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 and nine months ended September 30, 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 expense (income); (ii) gain on sale of controlling interest; (iii) impairment and credit losses (recoveries); (iv) restructuring charges and other initiative expenses; and (v) equity investments impairment and recovery of losses. A reconciliation of Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. to Adjusted EBITDA is provided below under Results of Operations.

Adjusted Earnings (Loss) per Share ("Adjusted EPS") is a non-GAAP measure that represents Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. (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 Earnings (Loss) per Share to Adjusted Earnings (Loss) per share is provided below under Results of Operations.

Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. is a non-GAAP measure that represents Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. 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 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; (vii) restructuring charges and other initiative expenses; and (viii) equity investments impairment and recovery of losses. A reconciliation of Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. to Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. 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 Income (Loss) attributable to Royal Caribbean Cruises Ltd. 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 Income (Loss) attributable to Royal Caribbean Cruises Ltd. 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, food, fuel, 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.

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 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 Income attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd. for the third quarter of 2023 was $1.0 billion and $1.1 billion, compared to Net Income and Adjusted Net Income of $33.0 million and $65.8 million, respectively, for the third quarter of 2022.

Net Income attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd. for the nine months ended September 30, 2023 was $1.4 billion and $1.5 billion, compared to Net Loss and Adjusted Net Loss of $1.7 billion and $1.6 billion, respectively, for the nine months ended September 30, 2022.

Significant items for the quarter and nine months ended September 30, 2023 include:

• Total revenues, increased $1.2 billion and $4.3 billion, respectively, for the quarter and nine months ended September 30, 2023 as compared to the same period in 2022. The increase is primarily driven by a 13.9% and 30.2% higher occupancy for the quarter and nine months ended September 30, 2023, respectively, as well as an increase in capacity, and ticket prices in 2023, compared to same periods in 2022.

• Total cruise operating expenses, increased $170.4 million and $1.1 billion, respectively, for the quarter and nine months ended September 30, 2023 as compared to the same period in 2022. The increase reflects our operations in 2023 at higher capacity and occupancy, compared to the same period in 2022.

• In January 2023, we amended and extended the majority of our two unsecured revolving credit facilities. The amendment 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.

• In February 2023, we issued $0.7 billion aggregate principal amount of 7.25% Priority Guaranteed Notes. Upon closing, we terminated our commitment for the $0.7 billion 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 to the partnership 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.

• In June 2023, we took delivery of Silver Nova.

*•*In June 2023, our 4.25% Convertible Senior Notes with an outstanding balance of $350 million were settled using a combination of $337.8 million in cash, and the issuance of approximately 374,000 shares of common stock. The issuance of equity increased additional paid-in capital by $12.2 million.

• During the nine months ended September 30, 2023, we repaid $0.9 billion of our 11.50% secured senior notes due in June 2025.

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

Operating results for the quarter and nine months ended September 30, 2023 compared to the same period in 2022 are shown in the following table (in thousands, except per share data):

			Quarter Ended September 30,
			2023												2022
									% of Total Revenues												% of Total Revenues
Passenger ticket revenues			$	2,941,481					70.7		%				$	2,020,974					67.5		%
Onboard and other revenues			1,218,972						29.3		%				972,101						32.5		%
Total revenues			4,160,453						100.0		%				2,993,075						100.0		%
Cruise operating expenses:
Commissions, transportation and other			632,075						15.2		%				484,054						16.2		%
Onboard and other			261,225						6.3		%				220,216						7.4		%
Payroll and related			293,629						7.1		%				304,369						10.2		%
Food			211,709						5.1		%				194,966						6.5		%
Fuel			272,408						6.5		%				316,214						10.6		%
Other operating			465,814						11.2		%				446,630						14.9		%
Total cruise operating expenses			2,136,860						51.4		%				1,966,449						65.7		%
Marketing, selling and administrative expenses			393,016						9.4		%				373,116						12.5		%
Depreciation and amortization expenses			365,473						8.8		%				355,085						11.9		%
Operating Income			1,265,104						30.4		%				298,425						10.0		%
Other income (expense):
Interest income			7,472						0.2		%				11,953						0.4		%
Interest expense, net of interest capitalized			(340,620)						(8.2)		%				(352,187)						(11.8)		%
Equity investment income			86,627						2.1		%				73,997						2.5		%
Other (expense) income			(7,905)						(0.2)		%				780						—		%
			(254,426)						(6.1)		%				(265,457)						(8.9)		%
Net Income			1,010,678						24.3		%				32,968						1.1		%
Less: Net Income attributable to noncontrolling interest			1,602						—		%				—						—		%
Net Income attributable to Royal Caribbean Cruises Ltd.			$	1,009,076					24.3		%				$	32,968					1.1		%
Diluted Earnings (Loss) per Share			$	3.65											$	0.13

			Nine Months Ended September 30,
			2023												2022
									% of Total Revenues												% of Total Revenues
Passenger ticket revenues			$	7,281,503					68.9		%				$	4,091,035					65.6		%
Onboard and other revenues			3,287,078						31.1		%				2,145,513						34.4		%
Total revenues			10,568,581						100.0		%				6,236,548						100.0		%
Cruise operating expenses:
Commissions, transportation and other			1,551,012						14.7		%				964,256						15.5		%
Onboard and other			640,175						6.1		%				450,225						7.2		%
Payroll and related			887,999						8.4		%				981,128						15.7		%
Food			613,795						5.8		%				450,376						7.2		%
Fuel			849,839						8.0		%				779,873						12.5		%
Other operating			1,341,821						12.7		%				1,205,452						19.3		%
Total cruise operating expenses			5,884,641						55.7		%				4,831,310						77.5		%
Marketing, selling and administrative expenses			1,288,719						12.2		%				1,138,571						18.3		%
Depreciation and amortization expenses			1,086,923						10.3		%				1,046,094						16.8		%
Operating Income (Loss)			2,308,298						21.8		%				(779,427)						(12.5)		%
Other income (expense):
Interest income			31,863						0.3		%				21,765						0.3		%
Interest expense, net of interest capitalized			(1,055,519)						(10.0)		%				(932,552)						(15.0)		%
Equity investment income			149,112						1.4		%				29,759						0.5		%
Other (expense) income			(8,676)						(0.1)		%				4,699						0.1		%
			(883,220)						(8.4)		%				(876,329)						(14.1)		%
Net Income (Loss)			1,425,078						13.5		%				(1,655,756)						(26.5)		%
Less: Net Income attributable to noncontrolling interest			5,151						—		%				—						—		%
Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.			$	1,419,927					13.4		%				$	(1,655,756)					(26.5)		%
Diluted Earnings (Loss) per Share			$	5.24											$	(6.49)

Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd, were calculated as follows (in thousands, except per share data):

			Quarter Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.			$	1,009,076					$	32,968					$	1,419,927					$	(1,655,756)
Loss on extinguishment of debt			37,923						16,449						81,441						16,449
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)			—						10,186						(6,990)						(584)
Amortization of Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition (5)			1,623						1,623						4,869						4,870
Restructuring charges and other initiative expenses			—						4,573						5,288						6,448
Equity investments impairment and recovery of losses (6)			16,672						—						12,444						—
Adjusted Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.			$	1,065,294					$	65,799					$	1,498,085					$	(1,628,573)
Basic:
Earnings (Loss) per Share			$	3.94					$	0.13					$	5.55					$	(6.49)
Adjusted Earnings (Loss) per Share			$	4.16					$	0.26					$	5.86					$	(6.39)
Diluted:
Earnings (Loss) per Share (7)			$	3.65					$	0.13					$	5.24					$	(6.49)
Adjusted Earnings (Loss) per Share (7)			$	3.85					$	0.26					$	5.52					$	(6.39)
Weighted-Average Shares Outstanding:
Basic			256,188						255,071						255,822						254,953
Diluted			281,876						255,378						283,847						254,953

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

(2)Represents tax on the PortMiami sale of noncontrolling interest. These amounts are included in Other (expense) income in our consolidated statements of comprehensive income (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 (expense) income within our consolidated statements of comprehensive income (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 income (loss).

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

(6)For the quarter and nine months ended September 30, 2023, represents equity method impairments of $12.6 million and recognition of deferred currency translation adjustment losses of $4.0 million. These amounts are included in Equity investment income and Other (expense) income within our consolidated statements of comprehensive income (loss), respectively. Additionally, the nine months ended September 30, 2023, includes a $4.2 million recovery of losses from one of our equity method investees recognized during the second quarter of 2023. This amount is included in Equity investment income within our consolidated statements of comprehensive income (loss).

(7)Diluted EPS and Adjusted Diluted EPS includes the add-back of dilutive interest expense related to our convertible notes of $20.3 million and $67.6 million for the quarter and nine months ended September 30, 2023, respectively. Refer to Note 4*. Earnings (Loss) Per Share* to our consolidated financial statements for further information.

Selected statistical information is shown in the following table:

			Quarter Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Passengers Carried			1,999,764						1,714,774						5,706,843						3,790,205
Passenger Cruise Days			13,172,002						11,136,331						36,944,034						23,998,975
APCD			12,011,593						11,564,662						34,953,919						29,553,564
Occupancy			109.7		%				96.3		%				105.7		%				81.2		%

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

						Quarter Ended September 30,												Nine Months Ended September 30,
						2023						2022						2023						2022
Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.						$	1,009,076					$	32,968					$	1,419,927					$	(1,655,756)
Interest income						(7,472)						(11,953)						(31,863)						(21,765)
Interest expense, net of interest capitalized						340,620						352,187						1,055,519						932,552
Depreciation and amortization expenses						365,473						355,085						1,086,923						1,046,094
Income tax expense (benefit) (1)						6,876						(38)						6,339						4,515
EBITDA						1,714,573						728,249						3,536,845						305,640
Other expense (income) (2)						1,029						(742)						2,337						(9,214)
Gain on sale of controlling interest (3)						—						—						(3,130)						—
Impairment and credit losses (recoveries) (4)						—						10,186						(6,990)						(584)
Restructuring charges and other initiative expenses						—						4,573						5,288						6,448
Equity investment impairment and recovery of losses (5)						12,634						—						8,406						—
Adjusted EBITDA						$	1,728,236					$	742,266					$	3,542,756					$	302,290

(1) These amounts are included in Other (expense) income within our consolidated statements of comprehensive income (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 expense (benefit), included in the EBITDA calculation above.

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

(5) For the quarter and nine months ended September 30, 2023, represents equity method impairments of $12.6 million. Additionally, the nine months ended September 30, 2023, includes a $4.2 million recovery of losses from one of our

equity method investees recognized during the second quarter of 2023. These amounts are included in Equity investment income within our consolidated statements of comprehensive income (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 September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Total revenue			$	4,160,453					$	2,993,075					$	10,568,581					$	6,236,548
Less:
Cruise operating expenses			2,136,860						1,966,449						5,884,641						4,831,310
Depreciation and amortization expenses			365,473						355,085						1,086,923						1,046,094
Gross Margin			1,658,120						671,541						3,597,017						359,144
Add:
Payroll and related			293,629						304,369						887,999						981,128
Food			211,709						194,966						613,795						450,376
Fuel			272,408						316,214						849,839						779,873
Other operating			465,814						446,630						1,341,821						1,205,452
Depreciation and amortization expenses			365,473						355,085						1,086,923						1,046,094
Adjusted Gross Margin			$	3,267,153					$	2,288,805					$	8,377,394					$	4,822,067
APCD			12,011,593						11,564,662						34,953,919						29,553,564
Gross Margin Yields			$	138.04					$	58.07					$	102.91					$	12.15
Net Yields			$	272.00					$	197.91					$	239.67					$	163.16

`

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 September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Total cruise operating expenses			$	2,136,860					$	1,966,449					$	5,884,641					$	4,831,310
Marketing, selling and administrative expenses			393,016						373,116						1,288,719						1,138,571
Gross Cruise Costs			2,529,876						2,339,565						7,173,360						5,969,881
Less:
Commissions, transportation and other			632,075						484,054						1,551,012						964,256
Onboard and other			261,225						220,216						640,175						450,225
Net Cruise Costs Including Other Costs			1,636,576						1,635,295						4,982,173						4,555,400
Less:
Gain on sale of controlling interest (1)			—						—						(3,130)						—
Impairment and credit recoveries (2)			—						10,186						(6,990)						(584)
Restructuring charges and other initiative expenses (3)			—						4,573						5,288						6,448
Net Cruise Costs			1,636,576						1,620,536						4,987,005						4,549,536
Less:
Fuel			272,408						316,214						849,839						779,873
Net Cruise Costs Excluding Fuel			$	1,364,168					$	1,304,322					$	4,137,166					$	3,769,663
APCD			12,011,593						11,564,662						34,953,919						29,553,564
Gross Cruise Costs per APCD			$	210.62					$	202.30					$	205.22					$	202.00
Net Cruise Costs per APCD			$	136.25					$	140.13					$	142.67					$	153.94
Net Cruise Costs Excluding Fuel per APCD			$	113.57					$	112.79					$	118.36					$	127.55

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

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

(3) These amounts are included in Marketing, selling and administrative expenses within our consolidated statements of comprehensive income (loss).

Quarter Ended September 30, 2023 Compared to Quarter Ended September 30, 2022

In this section, references to 2023 refer to the quarter ended September 30, 2023 and references to 2022 refer to the quarter ended September 30, 2022.

Revenues

Total revenues for 2023 increased $1.2 billion to $4.2 billion from $3.0 billion in 2022.

Passenger ticket revenues comprised 70.7% of our 2023 total revenues. Passenger ticket revenues for 2023 increased by $0.9 billion, or 45.5% to $2.9 billion from $2.0 billion in 2022. The increase was primarily due to higher ticket prices which increased ticket revenues by $0.8 billion compared to the same period in 2022. Additionally, the increase is complemented by an increase in occupancy of 13.9% in 2023 compared to the same period in 2022.

The remaining 29.3% of 2023 total revenues was comprised of Onboard and other revenues, which increased $246.9 million, or 25.4% to $1.2 billion in 2023 from $1.0 billion in 2022. The increase was primarily due to an increase in prices and occupancy noted above in 2023 compared to the same period in 2022.

Onboard and other revenues included concession revenues of $126.2 million in 2023 and $104.4 million in 2022.

Cruise Operating Expenses

Total Cruise operating expenses for 2023 increased $170.4 million to $2.1 billion from $2.0 billion in 2022. The increase was primarily due to:

• a $148.0 million increase in Commissions, transportation and other expenses; and

*•*a $41.0 million increase in Onboard and other expenses;

The increase in operating expenses noted above reflects our operations in 2023 at higher occupancy compared to the same period in 2022.

Other Comprehensive Income (Loss)

Other comprehensive income was $35.0 million in 2023 compared to other comprehensive loss of $(241.2) million for the same period in 2022. The increase of $276.3 million, or 114.5% was primarily due to a Gain on cash flow derivative hedges in 2023 of $19.6 million compared to a Loss on cash flow derivative hedges in 2022 of $(259.9) million, mostly as a result of a significant increase in fair value of our fuel swaps in 2023 compared to 2022.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

In this section, references to 2023 refer to the nine months ended September 30, 2023 and references to 2022 refer to the nine months ended September 30, 2022

Revenues

Total revenues for 2023 increased $4.3 billion to $10.6 billion from $6.2 billion in 2022.

Passenger ticket revenues comprised 68.9% of our 2023 total revenues. Passenger ticket revenues for 2023 increased by $3.2 billion to $7.3 billion from $4.1 billion in 2022. The increase was primarily due to a 30.2% increase in occupancy reflecting our full operations in 2023, compared to a partial return to operations during the first half of 2022 and full operations in the third quarter of 2022, higher ticket prices which increased ticket revenues by $2.4 billion, and higher capacity of 18.3% compared to the same period in 2022.

The remaining 31.1% of 2023 total revenues was comprised of Onboard and other revenues, which increased $1.1 billion to $3.3 billion in 2023 from $2.1 billion in 2022. The increase was primarily due to an increase in occupancy and higher capacity, as noted above, in 2023 compared to the same period in 2022.

The increase in revenues reflect our full operations in 2023, compared to a partial return to operations during the first half of 2022 and full operations in the third quarter of 2022. Occupancy in 2023 was 105.7% compared to 81.2% in 2022.

Onboard and other revenues included concession revenues of $347.7 million in 2023 and $233.4 million in 2022.

Cruise Operating Expenses

Total Cruise operating expenses for 2023 increased $1.1 billion to $5.9 billion from $4.8 billion in 2022. The increase was primarily due to:

• a $586.8 million increase in Commissions, transportation and other expenses*;*

•a $190.0 million increase in Onboard and other expenses;

*•*a $163.4 million increase in Food expense;

• a $136.4 million increase in Other operating expense; and

• a $70.0 million increase in Fuel expense.

The increase in operating expenses noted above reflects full operations in 2023; including additional capacity and higher occupancy compared to the same period in 2022, offset by a decrease of $93.1 million in payroll and related due to additional costs incurred during our return to service in 2022, which did not recur in 2023.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2023 increased $150.1 million, or 13.2%, to $1.3 billion from $1.1 billion in 2022, driven by an increase in headcount and higher stock price year over year related to our performance share awards.

Other Income (Expense)

Interest expense, net of interest capitalized for 2023 increased $123.0 million, or 13.2%, to $1.1 billion from $0.9 billion in 2022. The increase was primarily due to loss on extinguishment of debt of $81.4 million including partial repayments of the 11.50% senior secured notes due 2025 in 2023, compared to $16.4 million in 2022, higher rates on refinancing transactions that were completed in 2022, as well as the impact of higher rates on floating-rate debt compared to the same period in 2022.

Equity investment income for 2023 increased $119.4 million, or 401.1%, to $149.1 million from $29.8 million in 2022. The increase in income was primarily due to increase of income from TUI Cruises, one of our equity investments, in 2023 compared to 2022.

Other Comprehensive Loss

Other comprehensive loss for 2023 decreased $79.8 million, or 97.8%, to $(1.8) million from $(81.6) million in 2022. The decrease was primarily due to decrease in Loss on cash flow derivative hedges of $141.4 million, to $(7.1) million from $(148.5) million in 2022, which was mostly as a result of a significant increase 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 operating activities was $3.4 billion for the nine months ended September 30, 2023, compared to cash used of $94.7 million for the same period in 2022. The increase of $3.5 billion was primarily attributable to higher occupancy and bookings in 2023 compared to the same period in 2022.

Net cash used in investing activities decreased $1.5 billion to cash used of $1.3 billion for the nine months ended September 30, 2023, compared to cash used of $2.9 billion for the same period in 2022. The decrease was primarily attributable to a decrease in capital expenditures of $1.2 billion during 2023, compared to the same period in 2022, due to the delivery of Wonder of the Seas, Celebrity Beyond, and Silver Endeavour in 2022 compared to the delivery of Silver Nova during the same period in 2023, and a decrease in cash paid on the settlement of derivative financial instruments of $323.1 million during 2023, compared to the same period in 2022.

Net cash used in financing activities was $3.3 billion for the nine months ended September 30, 2023, compared to cash provided by financing activities of $1.8 billion for the same period in 2022. The change of $5.2 billion was primarily

attributable to a decrease of $5.4 billion in debt proceeds in 2023 compared to the same period in 2022, and an increase in repayments of debt of $170 million 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 nine months ended September 30, 2023.

Future Capital Commitments

Capital Expenditures

Our future capital commitments consist primarily of new ship orders. As of September 30, 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
Star of the Seas			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
Unnamed			Chantiers de l'Atlantique			4th Quarter 2025						3,250
Silversea Cruises —
Evolution Class:
Silver Ray			Meyer Werft			2nd Quarter 2024						730
TUI Cruises (50% joint venture) —
Mein Schiff 7			Meyer Turku Oy			2nd Quarter 2024						2,900
Mein Schiff Relax			Fincantieri			4th Quarter 2024						4,100
Unnamed			Fincantieri			2nd Quarter 2026						4,100
Total Berths												40,830

During the quarter ended June 30, 2023, we received commitments for the unsecured financing of the fifth Edge-class ship, estimated for delivery in 2025.

Our future capital commitments consist primarily of new ship orders. As of September 30, 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 $10.9 billion, of which we had deposited $1.1 billion. Approximately 40.1% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, 2023. Refer to Note 8. Commitments and Contingencies and Note 11*. Fair Value Measurements and Derivative Instruments* to our consolidated financial statement*.*

As of September 30, 2023, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $4.1 billion for 2023. This amount does not include any ships on order by our Partner Brands.

Material Cash Requirements

As of September 30, 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)			$	245,402					$	1,137,309					$	1,029,177					$	858,112					$	721,443					$	1,305,138					$	5,296,581
Other(2)			15,650						69,030						95,010						120,684						133,745						927,446						1,361,565
Investing Activities:
Ship purchase obligations(3)			2,008,276						1,904,847						2,093,766						1,223,947						—						—						7,230,836
Total			$	2,269,328					$	3,111,186					$	3,217,953					$	2,202,743					$	855,188					$	2,232,584					$	13,888,982

(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 September 30, 2023. Debt denominated in other currencies is calculated based on the applicable exchange rate at September 30, 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 $6.0 billion in final contractual installments, which have committed financing with sovereign guarantees covering 80% of the cost of the ships on order for our Global Brands. 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 September 30, 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.

The Company continually identifies and evaluates actions to maintain adequate liquidity. These include, and are not limited to: reductions in capital expenditures, operating expenses and administrative costs and additional financings. Additionally, we will continue, as appropriate, 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 September 30, 2023, we had $8.2 billion of committed financing for our ships on order.

As of September 30, 2023, our obligations due through September 30, 2024 primarily consisted of $2.0 billion related to debt maturities, $1.2 billion related to interest on debt and $3.9 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 Icon of the Seas, Celebrity Ascent, Utopia of the Seas, and Silver Ray.

As of September 30, 2023, we had liquidity of $3.3 billion, including cash and cash equivalents of $0.6 billion, and $2.7 billion of undrawn revolving credit facility capacity. 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 September 30, 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.