Common-Size Income Statement
Quarterly Data
Royal Caribbean Cruises Ltd., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
The financial performance exhibits three distinct phases: a period of stability from 2017 to 2019, a severe contraction during 2020 and 2021, and a gradual recovery phase throughout 2022.
- Revenue Composition
- From 2017 to 2019, revenue streams remained consistent, with passenger ticket revenues contributing approximately 70% to 74% and onboard revenues accounting for 26% to 30%. During the 2020-2021 crisis, a significant inversion occurred; ticket revenues dropped to a low of 44.75% in June 2021, while onboard and other revenues peaked at 55.25% of the total revenue mix. By the second quarter of 2022, the ratio began normalizing, with ticket revenues returning to 64.93%.
- Operating Expense Trends
- Cruise operating expenses, which typically ranged between 50% and 59% of revenue prior to 2020, surged to unsustainable levels during the pandemic. Payroll, fuel, and other operating expenses reached extreme percentages of revenue in late 2020 and early 2021, reflecting the impact of high fixed costs against a collapsed revenue base. By June 2022, total cruise operating expenses moderated to 77.41%, though this remains significantly higher than pre-crisis levels.
- Profitability and Margin Analysis
- Gross profit margins remained healthy between 41% and 49% until early 2020. The subsequent period saw deep gross losses, peaking in December 2020 at -677.02% of revenue. A return to positive gross profit was achieved by June 2022, reaching 22.59%. However, operating income remained negative through mid-2022, ending at -10.01%, as the recovery in gross margins was partially offset by ongoing depreciation and administrative costs.
- Financial and Non-Operating Impact
- Interest expenses and impairment charges exerted extreme pressure on the bottom line during 2020 and 2021. Interest expense peaked at -799.96% of revenue in December 2020, and impairment losses reached -620.62% in the same period. By June 2022, interest expenses had normalized to -13.86% of revenue, and impairment losses shifted to a minor recovery of 0.50%.
The overall trend demonstrates a transition from a state of extreme financial distress back toward operational viability, although net income remained negative at -23.88% of revenue as of June 2022.
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