with previous expectations.