Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Concerning Forward-Looking Statements

The discussion under this caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding our expectations for future periods, business and industry prospects or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. Words such as "anticipate," "believe," "considering," "could," "driving," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," "would," and similar expressions are intended to further identify any of these forward-looking statements. Forward-looking statements reflect management's current expectations, but they are based on judgments and are inherently uncertain. Furthermore, they are subject to risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q and, in particular, the risks discussed under the caption "Risk Factors" in Part II, Item 1A herein.

All forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date of this filing. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

The discussion and analysis of our financial condition and results of operations is organized to present the following:

• 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, 2023, compared to the same period in 2022; and

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

Critical Accounting Policies and Estimates

For a discussion of our critical accounting policies and estimates, refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report on Form 10-K for the year ended December 31, 2022.

Seasonality

Our revenues are seasonal based on demand for cruises. Demand has historically been strongest for cruises during the Northern Hemisphere’s summer months and holidays. In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have historically focused on deployment to the Caribbean, Asia and Australia during that period.

Financial Presentation

Description of Certain Line Items

Revenues

Our revenues are comprised of the following:

• Passenger ticket revenues, which consist of revenue recognized from the sale of passenger tickets and the sale of air transportation to and from our ships; and

• Onboard and other revenues, which consist primarily of revenues from the sale of goods and/or services onboard our ships not included in passenger ticket prices, casino operations, cancellation fees, sales of vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Onboard and other revenues also include revenues we receive from independent third-party concessionaires that pay us a percentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships, as well as revenues received for procurement and management related services we perform on behalf of our unconsolidated affiliates.

Cruise Operating Expenses

Our cruise operating expenses are comprised of the following:

• Commissions, transportation and other expenses, which consist of those costs directly associated with passenger ticket revenues, including travel advisor commissions, air and other transportation expenses, port costs that vary with passenger head counts and related credit card fees;

• Onboard and other expenses, which consist of the direct costs associated with onboard and other revenues, including the costs of products sold onboard our ships, vacation protection insurance premiums, costs associated with pre- and post-cruise tours and related credit card fees, as well as the minimal costs associated with concession revenues, as the costs are mostly incurred by third-party concessionaires, and costs incurred for the procurement and management related services we perform on behalf of our unconsolidated affiliates;

• Payroll and related expenses, which consist of costs for shipboard personnel (costs associated with our shoreside personnel are included in Marketing, selling and administrative expenses);

*•*Food expenses, which include food costs for both guests and crew;

*•*Fuel expenses, which include fuel and related delivery, storage and emission consumable costs and the financial impact of fuel swap agreements; and

• Other operating expenses, which consist primarily of operating costs such as repairs and maintenance, port costs that do not vary with passenger head counts, vessel related insurance, entertainment and gains and/or losses related to the sale of our ships, if any.

We do not allocate payroll and related expenses, food expenses, fuel expenses or other operating expenses to the expense categories attributable to passenger ticket revenues or onboard and other revenues since they are incurred to provide the total cruise vacation experience.

Selected Operational and Financial Metrics

We utilize a variety of operational and financial metrics which are defined below to evaluate our performance and financial condition. As discussed in more detail herein, certain of these metrics are non-GAAP financial measures. These non-GAAP financial measures are provided along with the related GAAP financial measures as we believe they provide useful information to investors as a supplement to our consolidated financial statements, which are prepared and presented in accordance with GAAP. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Adjusted EBITDA is a non-GAAP measure that represents EBITDA (as defined below) excluding certain items that we believe adjusting for is meaningful when assessing our profitability on a comparative basis. For the 2023 and 2022 periods, these items included (i) other income (expense); (ii) gain on sale of controlling interest; (iii) impairment and credit losses (recoveries); and (iv) restructuring charges and other initiative expenses. A reconciliation of Net Loss to Adjusted EBITDA is provided below under Results of Operations.

Adjusted Loss per Share ("Adjusted EPS") is a non-GAAP measure that represents Adjusted Net Loss (as defined below) divided by weighted average shares outstanding or by diluted weighted average shares outstanding, as applicable. We believe that this non-GAAP measure is meaningful when assessing our performance on a comparative basis. A reconciliation of Loss per Share to Adjusted Loss per share is provided below under Results of Operations.

Adjusted Net Loss is a non-GAAP measure that represents Net Loss excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis. For the periods presented, these items included (i) loss on the extinguishment of debt; (ii) gain on sale of controlling interest; (iii) tax on the sale of PortMiami noncontrolling interest; (iv) Silver Whisper deferred tax liability release; (v) impairment and credit losses (recoveries); (vi) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018; and (vii) restructuring charges and other initiative expenses. A reconciliation of Net Loss to Adjusted Net Loss is provided below under Results of Operations.

Available Passenger Cruise Days (“APCD”) is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period, which excludes canceled cruise days and cabins not available for sale. We use this measure to perform capacity and rate analysis to identify our main non-capacity drivers that cause our cruise revenue and expenses to vary.

EBITDA is a non-GAAP measure that represents Net Loss excluding (i) interest income; (ii) interest expense, net of interest capitalized; (iii) depreciation and amortization expenses; and (iv) income tax benefit or expense. We believe that this non-GAAP measure is meaningful when assessing our operating performance on a comparative basis. A reconciliation of Net Loss to EBITDA is provided below under Results of Operations.

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.

Net Cruise Costs and Net C**ruise Costs Excluding Fuel are non-GAAP measures that represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses and, in the case of Net Cruise Costs Excluding Fuel, fuel expenses (each of which is described above under the Description of Certain Line Items heading). In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs and Net Cruise Costs Excluding Fuel to be the most relevant indicators of our performance. A reconciliation of Gross Cruise Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of Operations. For the periods presented, Net Cruise Costs and Net Cruise Costs Excluding Fuel excludes (i) the gain on sale of controlling interest; (ii) impairment and credit losses (recoveries); and (iii) restructuring and other initiative expenses.

Gross Margin Yield represent Gross Margin per APCD.

Adjusted Gross Margin represent Gross Margin, adjusted for payroll and related, fuel, food, other operating expenses, and depreciation and amortization. Gross Margin is calculated pursuant to GAAP as total revenues less total cruise operating expenses, and depreciation and amortization.

Net Yields represent Adjusted Gross Margin per APCD. We utilize Adjusted Gross Margin and Net Yields to manage our business on a day-to-day basis as we believe that they are the most relevant measures of our pricing performance because they reflect the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses, and onboard and other expenses.

Occupancy ("Load Factor"), in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days (as defined below) by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

A significant portion of our revenue and expenses are denominated in currencies other than the United States dollar. Because our reporting currency is the United States dollar, the value of these revenues and expenses can be affected by changes in currency exchange rates. Although such changes in local currency prices are just one of many elements impacting our revenues and expenses, they can be an important element. For this reason, we also monitor Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel as if the current period's currency exchange rates had remained constant with the comparable prior period's rates, or on a "Constant Currency" basis.

It should be emphasized that Constant Currency is primarily used for comparing short-term changes and/or projections. Changes in guest sourcing and shifting the amount of purchases between currencies can change the impact of the purely currency-based fluctuations.

The use of certain significant non-GAAP measures, such as Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel, allows us to perform capacity and rate analysis to separate the impact of known capacity changes from other less predictable changes which affect our business. We believe these non-GAAP measures provide expanded insight to measure revenue and cost performance in addition to the standard GAAP based financial measures. There are no specific rules or regulations for determining non-GAAP and Constant Currency measures, and as such, they may not be comparable to other companies within the industry.

We have not provided a quantitative reconciliation of projected non-GAAP financial measures to the most comparable GAAP financial measures because preparation of meaningful U.S.GAAP projections would require unreasonable effort. Due to significant uncertainty, we are unable to predict, without unreasonable effort, the future movement of foreign exchange rates, fuel prices and interest rates inclusive of our related hedging programs. In addition, we are unable to determine the future impact of non-core business related gains and losses which may result from strategic initiatives. These items are uncertain and could be material to our results of operations in accordance with U.S GAAP. Due to this uncertainty, we do not believe that reconciling information for such projected figures would be meaningful.

Results of Operations

Summary

Net loss and Adjusted Net loss for the first quarter of 2023 was $47.9 million and $58.9 million, or $(0.19) and $(0.23) per share on a diluted basis, respectively, reflecting our return to full operations, compared to Net Loss and Adjusted Net Loss of $(1.17) billion and $(1.16) billion, or $(4.58) and (4.57) per share on a diluted basis, respectively, for the first quarter of 2022.

Significant items for the quarter ended March 31, 2023 include:

• Total revenues, excluding the effect of changes in foreign currency exchange rates, increased $1.9 billion, respectively, for the quarter ended March 31, 2023 as compared to the same period in 2022. The increase reflects our return to full operations in 2023, compared to a partial return to operations during the same period in 2022. APCD for the first quarter ended March 31, 2023 was 11,233,489, compared to 7,692,906 in the same period in 2022.

• Total cruise operating expenses, excluding the effect of changes in foreign currency exchange rates, increased $0.6 billion , for the quarter ended March 31, 2023 as compared to the same period in 2022. The increase reflects our return to full operations in 2023, compared to a partial return to operations during the same period in 2022.

• In January 2023, we amended and extended the majority of our two unsecured revolving credit facilities. The amendment has extended the maturities of $2.3 billion of the $3.0 billion aggregate revolving capacity by one year to April 2025, with the remainder maturing in April 2024. Additionally, during the quarter ended March 31, 2023, we repaid $2.4 billion under our revolving credit facilities, resulting in an aggregate borrowing capacity of $2.6 billion under the facilities as of March 31, 2023.

• In February 2023, we issued $700 million aggregate principal amount of 7.25% Priority Guaranteed Notes. Upon closing, we terminated our commitment for the $700 million 364-day term loan facility. In addition, the remaining $350 million backstop committed financing was also terminated upon closing.

• Effective March 31, 2023, we closed on the previously announced partnership with iCON. As part of the transaction, we sold 80% of PortMiami for $208.9 million and retained a 20% minority interest. The partnership will own, develop,

and manage cruise terminal facilities and infrastructure in key ports of call, initially including several development projects in Italy, Spain, and the U.S. Virgin Islands. Refer to Note 5*. Investments and Other Assets* in our consolidated financial statements for further information on the transaction.

For further information regarding the debt transactions discussed above, refer to Note 6*. Debt* to our consolidated financial statements.

Operating results for the quarter ended March 31, 2023 compared to the same period in 2022 are shown in the following table (in thousands, except per share data):

			Quarter Ended March 31,
			2023												2022
									% of Total Revenues												% of Total Revenues
Passenger ticket revenues			$	1,896,516					65.7		%				$	651,858					61.5		%
Onboard and other revenues			988,630						34.3		%				407,373						38.5		%
Total revenues			2,885,146						100.0		%				1,059,231						100.0		%
Cruise operating expenses:
Commissions, transportation and other			402,930						14.0		%				150,343						14.2		%
Onboard and other			158,635						5.5		%				74,439						7.0		%
Payroll and related			309,998						10.7		%				349,618						33.0		%
Food			199,391						6.9		%				100,184						9.5		%
Fuel			301,513						10.5		%				188,480						17.8		%
Other operating			420,438						14.6		%				321,878						30.4		%
Total cruise operating expenses			1,792,905						62.1		%				1,184,942						111.9		%
Marketing, selling and administrative expenses			460,855						16.0		%				394,030						37.2		%
Depreciation and amortization expenses			359,773						12.5		%				339,467						32.0		%
Operating Income (Loss)			271,613						9.4		%				(859,208)						(81.1)		%
Other (expense) income:
Interest income			14,808						0.5		%				3,322						0.3		%
Interest expense, net of interest capitalized			(359,387)						(12.5)		%				(277,659)						(26.2)		%
Equity investment income (loss)			20,471						0.7		%				(31,059)						(2.9)		%
Other income (expense)			4,585						0.2		%				(2,538)						(0.2)		%
			(319,523)						(11.1)		%				(307,934)						(29.1)		%
Net Loss			$	(47,910)					(1.7)		%				$	(1,167,142)					(110.2)		%
Diluted Loss per Share			$	(0.19)											$	(4.58)

Adjusted Net Loss and Adjusted Loss per Share were calculated as follows (in thousands, except per share data):

			Quarter Ended March 31,
			2023						2022
Net Loss			$	(47,910)					$	(1,167,142)
Loss on extinguishment of debt			13,289						—
Gain on sale of controlling interest (1)			(3,130)						—
PortMiami tax on sale of noncontrolling interest (2)			10,020						—
Silver Whisper deferred tax liability release (3)			(25,784)						—
Impairment and credit losses (recoveries) (4)			(6,990)						173
Amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition (5)			1,623						1,623
Restructuring charges and other initiative expenses			—						973
Adjusted Net Loss			$	(58,882)					$	(1,164,373)
Basic:
Loss per Share			$	(0.19)					$	(4.58)
Adjusted Loss per Share			$	(0.23)					$	(4.57)
Diluted:
Loss per Share			$	(0.19)					$	(4.58)
Adjusted Loss per Share			$	(0.23)					$	(4.57)
Weighted-Average Shares Outstanding:
Basic			255,465						254,821
Diluted			255,465						254,821

(1)Represents gain on sale of controlling interest in cruise terminal facilities in Italy. Included in Other operating within our consolidated statements of comprehensive loss.

(2)Represents tax on the PortMiami sale of noncontrolling interest. These amounts are included in Other income (expense) in our consolidated statements of comprehensive loss. Refer to Note 5*. Investments and Other Assets* to our consolidated financial statements for further information on the transaction.

(3)Represents the release of the deferred tax liability subsequent to the execution of the bargain purchase option for the Silver Whisper. These amounts are included in Other income (expense) within our consolidated statements of comprehensive loss*.*

(4)Represents asset impairments and credit loss recoveries for notes receivables for which credit losses were previously recorded. These amounts are included in Other operating within our consolidated statements of comprehensive loss.

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

Selected statistical information is shown in the following table:

			Quarter Ended March 31,
			2023						2022
Passengers Carried			1,806,270						734,809
Passenger Cruise Days			11,474,742						4,418,899
APCD			11,233,489						7,692,906
Occupancy			102.1		%				57.4		%

EBITDA and Adjusted EBITDA were calculated as follows (in thousands):

						Quarter Ended March 31,
						2023						2022
Net Loss						$	(47,910)					$	(1,167,142)
Interest income						(14,808)						(3,322)
Interest expense, net of interest capitalized						359,387						277,659
Depreciation and amortization expenses						359,773						339,467
Income tax (benefit) expense (1)						(8,343)						6,578
EBITDA						648,099						(546,760)
Other expense (income) (2)						3,758						(4,040)
Gain on sale of controlling interest (3)						(3,130)						—
Impairment and credit losses (recoveries) (4)						(6,990)						173
Restructuring charges and other initiative expenses						—						973
Adjusted EBITDA						$	641,737					$	(549,654)

(1) Included in Other income (expense) within our consolidated statements of comprehensive loss.

(2) Represents net non-operating income or expense. For the periods reported, primarily relates to gains or losses arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies. The amount excludes income tax (benefit) expense, included in the EBITDA calculation above.

(3) Represents gain on sale of controlling interest in cruise terminal facilities in Italy. Included in Other operating within our consolidated statements of comprehensive loss.

(4) Represents asset impairments and credit loss recoveries for notes receivables for which credit losses were previously recorded. These amounts are included in Other operating within our consolidated statements of comprehensive loss.

Gross Margin Yields and Net Yields were calculated by dividing Gross Margin and Adjusted Gross Margin by APCD as follows (in thousands, except APCD and Yields):

			Quarter Ended March 31,
			2023						2022
Total revenue			$	2,885,146					$	1,059,231
Less:
Cruise operating expenses			1,792,905						1,184,942
Depreciation and amortization expenses			359,773						339,467
Gross Margin			732,468						(465,178)
Add:
Payroll and related			309,998						349,618
Food			199,391						100,184
Fuel			301,513						188,480
Other operating			420,438						321,878
Depreciation and amortization expenses			359,773						339,467
Adjusted Gross Margin			$	2,323,581					$	834,449
APCD			11,233,489						7,692,906
Gross Margin Yields			$	65.20					$	(60.47)
Net Yields			$	206.84					$	108.47

`

Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD):

			Quarter Ended March 31,
			2023						2022
Total cruise operating expenses			$	1,792,905					$	1,184,942
Marketing, selling and administrative expenses			460,855						394,030
Gross Cruise Costs			2,253,760						1,578,972
Less:
Commissions, transportation and other			402,930						150,343
Onboard and other			158,635						74,439
Net Cruise Costs Including Other Costs			1,692,195						1,354,190
Less:
Gain on sale of controlling interest (1)			(3,130)						—
Impairment and credit recoveries (2)			(6,990)						173
Restructuring charges and other initiative expenses (3)			—						973
Net Cruise Costs			1,702,315						1,353,044
Less:
Fuel			301,513						188,480
Net Cruise Costs Excluding Fuel			$	1,400,802					$	1,164,564
APCD			11,233,489						7,692,906
Gross Cruise Costs per APCD			$	200.63					$	205.25
Net Cruise Costs per APCD			$	151.54					$	175.88
Net Cruise Costs Excluding Fuel per APCD			$	124.70					$	151.38

(1) Represents gain on sale of controlling interest in cruise terminal facilities in Italy. Included in Other operating within our consolidated statements of comprehensive loss

(2) Represents asset impairments and credit losses recoveries for notes receivables for which credit losses were previously recorded. Included in Other operating within our consolidated statements of comprehensive loss.

(3) Included in Marketing, selling and administrative expenses within our consolidated statements of comprehensive loss.

Quarter Ended March 31, 2023 Compared to Quarter Ended March 31, 2022

In this section, references to 2023 refer to the quarter ended March 31, 2023 and references to 2022 refer to the quarter ended March 31, 2022.

Revenues

Total revenues for 2023 increased $1.8 billion to $2.9 billion from $1.1 billion in 2022.

Passenger ticket revenues comprised 65.7% of our 2023 total revenues. Passenger ticket revenues for 2023 increased by $1.2 billion, or 190.9% to $1.9 billion from $0.7 billion in 2022.

The remaining 34.3% of 2023 total revenues was comprised of Onboard and other revenues, which increased $0.6 billion, or 142.7% to $1.0 billion in 2023 from $407.4 million in 2022.

The increase in revenues reflects our return to full operations in 2023, compared to a partial return to operations during the same period in 2022. Occupancy in 2023 was 102.1% compared to 57.4% in 2022.

Onboard and other revenues included concession revenues of $104.0 million in 2023 and $48.4 million in 2022.

Cruise Operating Expenses

Total Cruise operating expenses for 2023 increased $0.6 billion to $1.8 billion from $1.2 billion in 2022. The increase was primarily due to:

• a $252.6 million increase in Commissions, transportation and other expenses;

•a $113.0 million increase in Fuel expense;

*•*a $99.2 million increase in Food expense;

• a $98.6 million increase in Other operating expenses; and

*•*a $84.2 million increase in Onboard and other expenses.

The increase in operating expenses noted above reflects our return to full operations in 2023, compared to a partial return to operations during the same period in 2022. Additionally, high inflation has impacted our operating costs, especially in fuel and food expense. Our cost of fuel (net of the financial impact of fuel swap agreements) for 2023 increased 25% per metric ton compared to 2022 mainly due to the increase in fuel price.

Marketing, Sellin**g and Administrative Expenses

Marketing, selling and administrative expenses for 2023 increased $66.8 million, or 17.0%, to $460.9 million from $394.0 million in 2022. The increase reflects our return to full operations in 2023, compared to a partial return to operations during the same period in 2022. Additionally, the 2022 expenses reflect the ramp up of our global sales and marketing efforts to return to full operations in 2022.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2023 increased $20.3 million, or 6.0%, to $359.8 million from $339.5 million in 2022. The increase was primarily due to depreciation expenses for Celebrity Beyond and Silver Endeavour ships*,* which were not part of our fleet during the same period in 2022.

Other (Expense) Income

Interest expense, net of interest capitalized for 2023 increased $81.7 million, or 29.4%, to $359.4 million from $277.7 million in 2022. The increase was primarily due to refinancing transactions after the first quarter of 2022, as well as the impact of higher rates on floating-rate debt.

Equity investment income for 2023 was $20.5 million compared to Equity investment loss of $31.1 million in 2022. The increase in income was primarily due to income from TUI Cruises, one of our equity investments, in 2022 compared to losses in 2022.

Other Comprehensive (Loss) Income

Other comprehensive (loss) was $(34.7) million in 2023 compared to Other comprehensive income of $216.3 million in 2022. The decrease of $251.0 million, or 116.1% was primarily due to Losses on cash flow derivative hedges in 2023 of $31.7 million compared to a Gain on cash flow derivative hedges in 2022 of $195.9 million, mostly as a result of a significant decrease in fair value of our fuel swaps in 2023 compared to 2022.

Future Application of Accounting Standards

Refer to Note 2*. Summary of Significant Accounting Policies* to our consolidated financial statements.

Liquidity and Capital Resources

Sources and Uses of Cash

Net cash provided by (used in) operating activities increased $1.8 billion to cash provided by of $1.3 billion for the three months ended March 31, 2023 compared to cash used of $0.5 billion for the same period in 2022. The increase was primarily attributable to our return to full operations in 2023, compared to a partial return to operations during the same period in 2022, and an increase in proceeds from customer deposits in 2023 compared to the same period in 2022.

Net cash used in investing activities decreased $1.2 billion to cash used of $234.1 million for the three months ended March 31, 2023, compared to cash used of $1.4 billion for the same period in 2022. The decrease was primarily attributable to a decrease in capital expenditures of $1.1 billion during 2023, compared to the same period in 2022, due to the delivery of Wonder of the Seas in 2022 compared to no ship deliveries during the same period in 2023.

Net cash used in financing activities was $1.8 billion for the three months ended March 31, 2023, compared to cash provided by financing activities of $1.2 billion for the same period in 2022. The change of $3.0 billion was primarily attributable to a decrease of $1.6 billion in debt proceeds in 2023 compared to the same period in 2022, and an increase in repayments of debt of $1.7 billion in 2023 compared to the same period in 2022. The change is partially offset by proceeds received of $209.3 million for the sale of noncontrolling interest of PortMiami during the quarter ended March 31, 2023.

Future Capital Commitments

Capital Expenditures

Our future capital commitments consist primarily of new ship orders. As of March 31, 2023, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship			Shipyard			Expected delivery						Approximate Berths
Royal Caribbean International —
Oasis-class:
Utopia of the Seas			Chantiers de l'Atlantique			2nd Quarter 2024						5,700
Icon-class:
Icon of the Seas			Meyer Turku Oy			4th Quarter 2023						5,600
Unnamed			Meyer Turku Oy			2nd Quarter 2025						5,600
Unnamed			Meyer Turku Oy			2nd Quarter 2026						5,600
Celebrity Cruises —
Edge-class:
Celebrity Ascent			Chantiers de l'Atlantique			4th Quarter 2023						3,250
Silversea Cruises
Evolution Class:
Silver Nova			Meyer Werft			2nd Quarter 2023						730
Silver Ray			Meyer Werft			2nd Quarter 2024						730
TUI Cruises (50% joint venture) —
Mein Schiff 7			Meyer Turku Oy			2nd Quarter 2024						2,900
Unnamed			Fincantieri			4th Quarter 2024						4,100
Unnamed			Fincantieri			2nd Quarter 2026						4,100
Total Berths												38,310

In addition, as of March 31, 2023, we have an agreement in place with Chantiers de l’Atlantique to build an additional Edge-class ship with capacity of approximately 3,250 berths, estimated for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

Our future capital commitments consist primarily of new ship orders. As of March 31, 2023, the aggregate expected cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $10.2 billion, of which we had deposited $0.9 billion. Approximately 49.2% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2023. Refer to Note 8. Commitments and Contingencies and Note 11*. Fair Value Measurements and Derivative Instruments* to our consolidated financial statement*.*

As of March 31, 2023, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $4.2 billion for 2023. This amount does not include any ships on order by our Partner Brands.

Material Cash Requirements

As of March 31, 2023, our material cash requirements were as follows (in thousands):

			Remainder of
			2023						2024						2025						2026						2027						Thereafter						Total
Operating Activities:
Interest on debt(1)			$	849,009					$	1,202,768					$	1,089,901					$	833,427					$	700,903					$	1,237,058					$	5,913,066
Other(2)			121,999						129,961						123,002						121,241						118,424						859,471						1,474,098
Investing Activities:
Ship purchase obligations(3)			2,701,378						1,894,327						1,329,279						1,259,517						—						—						7,184,501
Total			$	3,672,386					$	3,227,056					$	2,542,182					$	2,214,185					$	819,327					$	2,096,529					$	14,571,665

(1) Long-term debt obligations mature at various dates through fiscal year 2037 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, 2023. Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2023.

(2) 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.

(3) Amounts are based on contractual installment and delivery dates for our ships on order. Included in these figures are $5.8 billion in final contractual installments, which have committed financing covering 80% of the cost of the ships on order for our Global Brands, almost all of which include sovereign financing guarantees. Amounts do not include potential obligations which remain subject to cancellation at our sole discretion or any agreements entered for ships on order that remain contingent upon completion of conditions precedent.

Refer to Note 6*. Debt* for maturities related to debt.

Refer to Note 7*. Leases* for maturities related to lease liabilities.

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

As a normal part of our business, depending on market conditions, pricing and our overall growth strategy, we continuously consider opportunities to enter into contracts for the building of additional ships. We may also consider the sale of ships or the purchase of existing ships. We continuously consider potential acquisitions and strategic alliances. If any of these were to occur, they would be financed through the incurrence of additional indebtedness, the issuance of additional shares of equity securities or through cash flows from operations.

Off-Balance Sheet Arrangements

Refer to Note 5*. Investments and Other Assets* for ownership restrictions related to TUI Cruises.

Refer to Note 3*. Revenues* for credit card processor agreements for export credit agency guarantees.

Refer to Note 8*. Commitments and Contingencies* for other agreements.

As of March 31, 2023, other than the items referenced 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

Historically, we have 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 a result of the global pandemic impact of COVID-19, we paused our guest cruise operations in March 2020 and began resuming guest cruise operations in 2021, with our full fleet in service by June 2022.

The Company continually identifies and evaluates actions to maintain adequate liquidity. These include, and are not limited to: further reductions in capital expenditures, operating expenses and administrative costs and additional financings. Additionally, we will continue to pursue various opportunities to raise capital to fund obligations associated with future debt maturities and/or to extend the maturity dates associated with our existing indebtedness or facilities. If needed, actions to raise capital may include issuances of debt, convertible debt or equity in private or public transactions or entering into new or extended credit facilities.

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, 2023, we had $7.8 billion of committed financing for our ships on order.

As of March 31, 2023, our obligations due through March 31, 2024 primarily consisted of $2.1 billion related to debt maturities, $1.3 billion related to interest on debt and $2.7 billion related to progress payments on our ship orders and, based on the expected delivery date, the final installment payable due upon the delivery of Silver Nova, Icon of the Seas, and Celebrity Ascent.

As of March 31, 2023, we had liquidity of $3.9 billion, including cash and cash equivalents of $1.2 billion, and $2.6 billion of undrawn revolving credit facility capacity. Our revolving credit facilities were partially utilized through a combination of amounts drawn and letters of credit issued under the facilities as of March 31, 2023. We have agreed with certain of our lenders not to pay dividends or engage in stock repurchases unless we repay the remaining principal payments that were deferred under our export credit facilities in 2020 and 2021. Refer to Note 6*. Debt and* Note 9*. Shareholders' Equity* to our consolidated financial statements for further information.

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 of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms. Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50% of our common stock coupled with a ratings downgrade. If this were to occur, it would have an adverse impact on our liquidity and operations.

Based on our assumptions and estimates and our financial condition, we believe that we have sufficient financial resources to fund our obligations for at least the next twelve months from the issuance of these financial statements. However, there is no assurance that our assumptions and estimates are accurate as there is inherent uncertainty in our ability to predict future liquidity requirements. Refer to Note 1*. General,* to our consolidated financial statements under Part I. Item 1. Financial Statements for further information.

Debt Covenants

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, limit our net debt-to-capital ratio, and maintain a minimum liquidity, and under certain facilities, to maintain a minimum level of shareholders' equity. Our minimum stockholders' equity and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total shareholders’ equity. In 2021 and 2022, the financial covenant levels were modified for 2023 and 2024. As of March 31, 2023, we were in compliance with our financial covenants and we estimate that we will be in compliance for at least the next twelve months.

Dividends

The declaration of dividends shall at all times be subject to the final determination of our board of directors that a dividend is prudent at that time in consideration of the needs of the business. In the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities. Accordingly, we have not declared a dividend since the first quarter of 2020.