Royal Caribbean Cruises Ltd. (NYSE: RCL, Oslo) today announced record net income for the third quarter 2007 of $395.0 million, or $1.84 per share, compared to net income of $345.4 million, or $1.63 per share, in 2006.
hese results were better than expected mainly due to stronger late bookings driving better yields. Revenues for the third quarter 2007 increased to $2.0 billion from revenues of $1.6 billion in the third quarter 2006. The company also raised its EPS guidance for the year to the high end of its previous guidance despite higher crude oil prices.
"It was a very encouraging finish for the quarter and augurs well for upcoming periods," said Richard Fain, chairman and chief executive officer. "It is very satisfying that, despite higher fuel prices and other challenges, we produced record results."
Key metrics for the third quarter 2007 were within expected ranges as follows:
• Net Yields on a comparable basis (i.e. excluding Pullmantur) increased 1.6% over the third quarter of 2006. Including Pullmantur, Net Yields increased 4.1%.
• Net Cruise Costs per APCD on a comparable basis increased 0.1%. Including Pullmantur, Net Cruise Costs per APCD increased 6.7%.
• Fuel prices were up 7.1% versus the third quarter of 2006, but cost per APCD was down about 1.9% mainly due to energy saving and other fuel initiatives. The average at-the-pump price for the quarter was $473 per metric ton versus $442 per metric ton in 2006.
• Excluding fuel, Net Cruise Costs per APCD on a comparable basis increased 1.0%. Including Pullmantur, Net Cruise Costs per APCD increased 8.6%.
Outlook - 2007
The company provided the following estimates for the full year and fourth quarter 2007. The "Comparable" estimates exclude Pullmantur, while the "Including Pullmantur" estimates are for the entire combined group.
Fourth Quarter 2007 Full Year 2007
Including Including
Comparable Pullmantur Comparable Pullmantur
Capacity 4.7% 13.6% 4.8% 12.4%
Net Yields approx. 2% approx. 9% approx. Flat approx. 3%
Net Cruise Costs
per APCD approx. 2% 8% to 9% approx. Flat 5% to 6%
Net Cruise Costs
per APCD,
excluding Fuel approx. 2% approx. 10% Flat to 1% 7% to 8%
Fourth Quarter 2007 Full Year 2007
Depreciation and Amortization $125 to $130 Million $485 to $490 Million
Interest Expense $83 to $88 Million $334 to $339 Million
Earnings Per Share $0.32 to $0.37 $2.80 to $2.85
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Passenger ticket
revenues $1,423,179 $1,211,758 $3,360,586 $3,006,928
Onboard and other
revenues 530,413 425,093 1,297,459 1,069,443
---------- ---------- ---------- ----------
Total revenues 1,953,592 1,636,851 4,658,045 4,076,371
---------- ---------- ---------- ----------
Cruise operating
expenses
Commissions,
transportation and
other 356,471 289,462 844,784 720,460
Onboard and other 148,218 123,167 316,792 267,945
Payroll and related 153,106 130,039 432,686 370,800
Food 87,062 74,606 236,044 205,898
Fuel 140,655 126,077 384,070 360,307
Other operating 263,732 200,815 741,736 573,863
---------- ---------- ---------- ----------
Total cruise
operating expenses 1,149,244 944,166 2,956,112 2,499,273
Marketing, selling and
administrative
expenses 199,169 163,745 578,547 518,681
Depreciation and
amortization expenses 122,345 109,331 360,021 313,513
---------- ---------- ---------- ----------
Operating Income 482,834 419,609 763,365 744,904
---------- ---------- ---------- ----------
Other income (expense)
Interest income 5,704 4,472 16,655 11,789
Interest expense, net
of interest
capitalized (85,270) (71,824) (251,266) (196,136)
Other (expense)
income (8,268) (6,885) 3,821 26,742
---------- ---------- ---------- ----------
(87,834) (74,237) (230,790) (157,605)
---------- ---------- ---------- ----------
Net Income $ 395,000 $ 345,372 $ 532,575 $ 587,299
========== ========== ========== ==========
Earnings Per Share:
Basic $ 1.85 $ 1.66 $ 2.50 $ 2.79
========== ========== ========== ==========
Diluted $ 1.84 $ 1.63 $ 2.49 $ 2.70
========== ========== ========== ==========
Weighted-Average Shares
Outstanding:
Basic 213,039 208,129 212,667 210,239
========== ========== ========== ==========
Diluted 214,295 213,526 214,170 224,078
========== ========== ========== ==========
STATISTICS
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Occupancy 109.1% 109.6% 106.4% 107.3%
Passenger Cruise Days 7,277,757 6,428,544 19,711,739 17,749,885
APCD 6,668,881 5,865,782 18,526,888 16,543,430
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
As of
--------------------------------
September 30, December 31,
2007 2006
--------------- -------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 411,906 $ 104,520
Trade and other receivables, net 337,889 185,886
Inventories 88,796 76,969
Prepaid expenses and other assets 221,680 134,529
--------------- -------------
Total current assets 1,060,271 501,904
Property and equipment, net 12,274,180 11,429,106
Goodwill 772,816 721,514
Other assets 1,058,551 740,564
--------------- -------------
$15,165,818 $13,393,088
=============== =============
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $ 558,618 $ 373,422
Accounts payable 192,424 193,794
Accrued expenses and other
liabilities 644,494 408,209
Customer deposits 1,175,262 896,943
--------------- -------------
Total current liabilities 2,570,798 1,872,368
Long-term debt 5,350,523 5,040,322
Other long-term liabilities 589,040 388,823
Commitments and contingencies
Shareholders' equity
Preferred stock ($0.01 par value,
20,000,000 shares authorized,
none outstanding, September 30, 2007
and December 31, 2006) - -
Common stock ($.01 par value,
500,000,000 shares authorized,
223,365,773 and 222,489,872
shares issued, September 30, 2007
and December 31, 2006, respectively) 2,234 2,225
Paid-in capital 2,935,123 2,904,041
Retained earnings 4,076,028 3,639,211
Accumulated other comprehensive
income (loss) 65,592 (30,802)
Treasury stock (11,016,185 and
10,985,927 common shares at cost,
September 30, 2007 and December 31,
2006, respectively) (423,520) (423,100)
--------------- -------------
Total shareholders' equity 6,655,457 6,091,575
--------------- -------------
$15,165,818 $13,393,088
=============== =============
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended
September 30,
--------------------------------
2007 2006
--------------- -------------
Operating Activities
Net income $ 532,575 $ 587,299
Adjustments:
Depreciation and amortization 360,021 313,513
Accretion of original issue
discount on debt 1,354 17,578
Changes in operating assets and
liabilities:
Increase in trade and other
receivables, net (146,569) (11,437)
Increase in inventories (11,532) (11,629)
Increase in prepaid expenses and
other assets (60,020) (18,923)
(Decrease) increase in accounts
payable (4,730) 8,811
Increase in accrued expenses and
other liabilities 212,871 43,162
Increase in customer deposits 273,372 74,877
Accreted interest paid on LYONs
repurchase - (121,199)
Other, net 2,711 25,982
--------------- -------------
Net cash provided by operating
activities 1,160,053 908,034
--------------- -------------
Investing Activities
Purchases of property and equipment (1,225,065) (1,019,462)
Purchases of notes from First Choice
Holidays PLC - (100,000)
Other, net 43,033 (13,204)
--------------- -------------
Net cash used in investing
activities (1,182,032) (1,132,666)
--------------- -------------
Financing Activities
Proceeds from issuance of debt 1,904,979 1,806,215
Debt issuance costs (10,134) (8,804)
Repayments of debt (1,515,101) (1,276,673)
Dividends (66,339) (63,543)
Proceeds from exercise of common
stock options 16,932 19,161
Purchases of treasury stock - (164,582)
Other, net (1,818) 8,011
--------------- -------------
Net cash provided by financing
activities 328,519 319,785
--------------- -------------
Effect of exchange rate changes
on cash 846 -
Net increase in cash and cash
equivalents 307,386 95,153
Cash and cash equivalents at
beginning of period 104,520 125,385
--------------- -------------
Cash and cash equivalents at end
of period $ 411,906 $ 220,538
=============== =============
Supplemental Disclosure
Cash paid during the period for:
Interest, net of amount
capitalized $190,995 $276,785
=============== =============
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 Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2007 2006 2007 2006
----------- ------------ ----------- ------------
Passenger ticket
revenues $ 1,423,179 $ 1,211,758 $ 3,360,586 $ 3,006,928
Onboard and other
revenues 530,413 425,093 1,297,459 1,069,443
----------- ------------ ----------- ------------
Total revenues 1,953,592 1,636,851 4,658,045 4,076,371
=========== ============ =========== ============
Less:
Commissions,
transportation and
other 356,471 289,462 844,784 720,460
Onboard and other 148,218 123,167 316,792 267,945
----------- ------------ ----------- ------------
Net revenues $ 1,448,903 $ 1,224,222 $ 3,496,469 $ 3,087,966
=========== ============ =========== ============
APCD 6,668,881 5,865,782 18,526,888 16,543,430
Gross Yields $ 292.94 $ 279.05 $ 251.42 $ 246.40
Net Yields $ 217.26 $ 208.71 $ 188.72 $ 186.66
Gross Cruise Costs and Net Cruise Costs were calculated as follows
(in thousands, except APCD and costs per APCD):
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2007 2006 2007 2006
----------- ------------ ----------- ------------
Total cruise operating
expenses $ 1,149,244 $ 944,166 $ 2,956,112 $ 2,499,273
Marketing, selling
and administrative
expenses 199,169 163,745 578,547 518,681
----------- ------------ ----------- ------------
Gross Cruise Costs 1,348,413 1,107,911 3,534,659 3,017,954
=========== ============ =========== ============
Less:
Commissions,
transportation and
other 356,471 289,462 844,784 720,460
Onboard and other 148,218 123,167 316,792 267,945
----------- ------------ ----------- ------------
Net Cruise Costs $ 843,724 $ 695,282 $ 2,373,083 $ 2,029,549
=========== ============ =========== ============
APCD 6,668,881 5,865,782 18,526,888 16,543,430
Gross Cruise Costs
per APCD $ 202.19 $ 188.88 $ 190.79 $ 182.43
Net Cruise Costs
per APCD $ 126.52 $ 118.53 $ 128.09 $ 122.68
Net Debt-to-Capital was calculated as follows (in thousands):
As of
September 30,
--------------------------------
2007 2006
------------ ------------
Long-term debt, net of current
portion $ 5,350,523 $ 4,181,502
Current portion of long-term debt 558,618 268,638
------------ ------------
Total debt 5,909,141 4,450,140
Less: Cash and cash equivalents 411,906 220,538
------------ ------------
Net Debt $ 5,497,235 $ 4,229,602
============ ============
Total shareholders' equity $ 6,655,457 $ 6,043,134
Total debt 5,909,141 4,450,140
------------ ------------
Total debt and shareholders' equity 12,564,598 10,493,274
============ ============
Debt-to-Capital 47.0% 42.4%
Net Debt 5,497,235 4,229,602
------------ ------------
Net Debt and shareholders' equity $12,152,692 $10,272,736
------------ ------------
Net Debt-to-Capital 45.2% 41.2%
