Royal Caribbean Cruises Ltd. (NYSE:RCL)

Asset Turnover

The reported and adjusted total asset turnover ratios exhibited a declining trend from 0.39 in 2017 to 0.05 in 2021. A marked reduction occurred between 2019 and 2020, falling from 0.36 to 0.07, with a further decrease to 0.05 in 2021, indicating a significant deterioration in the efficiency with which assets generate revenue over the period.

Current Ratio

The reported and adjusted current ratios were consistently low from 2017 to 2019, around 0.15-0.18, suggesting limited short-term liquidity. However, there was a dramatic increase to 0.95 in 2020, indicating improved liquidity, possibly due to strategic liquidity management or changes in current assets and liabilities. In 2021, the ratio declined to approximately 0.49-0.50, which remains higher than pre-2020 levels but reflects reduced liquidity compared to the prior year.

Debt to Equity Ratio

The debt to equity ratio showed a steady upward trajectory, increasing from approximately 0.7 in 2017 to above 4.1 in 2021. The most substantial increase occurred between 2019 and 2020, where the ratio more than doubled from roughly 0.9 to over 2.2, and it nearly doubled again by 2021. This indicates a significant rise in leverage, reflecting increased reliance on debt financing relative to equity.

Debt to Capital Ratio

Debt to capital similarly rose from about 0.41 in 2017 to 0.81 in 2021. The increase was relatively steady with a notable jump between 2019 and 2020 from under 0.5 to nearly 0.7, continuing upward to exceed 0.8 by 2021. This trend aligns with the increasing debt to equity and indicates a growing proportion of capital structure financed by debt.

Financial Leverage

The reported and adjusted financial leverage ratios escalated significantly, moving from approximately 2.1 in 2017 to over 6.3 by 2021. The rise was especially pronounced after 2019, signifying an intensification of leverage exposure and potentially greater financial risk in this period.

Net Profit Margin

The net profit margin percentages demonstrated strong profitability in 2017-2019, with figures between 15% and 25%. However, there was a drastic reversal in 2020, where margins turned sharply negative at around -260%, worsening further to approximately -340% in 2021. This reflects significant losses likely due to extraordinary circumstances impacting profitability adversely.

Return on Equity (ROE)

ROE followed a similar pattern to net profit margin, registering positive returns between 13% and 20% from 2017 to 2019, then plunging to deeply negative values exceeding -65% in 2020 and reaching below -100% in 2021. This indicates that shareholders experienced substantial negative returns, driven by negative net income and increased leverage.

Return on Assets (ROA)

The ROA declined from positive levels around 5-10% in the earlier years to negative values in 2020 and 2021, approximately -17% and -16%, respectively. This decline indicates that asset utilization for generating profits deteriorated significantly during the period, reflecting reduced operational effectiveness or asset impairments.

Revenue Trends

Revenues experienced a steady increase from 2017 to 2019, rising from approximately 8.8 billion USD to 10.95 billion USD. However, there was a sharp decline in 2020, with revenues dropping to about 2.21 billion USD, followed by a further decrease in 2021 to approximately 1.53 billion USD. This indicates a significant downturn in revenue generation during the latter years, particularly after 2019.

Asset Developments

Total assets showed consistent growth from 2017 through 2020, increasing from about 22.3 billion USD to 32.5 billion USD. In 2021, total assets remained relatively stable, slightly decreasing to around 32.3 billion USD. Adjusted total assets followed a similar pattern, closely tracking total assets over the period.

Asset Turnover Ratios

The reported total asset turnover ratio decreased steadily from 0.39 in 2017 to 0.34 in 2018, before showing a slight improvement to 0.36 in 2019. This ratio then drastically declined to 0.07 in 2020 and further to 0.05 in 2021. The adjusted total asset turnover mirrors this trend, suggesting a diminishing efficiency in asset utilization to generate revenue, particularly pronounced during and after 2020.

Overall Insights

The data suggests a period of expansion in revenues and asset base up to 2019, followed by a significant downturn in revenue from 2020 onwards, coupled with stable asset levels. The sharp decline in asset turnover ratios in the most recent years indicates that assets are not being converted into revenue as efficiently as before, reflecting decreased operational performance or external challenges affecting the business environment.

Current Assets

The current assets showed an overall increasing trend from 2017 to 2020, rising from approximately 843 million to about 4.3 billion US dollars. However, in 2021, there was a decline to around 3.6 billion, suggesting a reduction in liquid or short-term resources after the peak in 2020.

Current Liabilities

Current liabilities increased consistently over the analyzed period, starting at around 4.8 billion US dollars in 2017 and reaching approximately 7.9 billion by the end of 2019. A large drop to about 4.5 billion occurred in 2020, followed by a resurgence to approximately 7.3 billion in 2021. This volatility may indicate changes in short-term obligations possibly influenced by external factors during 2020.

Reported Current Ratio

The reported current ratio remained very low from 2017 through 2019, fluctuating narrowly around 0.15 to 0.18, indicating that current liabilities significantly exceeded current assets during these years. In 2020, the ratio increased markedly to 0.95, revealing a nearly balanced short-term liquidity position. However, this improvement was not sustained, as the ratio fell again to 0.49 in 2021, reflecting a deterioration in liquidity compared to the previous year.

Adjusted Current Assets

Adjusted current assets followed the same general pattern as the reported current assets, with growth through 2020 followed by a decline in 2021. The values are marginally higher than the reported current assets in 2020 and 2021, suggesting some adjustments that slightly improve the short-term asset valuation.

Adjusted Current Ratio

The adjusted current ratio closely mirrors the reported current ratio trend and values, reinforcing the same liquidity insights. The ratio improved notably in 2020 to 0.95, stayed relatively steady, and then dropped to 0.5 in 2021. This indicates that even after adjustments, the liquidity position showed significant improvement in 2020 but weakened somewhat in the following year.

Overall Analysis

The financial data reveal a generally strained liquidity position with current liabilities consistently exceeding current assets by a considerable margin up to 2019. A substantial improvement occurred in 2020, with current assets increasing and liabilities decreasing sharply, resulting in a near parity liquidity ratio. This improvement could be attributed to operational adjustments or external influences impacting the balance sheet structure. However, in 2021, both current assets decreased and current liabilities increased again, leading to a reduction in liquidity ratios and indicating a partial reversal of the previous year's gains. The adjusted metrics confirm these observations, showing that despite some recovery in 2020, the company continued to face challenges in maintaining strong short-term liquidity.

Total Debt

The total debt exhibited a consistent upward trend over the five-year period. It increased from approximately $7.54 billion at the end of 2017 to around $21.09 billion by the end of 2021, nearly tripling in size. The most significant jump occurred between 2019 and 2020, with an increase from $11.03 billion to $19.33 billion, reflecting a substantial rise likely influenced by extraordinary circumstances during that period. The upward trajectory continued into 2021, although at a slower pace.

Shareholders’ Equity

Shareholders’ equity initially showed moderate growth from $10.7 billion in 2017 to a peak of $12.16 billion in 2019. However, starting in 2020, equity dropped sharply to around $8.76 billion, followed by a further decline to approximately $5.09 billion in 2021. This marked decrease suggests significant erosion of equity capital during the latter years, potentially due to net losses or increased liabilities.

Reported Debt to Equity Ratio

The reported debt to equity ratio remained below 1.0 for the first three years, indicating a relatively balanced capital structure with debt levels below equity. This ratio increased dramatically from 0.91 in 2019 to 2.21 in 2020 and further escalated to 4.15 in 2021. Such an increase indicates a substantial rise in leverage and financial risk, reflecting the declining equity base combined with rising debt levels.

Adjusted Total Debt and Adjusted Shareholders’ Equity

The adjusted total debt figures closely mirror the reported total debt values, showing a similar upward trend, increasing from about $7.72 billion in 2017 to $21.69 billion in 2021. Adjusted shareholders’ equity shows a slight increase over the first three years, from approximately $10.7 billion to $12.75 billion, before declining sharply from 2020 onward to roughly $5.1 billion in 2021. This pattern aligns with the reported equity trend, reinforcing the observation of weakening equity.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio follows the same pattern as the reported debt to equity ratio. It remained stable under 1.0 from 2017 to 2019, rose steeply to 2.28 in 2020, and continued to climb to 4.25 in 2021. This indicates a pronounced increase in leverage when considering the adjusted figures, highlighting growing financial risk and tightened capital structure over time.

Overall Observations

The data reveals a company that significantly increased its debt load while simultaneously experiencing a sharp decline in equity during the period from 2019 to 2021. The dramatic rise in debt to equity ratios, both reported and adjusted, signals a shift toward higher leverage and potential vulnerability. The peak and subsequent decline in equity suggest financial stress or losses impacting the company's net asset base. The increasing debt burden combined with diminishing equity could imply challenges in maintaining financial stability and may necessitate closer attention to liquidity and solvency metrics moving forward.

Total Debt

The total debt shows a consistent upward trajectory from 2017 through 2021. It increased from approximately $7.54 billion in 2017 to about $21.09 billion in 2021, with a notable sharp rise in 2020 and continuing into 2021. This indicates an aggressive increase in borrowing or liabilities over the five-year period.

Total Capital

Total capital followed an overall upward trend from roughly $18.24 billion in 2017, peaking at a maximum near $28.09 billion in 2020, before decreasing somewhat to about $26.18 billion in 2021. This suggests some fluctuation in the capital base, with a significant expansion by 2020 followed by a slight contraction.

Reported Debt to Capital Ratio

This ratio increased notably from 0.41 in 2017 to 0.81 in 2021, with a particularly steep jump between 2019 and 2020. The rising ratio indicates that debt is growing at a faster pace relative to total capital, reflecting increased financial leverage and possibly higher financial risk.

Adjusted Total Debt

The adjusted total debt mirrors the pattern seen in total debt, rising from about $7.72 billion in 2017 to nearly $21.69 billion in 2021. The adjusted figures maintain consistency and confirm the substantial debt increase, especially from 2019 onwards.

Adjusted Total Capital

Adjusted total capital also increased from approximately $18.42 billion in 2017 to a peak near $28.77 billion in 2020, then declined slightly to $26.79 billion in 2021. This pattern reinforces the trend observed in reported total capital, indicating a considerable capital base expansion followed by a mild reduction.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio also escalated from 0.42 in 2017 to 0.81 in 2021. The consistent increase across reported and adjusted ratios signifies a growing reliance on debt financing relative to the total capital base, highlighting a shift towards a more leveraged capital structure.

Total Assets

The total assets show a consistent upward trend from 2017 through 2020, increasing from approximately 22.3 billion US dollars in 2017 to about 32.5 billion US dollars in 2020. However, there is a slight decrease in 2021, with total assets declining marginally to approximately 32.3 billion US dollars. This indicates a general growth in asset base over the five-year period, with a small contraction in the most recent year.

Shareholders’ Equity

Shareholders’ equity rose steadily between 2017 and 2019, growing from around 10.7 billion to 12.2 billion US dollars. In 2020, there is a marked decline to approximately 8.8 billion US dollars, followed by a further significant reduction to about 5.1 billion US dollars in 2021. This demonstrates substantial erosion in equity during the last two years.

Reported Financial Leverage

The reported financial leverage ratio increased gradually from 2.08 in 2017 to 2.49 by 2018 and remained stable at 2.49 in 2019. It then jumped sharply to 3.71 in 2020 and escalated even more drastically to 6.34 in 2021. This pattern indicates a rising dependence on debt or liabilities relative to equity particularly after 2019, reflecting increased financial risk.

Adjusted Total Assets

Adjusted total assets follow a similar trajectory to total assets, increasing steadily from about 22.5 billion in 2017 to 32.5 billion in 2020, followed by a slight decrease to approximately 32.3 billion in 2021. This consistency suggests that asset adjustments do not significantly alter the overall asset trend.

Adjusted Shareholders’ Equity

Adjusted shareholders’ equity also mirrors the reported equity trend, with growth from around 10.7 billion in 2017 to 12.7 billion in 2019, then a sharp decline to 8.8 billion in 2020 and a further drop to approximately 5.1 billion in 2021. This reinforces the observation of deteriorating equity position over the last two years.

Adjusted Financial Leverage

The adjusted financial leverage ratio remains relatively stable from 2.10 in 2017 to 2.42 in 2018 and 2.38 in 2019. It rises significantly to 3.70 in 2020 and surges to 6.33 in 2021, closely aligning with the reported leverage ratio. The increase reflects higher leverage and potential financial vulnerability following 2019.

Net Income (Loss) Attributable to Royal Caribbean Cruises Ltd.

The net income showed a positive trend from 2017 to 2019, increasing from approximately $1.63 billion to nearly $1.88 billion. This indicates consistent profitability during this period. However, there was a significant deterioration in 2020, with net losses reaching approximately $5.8 billion, followed by a slightly smaller but still substantial loss of about $5.3 billion in 2021. This sharp downturn reflects a dramatic shift in financial performance starting in 2020.

Revenues

Revenues exhibited steady growth from 2017 through 2019, rising from approximately $8.78 billion to $10.95 billion. In 2020, revenue sharply declined to roughly $2.21 billion and further decreased in 2021 to about $1.53 billion. The fall in revenues correlates closely with the period of net losses, suggesting a major impact on core business operations during these years.

Reported Net Profit Margin

The reported net profit margin was positive and relatively stable from 2017 to 2019, hovering between 17% and 19%, indicative of efficient cost management and profitability. Starting in 2020, the margin plummeted deeply into negative territory, reaching -262.47% in 2020 and further deteriorating to -343.34% in 2021. This dramatic shift highlights the severity of losses relative to revenues in the recent period.

Adjusted Net Income (Loss)

Adjusted net income followed a pattern similar to the reported net income, with positive figures from 2017 through 2019, peaking at around $2.21 billion in 2017 and stabilizing above $1.5 billion through 2019. From 2020 onward, adjusted net income also demonstrated severe losses, with figures close to -$5.7 billion in 2020 and -$5.2 billion in 2021, confirming that extraordinary items or adjustments did not mitigate the fundamental loss trends.

Adjusted Net Profit Margin

The adjusted net profit margin was strong and positive from 2017 to 2019, initially at 25.15% in 2017 and narrowing to approximately 16% in 2018 and 2019. In 2020 and 2021, this margin shifted drastically into negative values, registering -258.79% and -341.75%, respectively. This aligns with the adjusted income data and denotes substantial operational and financial challenges during these years.

Overall Trend Summary

The financial data reveals robust growth and profitability from 2017 to 2019 across all key measures, including net income, revenues, and profit margins. Beginning in 2020, there is an abrupt and substantial decline in revenues accompanied by severe net losses, both reported and adjusted, which persist into 2021. The plunging profit margins indicate a high rate of loss relative to revenue, evidencing significant adverse impacts likely driven by extraordinary external factors affecting the company’s business environment during this period.

The financial performance over the examined periods displays marked volatility, most notably in the years 2020 and 2021. The net income attributable to the company shows growth from 1,625,133 thousand US dollars in 2017 to 1,878,887 thousand US dollars in 2019, then reverses sharply into significant losses of -5,797,462 thousand US dollars and -5,260,499 thousand US dollars in 2020 and 2021, respectively.

Parallel to the net income trend, shareholders’ equity increased steadily from 10,702,303 thousand US dollars in 2017 to 12,163,846 thousand US dollars in 2019. This positive trajectory is interrupted by a decline to 8,760,669 thousand US dollars in 2020 and continues downward to 5,085,556 thousand US dollars in 2021.

The reported return on equity (ROE) mirrors the fluctuations in net income and equity. It rose modestly from 15.18% in 2017 to 16.31% in 2018, then slightly declined to 15.45% in 2019 before experiencing a dramatic fall to -66.18% in 2020 and further to -103.44% in 2021. This indicates severe profitability challenges relative to equity.

The adjusted metrics, which likely exclude certain non-recurring or extraordinary items, reflect a similar pattern. Adjusted net income was 2,207,352 thousand US dollars in 2017, decreased to 1,522,323 thousand US dollars in 2018, then increased moderately to 1,749,133 thousand US dollars in 2019. Following this period, adjusted net income shows substantial losses of -5,716,234 thousand US dollars in 2020 and -5,235,990 thousand US dollars in 2021.

Adjusted shareholders’ equity followed an increasing trend from 10,702,303 thousand US dollars in 2017 to 12,745,339 thousand US dollars in 2019, before a sizeable reduction to 8,778,340 thousand US dollars in 2020 and a further decrease to 5,099,280 thousand US dollars in 2021.

The adjusted ROE decreased from 20.63% in 2017 to 13.07% in 2018, then slightly improved to 13.72% in 2019, followed by a significant decline to -65.12% in 2020 and worsening further to -102.68% in 2021.

Key Insights:

The company demonstrated growth in both income and equity until the end of 2019, suggesting increasing profitability and capital base.

The years 2020 and 2021 are characterized by substantial losses and sharp declines in equity, indicating severe financial distress or operational challenges during these periods.

Return on equity metrics, both reported and adjusted, confirm the deterioration in profitability relative to equity, with negative returns surpassing 100% by 2021.

The alignment of adjusted figures with the reported data underscores that the negative trends are consistent even after excluding non-recurring items, suggesting fundamental issues rather than one-time events.

This overall pattern signals a critical need for financial stabilization and strategic review to address the losses and restore equity levels.

Net Income (Loss) Attributable to Royal Caribbean Cruises Ltd.

The net income shows an increasing trend from 2017 through 2019, rising from approximately $1.6 billion to nearly $1.9 billion. However, a significant decline occurs starting in 2020, with the company reporting substantial losses exceeding $5.7 billion and $5.2 billion in 2020 and 2021, respectively.

Total Assets

Total assets increased steadily over the years, growing from approximately $22.3 billion in 2017 to about $32.5 billion in 2020, with a slight decrease to $32.3 billion in 2021. Despite operational losses, the asset base expanded, suggesting continued investment or capital accumulation.

Reported Return on Assets (ROA)

The reported ROA declined gradually from 7.29% in 2017 to 6.2% in 2019, reflecting slightly diminishing asset efficiency before the pandemic. This metric then plummeted to deeply negative values, approximately -17.9% and -16.3% in 2020 and 2021, respectively, indicating severe profitability challenges during those years.

Adjusted Net Income (Loss)

Adjusted net income demonstrates a similar pattern to the reported net income but exhibits some variation in absolute values. It increased from about $2.2 billion in 2017 to $1.75 billion in 2019, then dropped substantially to losses of approximately $5.7 billion and $5.2 billion in 2020 and 2021. This pattern underscores considerable negative impacts during the latter two years, even after adjustments.

Adjusted Total Assets

Adjusted total assets follow the same increasing trend as reported assets, growing from $22.5 billion in 2017 to $32.5 billion in 2020, then slightly declining to near $32.3 billion in 2021. The steadiness between reported and adjusted asset values suggests consistency in asset valuation methodologies.

Adjusted Return on Assets (Adjusted ROA)

Adjusted ROA also trends downward, starting at a higher 9.82% in 2017, dropping to 5.77% in 2019, and turning sharply negative to -17.6% and -16.2% in 2020 and 2021, respectively. This mirrors the reported ROA trend and further confirms a significant loss of asset profitability during the pandemic years.