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MIAMI, July 26 /PRNewswire-FirstCall/ -- Royal Caribbean Cruises Ltd.
(NYSE: RCL; Oslo) today announced net income for the second quarter 2007 of
$128.7 million, or $0.60 per share, compared to net income of $122.4
million, or $0.57 per share in 2006. The results were consistent with
previous guidance of $0.58 to $0.63 per share. Revenues for the second
quarter 2007 increased to $1.5 billion from revenues of $1.3 billion in the
second quarter 2006.
The company also announced that the full year earnings guidance is
substantially unchanged except for the impact of higher fuel prices. The
company does not forecast fuel prices, and, adjusting for current spot
pricing, full year 2007 earnings are expected to be $2.75 to $2.85 per
share.
Key metrics for the second quarter 2007 on a comparable basis
(excluding Pullmantur) were as follows:
-- Net Yields decreased 0.2% compared to the second quarter 2006,
consistent with previous guidance of a decrease in a range around 1%.
-- Net Cruise Costs per APCD decreased 4.0%, versus previous guidance of a
decrease in a range around 3%. Fuel costs were higher than
anticipated, and non-fuel expenses came in lower.
-- Fuel prices increased 8% from the May 1, 2007 levels disclosed
previously, with "at-the-pump" fuel prices averaging $443 per metric
ton compared to the previously disclosed price of $412 per metric ton.
Fuel prices were $460 per metric ton in the second quarter 2006.
-- Excluding fuel, Net Cruise Costs per APCD decreased 3.2%, versus
previous guidance of a decrease in a range around 1%, partly due to
the timing of certain marketing and selling expenses.
"Despite continuing pressure from high fuel prices, our second quarter
results were consistent with our expectations," said Richard Fain, chairman
and chief executive officer. "The revenue environment has stabilized versus
the first quarter, and our cost control initiatives are working well."
Including Pullmantur, the company's Net Yields increased 0.9% and Net
Cruise Costs per APCD increased 1.1%. Pullmantur's operating income fell
slightly below expectations due to weaker than expected demand for its land
tour business during the spring season.
Outlook For The Rest Of The Year
The company provided the following estimates for the full year and
third quarter 2007. The "Comparable" estimates exclude Pullmantur, while
the "Including Pullmantur" estimates are for the entire combined group.
Full Year 2007 Third Quarter 2007
Including Including
Comparable Pullmantur Comparable Pullmantur
Capacity 4.6% 12.0% 4.9% 13.2%
Net Yields approx. Flat 2% - 3% approx. Flat 2% - 3%
Net Cruise Costs
per APCD Flat - (1%) approx. 5% Flat - (1%) 5% - 6%
Net Cruise Costs per
APCD, excluding Fuel approx. Flat approx. 7% Flat - 1% approx. 7%
As previously disclosed, Celebrity Cruises cancelled two 12-night
Mediterranean sailings onboard Celebrity Millennium due to damage to the
ship's propellers. The cancelled cruises are expected to have a negative
impact on earnings of approximately $0.14 per share, which is reflected in
third quarter 2007 guidance.
Collectively, the company will have a 12.0% increase in capacity in
2007, driven by Pullmantur, the April delivery of Liberty of the Seas, and
a full year of Freedom of the Seas.
"After a relatively slow start to the year, we are encouraged by the
stabilized Caribbean pricing environment and the sound demand for our
summer seasonal products," Fain said.
Second Half Third Quarter
2007 2007
Fuel Price/Metric Ton (Current) $486 $486
Fuel Consumption (Metric Tons) 635,000 320,000
Fuel Percentage Hedged (Current) 53% 57%
10% Change in Fuel Price Impact $12 Million $6 Million
The company does not forecast fuel prices and its cost guidance for
fuel is based on a current "at-the-pump" price of $486 per metric ton. This
is higher than the May 1, 2007, figure, and represents a negative impact of
$0.17 per share ($0.03, $0.08 and $0.06 in the second quarter, third
quarter, and fourth quarter, respectively) versus the company's previous
guidance. Additionally, the company is currently 53% and 57% hedged for the
second half of 2007 and third quarter 2007, respectively. A 10% change in
the market price of fuel results in $12 million and $6 million changes in
fuel costs for the second half of 2007 and third quarter 2007,
respectively, after taking into account existing hedges.
Full Year Third Quarter
2007 2007
Depreciation and Amortization $490 to $500 Million $125 to $130 Million
Interest Expense $330 to $340 Million $85 to $90 Million
Earnings Per Share $2.75 to $2.85 $1.75 to $1.80
Based on these estimates, and assuming that fuel prices remain at
today's level, the company expects its full year 2007 earnings per share to
be $2.75 to $2.85, and expects third quarter 2007 earnings per share to be
$1.75 to $1.80.
As of June 30, 2007, liquidity was $1.4 billion, comprising $0.2
billion in cash and cash equivalents and $1.2 billion in available credit
on the company's revolving credit agreement.
Projected capital expenditures for 2007, 2008, 2009, 2010, and 2011 are
estimated to be $1.3 billion, $1.8 billion, $2.0 billion, $2.2 billion, and
$1.0 billion, respectively. Projected capacity increases for the same five
years are estimated at 12.0%, 9.5%, 7.7%, 11.5%, and 5.8%, respectively.
The company has scheduled a conference call at 10 a.m. Eastern Standard
Time today to discuss its earnings. This call can be heard, either live or
on a delayed basis, on the company's investor relations web site at
http://www.rclinvestor.com.
Terminology
Available Passenger Cruise Days ("APCD")
APCDs are our measurement of capacity and represent double occupancy
per cabin multiplied by the number of cruise days for the period.
Gross Yields
Gross Yields represent total revenues per APCD.
Net Yields
Net Yields represent Gross Yields less commissions, transportation and
other expenses and onboard and other expenses per APCD. We utilize Net
Yields to manage our business on a day-to-day basis and believe that it is
the most relevant measure of our pricing performance because it reflects
the cruise revenues earned by us net of our most significant variable
costs. We have not provided a quantitative reconciliation of projected
Gross Yields to projected Net Yields due to the significant uncertainty in
projecting the costs deducted to arrive at this measure. Accordingly, we do
not believe that reconciling information for such projected figures would
be meaningful.
Gross Cruise Costs
Gross Cruise Costs represent the sum of total cruise operating expenses
plus marketing, selling and administrative expenses.
Net Cruise Costs
Net Cruise Costs represent Gross Cruise Costs excluding commissions,
transportation and other expenses and onboard and other expenses. In
measuring our ability to control costs in a manner that positively impacts
net income, we believe changes in Net Cruise Costs to be the most relevant
indicator of our performance. We have not provided a quantitative
reconciliation of projected Gross Cruise Costs to projected Net Cruise
Costs due to the significant uncertainty in projecting the costs deducted
to arrive at this measure. Accordingly, we do not believe that reconciling
information for such projected figures would be meaningful.
Passenger Cruise Days
Passenger Cruise Days represent the number of passengers carried for
the period multiplied by the number of days of their respective cruises.
Occupancy
Occupancy, in accordance with cruise industry practice, is calculated
by dividing Passenger Cruise Days by APCDs. A percentage of 100% or higher
indicates that three or more passengers occupied some cabins.
Royal Caribbean Cruises Ltd. is a global cruise vacation company that
operates Royal Caribbean International, Celebrity Cruises, Pullmantur and
Azamara Cruises. The company has a combined total of 35 ships in service
and seven under construction. It also offers unique land-tour vacations in
Alaska, Asia, Australia, Canada, Europe, Latin America and New Zealand.
Additional information can be found on http://www.royalcaribbean.com,
http://www.celebrity.com, http://www.pullmantur.es, http://www.azamaracruises.com or
http://www.rclinvestor.com.
Certain statements in this news release are forward-looking statements.
Forward-looking statements do not guarantee future performance and may
involve risks, uncertainties and other factors, which 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. Such factors include general economic and
business conditions, vacation industry competition, including cruise
vacation industry competition, changes in vacation industry capacity,
including over capacity in the cruise vacation industry, the impact of tax
laws and regulations affecting our business or our principal shareholders,
the impact of changes in other laws and regulations affecting our business,
the impact of pending or threatened litigation, the delivery of scheduled
new ships, emergency ship repairs, negative incidents involving cruise
ships including those involving the health and safety of passengers,
reduced consumer demand for cruises as a result of any number of reasons,
including geo-political and economic uncertainties, the unavailability of
air service, armed conflict, terrorist attacks and the resulting concerns
over safety and security aspects of traveling, the impact of the spread of
contagious diseases, our ability to obtain financing on terms that are
favorable or consistent with our expectations, changes in our stock price
or principal shareholders, the impact of changes in operating and financing
costs, including changes in foreign currency, interest rates, fuel, food,
payroll, insurance and security costs, the implementation of regulations in
the United States requiring United States citizens to obtain passports for
travel to additional foreign destinations, weather, and other factors
described in further detail in Royal Caribbean Cruises Ltd.'s filings with
the Securities and Exchange Commission. The above examples are not
exhaustive and new risks emerge from time to time. We undertake no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. In
addition, certain financial measures in this news release constitute
non-GAAP financial measures as defined by Regulation G. A reconciliation of
these items can be found on our investor relations website at
http://www.rclinvestor.com.
Financial Tables Follow
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Quarter Ended Six Months Ended
June 30, June 30,
--------------------- ----------------------
2007 2006 2007 2006
----------- --------- ----------- ----------
Passenger ticket revenues $1,066,991 $ 952,907 $1,937,407 $1,795,170
Onboard and other
revenues 414,334 340,077 767,044 644,350
----------- --------- ----------- ----------
Total revenues 1,481,325 1,292,984 2,704,451 2,439,520
----------- --------- ----------- ----------
Cruise operating expenses
Commissions,
transportation and
other 268,630 228,733 488,315 430,998
Onboard and other 102,169 84,926 168,573 144,778
Payroll and related 142,300 123,427 279,580 240,761
Food 75,797 65,592 148,982 131,292
Fuel 126,081 121,487 243,415 234,230
Other operating 250,552 200,808 478,005 373,048
----------- --------- ----------- ----------
Total cruise
operating expenses 965,529 824,973 1,806,870 1,555,107
Marketing, selling and
administrative expenses 193,195 181,744 379,379 354,936
Depreciation and
amortization expenses 121,718 102,023 237,676 204,182
----------- --------- ----------- ----------
Operating Income 200,883 184,244 280,526 325,295
----------- --------- ----------- ----------
Other income (expense)
Interest income 6,451 5,741 10,951 7,317
Interest expense, net
of interest capitalized (85,516) (66,649) (165,996) (124,312)
Other income (expense) 6,927 (909) 12,089 33,626
----------- --------- ----------- ----------
(72,138) (61,817) (142,956) (83,369)
----------- --------- ----------- ----------
Net Income $ 128,745 $ 122,427 $ 137,570 $ 241,926
=========== ========= =========== ==========
Earnings Per Share:
Basic $ 0.61 $ 0.58 $ 0.65 $ 1.14
=========== ========= =========== ==========
Diluted $ 0.60 $ 0.57 $ 0.64 $ 1.12
=========== ========= =========== ==========
Weighted-Average Shares
Outstanding:
Basic 212,633 211,252 212,478 211,312
=========== ========= =========== ==========
Diluted 214,157 228,193 214,101 229,438
=========== ========= =========== ==========
STATISTICS
Quarter Ended Six Months Ended
June 30, June 30,
--------------------- ----------------------
2007 2006 2007 2006
----------- --------- ----------- ----------
Occupancy 106.0% 106.9% 104.9% 106.0%
Passenger Cruise Days 6,403,995 5,746,992 12,433,982 11,321,341
APCD 6,041,961 5,374,078 11,858,007 10,677,648
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
As of
---------------------------------
June 30, December 31,
2007 2006
--------------- --------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 212,365 $ 104,520
Trade and other receivables, net 212,685 185,886
Inventories 86,567 76,969
Prepaid expenses and other assets 235,907 134,529
--------------- --------------
Total current assets 747,524 501,904
Property and equipment - at cost
less accumulated depreciation
and amortization 12,239,083 11,429,106
Goodwill 741,596 721,514
Other assets 832,099 740,564
--------------- --------------
$14,560,302 $13,393,088
=============== ==============
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $553,473 $373,422
Accounts payable 202,650 193,794
Accrued expenses and other
liabilities 453,466 408,209
Customer deposits 1,411,817 896,943
--------------- --------------
Total current liabilities 2,621,406 1,872,368
Long-term debt 5,242,465 5,040,322
Other long-term liabilities 471,181 388,823
Commitments and contingencies
Shareholders' equity
Common stock ($.01 par value;
500,000,000 shares authorized;
223,317,844 and 222,489,872
shares issued) 2,233 2,225
Paid-in capital 2,929,469 2,904,041
Retained earnings 3,712,982 3,639,211
Accumulated other comprehensive
income (loss) 3,946 (30,802)
Treasury stock (11,006,099 and
10,985,927 common shares at cost) (423,380) (423,100)
--------------- --------------
Total shareholders' equity 6,225,250 6,091,575
--------------- --------------
$14,560,302 $13,393,088
=============== ==============
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended
June 30,
--------------------------------
2007 2006
-------------- --------------
Operating Activities
Net income $ 137,570 $ 241,926
Adjustments:
Depreciation and amortization 237,676 204,182
Accretion of original issue
discount on debt 884 15,759
Changes in operating assets and
liabilities:
(Increase) decrease in trade and
other receivables, net (25,930) 10,856
Increase in inventories (10,158) (17,063)
Increase in prepaid expenses and
other assets (112,080) (63,803)
Increase in accounts payable 7,559 44,648
Increase (decrease) in accrued
expenses and other liabilities 76,041 (6,851)
Increase in customer deposits 513,490 369,470
Accreted interest paid on LYONs
repurchase - (121,199)
Other, net (1,906) 5,794
-------------- --------------
Net cash provided by operating
activities 823,146 683,719
-------------- --------------
Investing Activities
Purchases of property and equipment (1,030,590) (830,956)
Purchases of notes from First Choice
Holidays PLC - (100,000)
Other, net (10,276) 7,110
-------------- --------------
Net cash used in investing
activities (1,040,866) (923,846)
-------------- --------------
Financing Activities
Net proceeds from issuance of debt 1,897,780 1,591,215
Debt issuance costs (10,048) (8,122)
Repayments of debt (1,514,686) (947,512)
Dividends (66,339) (63,545)
Proceeds from exercise of common
stock options 16,427 22,646
Purchases of treasury stock - (164,582)
Other, net 2,593 7,825
-------------- --------------
Net cash provided by financing
activities 325,727 437,925
-------------- --------------
Effect of exchange rate changes
on cash (162) -
Net increase in cash and cash
equivalents 107,845 197,798
Cash and cash equivalents at
beginning of period 104,520 125,385
-------------- --------------
Cash and cash equivalents at end of
period $ 212,365 $ 323,183
============== ==============
Supplemental Disclosure
Cash paid during the period for:
Interest, net of amount
capitalized $ 137,499 $ 227,675
============== ==============
ROYAL CARIBBEAN CRUISES LTD.
NON-GAAP RECONCILING INFORMATION
(unaudited)
Gross Yields and Net Yields were calculated as follows (in thousands,
except APCD and Yields):
Quarter Ended Six Months Ended
June 30, June 30,
---------------------- -----------------------
2007 2006 2007 2006
----------- ---------- ----------- -----------
Passenger ticket
revenues $1,066,991 $ 952,907 $ 1,937,407 $ 1,795,170
Onboard and other
revenues 414,334 340,077 767,044 644,350
----------- ---------- ----------- -----------
Total revenues 1,481,325 1,292,984 2,704,451 2,439,520
=========== ========== =========== ===========
Less:
Commissions,
transportation and
other 268,630 228,733 488,315 430,998
Onboard and other 102,169 84,926 168,573 144,778
----------- ---------- ----------- -----------
Net revenues $1,110,526 $ 979,325 $ 2,047,563 $ 1,863,744
=========== ========== =========== ===========
APCD 6,041,961 5,374,078 11,858,007 10,677,648
Gross Yields $ 245.17 $ 240.60 $ 228.07 $ 228.47
Net Yields $ 183.80 $ 182.23 $ 172.67 $ 174.55
Gross Cruise Costs and Net Cruise Costs were calculated as follows
(in thousands, except APCD and costs per APCD):
Quarter Ended Six Months Ended
June 30, June 30,
---------------------- -----------------------
2007 2006 2007 2006
----------- ---------- ----------- -----------
Total cruise operating
expenses $ 965,529 $ 824,973 $ 1,806,870 $ 1,555,107
Marketing, selling and
administrative expenses 193,195 181,744 379,379 354,936
----------- ---------- ----------- -----------
Gross Cruise Costs 1,158,724 1,006,717 2,186,249 1,910,043
=========== ========== =========== ===========
Less:
Commissions,
transportation and
other 268,630 228,733 488,315 430,998
Onboard and other 102,169 84,926 168,573 144,778
----------- ---------- ----------- -----------
Net Cruise Costs $ 787,925 $ 693,058 $ 1,529,361 $ 1,334,267
=========== ========== =========== ===========
APCD 6,041,961 5,374,078 11,858,007 10,677,648
Gross Cruise Costs per
APCD $ 191.78 $ 187.33 $ 184.37 $ 178.88
Net Cruise Costs per
APCD $ 130.41 $ 128.96 $ 128.97 $ 124.96
Net Debt-to-Capital was calculated as follows (in thousands):
As of
June 30,
----------------------
2007 2006
----------- ----------
Long-term debt, net
of current portion $ 5,242,465 $ 4,171,619
Current portion of
long-term debt 553,473 482,870
----------- ----------
Total debt 5,795,938 4,654,489
Less: Cash and cash
equivalents 212,365 323,183
----------- ----------
Net Debt $ 5,583,573 $ 4,331,306
=========== ==========
Total shareholders'
equity $ 6,225,250 $ 5,650,460
Total debt 5,795,938 4,654,489
----------- ----------
Total debt and
shareholders' equity 12,021,188 10,304,949
=========== ==========
Debt-to-Capital 48.2% 45.2%
Net Debt 5,583,573 4,331,306
Net Debt and
shareholders' equity $11,808,823 $9,981,766
Net Debt-to-Capital 47.3% 43.4%
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