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Royal Caribbean Cruises Ltd. News
Royal Caribbean Reports Record Fourth Quarter 2007 Earnings
Net income for the full year 2007 was
"It is very gratifying to see such a strong performance, especially in light of the broader consumer and economic environment," said Richard D. Fain, Chairman and Chief Executive Officer. "We are particularly pleased with the solid yield performance of our brands, which produced such healthy earnings despite significantly higher fuel costs." Higher fuel prices increased operating costs by
Fain continued, "Despite pressures on consumer spending, yields for the year were consistent with our original expectations, growing 0.3% on a comparable basis (i.e. excluding Pullmantur). This is a testament to the strength and momentum of our products."
Key metrics for the fourth quarter 2007, as compared to the fourth quarter 2006, were as follows:
— Net Yields on a comparable basis increased 3.2%; higher than guidance of an increase in a range around 2%. Including Pullmantur, Net Yields increased 11.0%. — Excluding fuel, Net Cruise Costs per APCD on a comparable basis increased 3.4%; higher than guidance of an increase in a range around 2%. Including Pullmantur, Net Cruise Costs per APCD increased 12.1%. — Fuel prices increased 41% versus the fourth quarter of 2006, while fuel costs per APCD increased 19%, benefiting from energy saving initiatives and hedging. The average at-the-pump price for the quarter was $555 per metric ton versus $395 per metric ton in 2006. — Net Cruise Costs per APCD on a comparable basis increased 5.9%; higher than guidance of an increase in a range around 2%. Including Pullmantur, Net Cruise Costs per APCD increased 13.4%. Outlook - 2008 The company provided the following estimates for the first quarter and full year 2008, as compared to the first quarter and full year 2007, respectively. First Quarter 2008 Full Year 2008 ————————— ——————— Capacity 8.8% 5.1% Net Yields approx. 7% approx. 4% Net Cruise Costs per APCD approx. 1% approx. 2% Net Cruise Costs per APCD, excluding Fuel (1%) - (2%) 1% - 2%
The company expects to have a 5.1% increase in capacity in 2008, driven primarily by a full year of Liberty of the Seas, the April delivery of Independence of the Seas, Pullmantur's purchase of Pacific Star, and the November delivery of Celebrity Solstice.
"The early indications from the 'wave period' are encouraging," said Fain. "We continue to see healthy booking volumes and improved pricing over the same time last year. Based on this improving revenue performance and our focus on controlling costs, we expect 2008 to be a year of double-digit improvement in EPS."
The company does not forecast fuel prices and its cost guidance for fuel is based on current "at-the-pump" prices including any hedge impacts. Fuel prices remain volatile; however, the company has taken a number of actions to reduce energy consumption and fuel expense. The company is 52% and 45% hedged for the first quarter and full year, respectively. If fuel prices for 2008 remain at today's level, fuel costs for the first quarter 2008 would be approximately
First Quarter 2008 Full Year 2008 —————————— —————————— Depreciation and Amortization $123 to $128 Million $525 to $545 Million Interest Expense $82 to $87 Million $340 to $360 Million Earnings Per Share $0.30 to $0.35 $3.20 to $3.40
Based on these estimates, and assuming that fuel prices remain at today's level, the company expects its first quarter 2008 earnings per share to be
As of
Based on current ship orders, projected capital expenditures for 2008, 2009, 2010, and 2011, are estimated to be
The company has scheduled a conference call at
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 Cruise Costs
Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.
Gross Yields Gross Yields represent total revenues per APCD.
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.
Net Debt-to-Capital
Net Debt-to-Capital is a ratio which represents total long-term debt, including current portion of long-term debt, less cash and cash equivalents ("Net Debt") divided by the sum of Net Debt and total shareholders' equity. We believe Net Debt and Net Debt-to-Capital, along with total long-term debt and shareholders' equity are useful measures of our capital structure.
Net Revenues
Net Revenues represent total revenues less commissions, transportation and other expenses and onboard and other expenses.
Net Yields
Net Yields represent Net Revenues per APCD. We utilize Net Revenues and Net Yields to manage our business on a day-to-day basis as we 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, which are commissions, transportation and other expenses and onboard and other expenses. 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.
Occupancy
Occupancy, in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.
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.
Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International, Celebrity Cruises, Pullmantur Cruises, Azamara Cruises and CDF Croisieres de
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
ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data) Quarter Ended Year Ended December 31, December 31, ——————————— ——————————— 2007 2006 2007 2006 ————— ————— ————— ————— Passenger ticket revenues $1,066,799 $831,721 $4,427,384 $3,838,648 Onboard and other revenues 424,296 321,494 1,721,755 1,390,936 ————— ————— ————— ————— Total revenues 1,491,095 1,153,215 6,149,139 5,229,584 ————— ————— ————— ————— Cruise operating expenses Commissions, transportation and other 279,237 197,470 1,124,022 917,929 Onboard and other 88,845 63,272 405,637 331,218 Payroll and related 151,395 131,075 584,081 501,874 Food 86,952 72,706 322,996 278,604 Fuel 161,959 119,880 546,029 480,187 Other operating 257,196 165,955 998,933 739,817 ————— ————— ————— ————— Total cruise operating expenses 1,025,584 750,358 3,981,698 3,249,629 Marketing, selling and administrative expenses 204,492 181,183 783,040 699,864 Depreciation and amortization expenses 123,045 108,132 483,066 421,645 ————— ————— ————— ————— Operating Income 137,974 113,542 901,335 858,446 ————— ————— ————— ————— Other income (expense) Interest income 3,370 3,451 20,025 15,238 Interest expense, net of interest capitalized (82,518) (71,727) (333,784) (267,861) Other (expense) income 12,008 1,358 15,829 28,099 ————— ————— ————— ————— (67,140) (66,918) (297,930) (224,524) ————— ————— ————— ————— Net Income $ 70,834 $ 46,624 $ 603,405 $ 633,922 ========== ========== ========== ========== Earnings Per Share: Basic $ 0.33 $ 0.22 $ 2.84 $ 3.01 ========== ========== ========== ========== Diluted $ 0.33 $ 0.22 $ 2.82 $ 2.94 ========== ========== ========== ========== Weighted-Average Shares Outstanding: Basic 213,129 212,078 212,784 210,703 ========== ========== ========== ========== Diluted 214,477 213,743 214,255 221,485 ========== ========== ========== ========== STATISTICS Quarter Ended Year Ended December 31, December 31, —————————— ——————————— 2007 2006 2007 2006 ————— ————- ————- —————- Occupancy 103.8% 104.3% 105.7% 106.5% Passenger Cruise Days 6,882,776 6,099,721 26,594,515 23,849,606 APCD 6,628,881 5,849,048 25,155,768 22,392,478 ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) As of December 31, —————————- 2007 2006 —————— —————- (unaudited) Assets Current assets Cash and cash equivalents $ 230,784 $ 104,520 Trade and other receivables, net 313,640 185,886 Inventories 96,813 76,969 Prepaid expenses and other assets 351,554 134,529 —————- —————- Total current assets 992,791 501,904 Property and equipment, net 12,253,784 11,429,106 Goodwill 797,791 721,514 Other assets 937,915 740,564 —————- ————— $14,982,281 $13,393,088 =========== =========== Liabilities and Shareholders' Equity Current liabilities Current portion of long-term debt $ 351,725 $ 373,422 Accounts payable 222,895 193,794 Accrued expenses and other liabilities 680,316 408,209 Customer deposits 1,084,359 896,943 —————- —————- Total current liabilities 2,339,295 1,872,368 Long-term debt 5,346,547 5,040,322 Other long-term liabilities 539,096 388,823 Commitments and contingencies Shareholders' equity Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding, December 31, 2007 and December 31, 2006) - - Common stock ($0.01 par value; 500,000,000 shares authorized; 223,509,136 and 222,489,872 shares issued, December 31, 2007 and December 31, 2006, respectively) 2,236 2,225 Paid-in capital 2,942,934 2,904,041 Retained earnings 4,114,877 3,639,211 Accumulated other comprehensive income (loss) 120,955 (30,802) Treasury stock (11,026,271 and 10,985,927 common shares at cost, December 31, 2007 and December 31, 2006, respectively) (423,659) (423,100) —————- —————- Total shareholders' equity 6,757,343 6,091,575 —————- —————- $14,982,281 $13,393,088 =========== =========== ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, ——————————- 2007 2006 —————- —————- (unaudited) Operating Activities Net income $ 603,405 $ 633,922 Adjustments: Depreciation and amortization 483,066 421,645 Accretion of original issue discount on debt 1,810 17,902 Changes in operating assets and liabilities: Increase in trade and other receivables, net (122,682) (38,855) Increase in inventories (19,424) (7,441) (Increase) decrease in prepaid expenses and other assets (37,650) 707 Increase (decrease) in accounts payable 23,398 (29,671) Increase in accrued expenses and other liabilities 150,195 21,815 Increase in customer deposits 184,713 9,724 Accreted interest paid on LYONs repurchase - (121,199) Other, net 1,863 39,957 ————— ————— Net cash provided by operating activities 1,268,694 948,506 ————— ————— Investing Activities Purchases of property and equipment (1,317,381) (1,180,579) Purchase of notes from TUI Travel PLC (formerly First Choice Holidays PLC) - (100,000) Repayment of notes from TUI Travel PLC 100,000 - Purchase of Pullmantur, net of cash acquired - (553,312) Other, net 46,823 (15,187) ————— ————— Net cash used in investing activities (1,170,558) (1,849,078) ————— ————— Financing Activities Proceeds from issuance of debt 1,934,979 2,933,915 Debt issuance costs (10,146) (10,004) Repayments of debt (1,805,798) (1,785,773) Dividends (98,298) (124,460) Proceeds from exercise of common stock options 19,632 23,026 Purchases of treasury stock - (164,582) Other, net (3,758) 7,585 ————— ————— Net cash provided by financing activities 36,611 879,707 ————— ————— Effect of exchange rate changes on cash (8,483) - Net increase (decrease) in cash and cash equivalents 126,264 (20,865) Cash and cash equivalents at beginning of period 104,520 125,385 ————— ————— Cash and cash equivalents at end of period $ 230,784 $ 104,520 ========== ========== Supplemental Disclosure Cash paid during the period for: Interest, net of amount capitalized $ 285,206 $ 376,817 ========== ========== 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 Year Ended December 31, December 31, ———————————- ———————————— 2007 2006 2007 2006 ————— —————- —————- —————- Passenger ticket revenues $1,066,799 $ 831,721 $ 4,427,384 $ 3,838,648 Onboard and other revenues 424,296 321,494 1,721,755 1,390,936 ————— —————- —————- —————- Total revenues 1,491,095 1,153,215 6,149,139 5,229,584 ========== =========== =========== =========== Less: Commissions, transportation and other 279,237 197,470 1,124,022 917,929 Onboard and other 88,845 63,272 405,637 331,218 ————— —————- —————- —————- Net revenues $1,123,013 $ 892,473 $ 4,619,480 $ 3,980,437 ========== =========== =========== =========== APCD 6,628,881 5,849,048 25,155,768 22,392,478 Gross Yields $ 224.94 $ 197.16 $ 244.44 $ 233.54 Net Yields $ 169.41 $ 152.58 $ 183.64 $ 177.76
Gross Cruise Costs and Net Cruise Costs were calculated as follows (in thousands, except APCD and costs per APCD):
Quarter Ended Year Ended December 31, December 31, ——————————— ————————————- 2007 2006 2007 2006 ————— ————— —————- —————— Total cruise operating expenses $1,025,584 $ 750,358 $ 3,981,698 $ 3,249,629 Marketing, selling and administrative expenses 204,492 181,183 783,040 699,864 ————— ————— —————- —————— Gross Cruise Costs 1,230,076 931,541 4,764,738 3,949,493 ========== ========== =========== ============ Less: Commissions, transportation and other 279,237 197,470 1,124,022 917,929 Onboard and other 88,845 63,272 405,637 331,218 ————— ————— —————- —————— Net Cruise Costs $ 861,994 $ 670,799 $ 3,235,079 $ 2,700,346 ========== ========== =========== ============ APCD 6,628,881 5,849,048 25,155,768 22,392,478 Gross Cruise Costs per APCD $ 185.56 $ 159.26 $ 189.41 $ 176.38 Net Cruise Costs per APCD $ 130.04 $ 114.69 $ 128.60 $ 120.59 Net Debt-to-Capital was calculated as follows (in thousands): As of December 31, ———————————————- 2007 2006 —————- —————- Long-term debt, net of current portion $ 5,346,547 $ 5,040,322 Current portion of long-term debt 351,725 373,422 —————- —————- Total debt 5,698,272 5,413,744 Less: Cash and cash equivalents 230,784 104,520 —————- ————— Net Debt $ 5,467,488 $ 5,309,224 =========== ========== Total shareholders' equity $ 6,757,343 $ 6,091,575 Total debt 5,698,272 5,413,744 —————- —————- Total debt and shareholders' equity 12,455,615 11,505,319 =========== =========== Debt-to-Capital 45.7% 47.1% Net Debt 5,467,488 5,309,224 —————- —————- Net Debt and shareholders' equity $12,224,831 $11,400,799 =========== =========== Net Debt-to-Capital 44.7% 46.6%
SOURCE Royal Caribbean Cruises Ltd.
