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Royal Caribbean Booming Earnings & Guidance!
Hi Everyone,
I received this press release from Royal Caribbean and thought it would be of interest. I suggest those of you that are thinking of booking a cruise to do it soon. We are seeing many sold out sailings. Cabins that are available are often times going up in price. If you have missed any of my news' postings, they are available on my web site. Best regards, Ray LIGHTHOUSE TRAVEL 800-719-9917 or 805-566-3905 http://www.lighthousetravel.com Royal Caribbean Reports Record Second Quarter Earnings and Increases Guidance for the Year MIAMI, July 28 Royal Caribbean Cruises Ltd. (NYSE: RCL; Oslo) announced today that net income for the second quarter of 2004 was $122.2 million, or $0.59 per share. This compares to $55.7 million, or $0.28 per share, for the second quarter of 2003. Revenues for the second quarter of 2004 increased 26.2% to $1.1 billion from revenues of $905.8 million in the second quarter of 2003. The increase in revenues was primarily due to a 12.4% increase in capacity coupled with an increase in cruise ticket prices, occupancy and onboard revenues. Gross Yields for the second quarter of 2004 increased 12.3% from the second quarter of 2003. Net Yields, which the company considers a better measure of revenue performance, increased 12.6% from the second quarter of 2003. "These are exciting times at Royal Caribbean," said Richard D. Fain, chairman and chief executive officer of Royal Caribbean Cruises Ltd. "The marketplace is demonstrating characteristics that we haven't seen since prior to 2001." The booking environment continues to be strong as evidenced by widespread improvements in pricing and occupancy. The company has continued to focus on its "strategic pricing" programs as a result of which the booking curve continues to be longer than in 2003. In addition, the company has been able to fill on a more profitable basis remaining berths as sailings approach. This has resulted in higher occupancy and higher yields. Assuming there are no external shocks, the company currently forecasts that Net Yields for the third and fourth quarters of 2004 will increase in the range of 10% to 11% and 1% to 3%, respectively, compared to the same periods last year. On this basis, the company expects Net Yields for the full year 2004 will increase in the range of 7% to 9% from the prior year. The company first remarked on the improvement in the yield environment last spring, but the fact that this improvement has continued is very gratifying. The company attributes part of the yield improvements to its success in anticipating and managing market demand via its revenue management. Gross Cruise Costs and Net Cruise Costs, on a per Available Passenger Cruise Day basis, for the second quarter of 2004 increased 8.1% and 6.6%, respectively, compared to the same quarter in 2003. Consistent with industry and market trends, year-over-year cost comparisons were negatively impacted by increases in fuel prices. Year-over-year comparisons were also affected by an increase in marketing, selling and administrative expenses, as well as crew and port expenses. For the second half of 2004, the company estimates that Net Cruise Costs, on a per Available Passenger Cruise Day basis, will be flat to up 2% as compared to the same period from the prior year. The company estimates that Net Cruise Costs, on a per Available Passenger Cruise Day basis, for the third quarter of 2004 will increase in the range of 4% to 5% and for the fourth quarter of 2004 will be flat to down 2% compared to the same periods in 2003. Based upon these expectations, management anticipates 2004 earnings per share to be in the range of $2.25 to $2.40. The 2005 booking season has just begun and is off to a good start. While the company does not have enough visibility to provide specific yield guidance, demand is stronger than at the same time last year and early indications, assuming there are no external shocks, point to a positive yield environment. In a separate release, the company today announced that it was lengthening and refurbishing Enchantment of the Seas. The addition of a 73-foot midsection and refurbishment will increase the vessel's overall length to 990 feet and add 151 staterooms. The additional space and extensive renovations will also accommodate new public areas onboard Enchantment of the Seas, including a new specialty restaurant, Royal Caribbean International's hallmark Boleros Latin lounge and Latte'tudes coffee shop and ice cream parlor. In addition, existing spaces will be extensively reconditioned. The expansion of Enchantment of the Seas will add substantial revenue without adding commensurate costs, while significantly improving the overall passenger experience. The Enchantment of the Seas' transformation comes in the wake of extensive enhancements to Empress of the Seas and Monarch of the Seas. The line also has announced plans to revitalize Sovereign of the Seas this fall. "Projects like these give us a two-fold benefit -- upgrading our fleet while producing a good ROI on the capital expenditures," said Fain. During the second quarter, the company officially opened Cape Liberty Cruise Port in Bayonne, N.J. Cape Liberty Cruise Port is located at the northeast corner of The Peninsula at Bayonne Harbor, a 430-acre, man-made peninsula that extends into New York Harbor. The new cruise port offers passengers outstanding views of the harbor, the Verrazano Narrows Bridge, the Statue of Liberty and lower Manhattan. Royal Caribbean International has two ships at the new port in 2004, from May through October. Voyager of the Seas offers an alternating schedule of five-night Canada and nine-night Caribbean cruises. Empress of the Seas offers alternating six-night and eight-night Bermuda itineraries. The company has scheduled a conference call at 10 a.m. eastern daylight time today to discuss its earnings. This call can be listened to live or on a delayed basis on the company's investor relations web site at http://www.rclinvestor.com. Terminology Available Passenger Cruise Days Available Passenger Cruise Days represent double occupancy per cabin multiplied by the number of cruise days for the period. Gross Yields Gross Yields represent total revenues per Available Passenger Cruise Day. Net Yields Net Yields represent Gross Yields excluding commissions, transportation and other expenses and onboard and other expenses per Available Passenger Cruise Day. We utilize Net Yields for revenue management purposes and believe that it is the most relevant measure of our pricing performance. 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. We utilize Net Yields to manage our business on a day-to-day basis and believe it is a more relevant measure of our performance. As such, we do not believe that reconciling information is meaningful. Gross Cruise Costs Gross Cruise Costs represent total operating expenses and 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. We utilize Net Cruise Costs to manage our business on a day- to-day basis and believe it is a more relevant measure of our performance. As such, we do not believe that reconciling information is meaningful. Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International and Celebrity Cruises, with a combined total of 29 ships in service and one under construction. The company also offers unique cruisetour vacations in Alaska, Canada and Europe. Additional information can be found on http://www.royalcaribbean.com, http://www.celebrity.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 industry competition), changes in vacation industry capacity (including cruise capacity), 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, incidents involving cruise ships, reduced consumer demand for cruises as a result of any number of reasons (including armed conflict, terrorist attacks, geo-political and economic uncertainties or the unavailability of air service), changes in our stock price, interest rates or oil prices, 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) Second Quarter Ended Six Months Ended June 30, June 30, --------------------- ---------------------- 2004 2003 2004 2003 ---------- --------- ---------- ---------- Passenger ticket revenues $ 844,554 $663,817 $1,634,647 $1,316,947 Onboard and other revenues 298,445 242,024 570,036 469,058 ---------- --------- ---------- ---------- Total revenues 1,142,999 905,841 2,204,683 1,786,005 ---------- --------- ---------- ---------- Operating expenses Commissions, transportation and other 206,552 164,718 410,456 324,349 Onboard and other 77,294 62,191 135,177 112,733 Payroll and related 123,987 103,644 239,929 205,025 Food 65,755 57,534 131,591 115,257 Other operating 233,843 192,379 444,677 375,671 ---------- --------- ---------- ---------- Total operating expenses 707,431 580,466 1,361,830 1,133,035 Marketing, selling and administrative expenses 143,321 119,457 293,559 243,441 Depreciation and amortization expenses 97,661 88,715 194,240 177,384 ---------- --------- ---------- ---------- Operating income 194,586 117,203 355,054 232,145 ---------- --------- ---------- ---------- Other income (expense) Interest income 1,333 809 2,782 1,914 Interest expense, net of capitalized interest (77,146) (66,750) (152,886) (131,634) Other income (expense) 3,386 4,410 13,055 6,421 ---------- --------- ---------- ---------- (72,427) (61,531) (137,049) (123,299) ---------- --------- ---------- ---------- Net income $ 122,159 $ 55,672 $ 218,005 $ 108,846 ========== ========== ========== ========== EARNINGS PER SHA Basic $ 0.61 $ 0.29 $ 1.10 $ 0.56 ========== ========== ========== ========== Diluted $ 0.59 $ 0.28 $ 1.05 $ 0.56 ========== ========== ========== ========== WEIGHTED-AVERAGE SHARES OUTSTANDING: Basic 198,786 193,158 198,106 193,093 ========== ========== ========== ========== Diluted 216,730 195,882 216,335 195,394 ========== ========== ========== ========== STATISTICS Second Quarter Ended Six Months Ended June 30, June 30, --------------------- ---------------------- 2004 2003 2004 2003 ---------- --------- ---------- ---------- Occupancy as a percentage of total capacity 106.2% 101.8% 105.2% 101.7% Passenger Cruise Days 5,639,115 4,809,952 11,151,164 9,553,116 Available Passenger Cruise Days 5,312,326 4,726,704 10,601,862 9,390,296 ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) As of --------------------------- June 30, December 31, 2004 2003 ----------- ------------ (unaudited) ASSETS Current assets Cash and cash equivalents $ 706,337 $ 330,086 Trade and other receivables, net 94,957 89,489 Inventories 64,965 53,277 Prepaid expenses and other assets 94,865 101,698 ------------ ------------ Total current assets 961,124 574,550 Property and equipment - at cost less accumulated depreciation and amortization 10,238,150 9,943,495 Goodwill - less accumulated amortization of $138,606 278,561 278,561 Other assets 535,790 526,136 ------------ ------------ $12,013,625 $11,322,742 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 1,080,736 $ 315,232 Accounts payable 195,515 187,756 Accrued expenses and other liabilities 284,025 271,944 Customer deposits 1,037,036 729,595 ------------ ------------ Total current liabilities 2,597,312 1,504,527 Long-term debt 4,896,425 5,520,572 Other long-term liabilities 31,867 34,746 Commitments and contingencies Shareholders' equity Common stock ($.01 par value; 500,000,000 shares authorized; 198,990,778 and 196,106,658 shares issued) 1,990 1,961 Paid-in capital 2,159,053 2,100,612 Retained earnings 2,328,608 2,162,195 Accumulated other comprehensive income 6,367 5,846 Treasury stock (576,384 and 556,212 common shares at cost) (7,997) (7,717) ----------- ------------ Total shareholders' equity 4,488,021 4,262,897 ----------- ------------ $12,013,625 $11,322,742 ============ ============ ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Six Months Ended June 30, -------------------------- 2004 2003 --------- --------- OPERATING ACTIVITIES Net income $218,005 $108,846 Adjustments: Depreciation and amortization 194,240 177,384 Accretion of original issue discount on debt 25,401 24,139 Changes in operating assets and liabilities: Increase in trade and other receivables, net (5,686) (17,406) Increase in inventories (11,518) (10,976) Increase in prepaid expenses and other assets (43,192) (18,985) Increase (decrease) in accounts payable 6,555 (3,758) Increase (decrease) in accrued expenses and other liabilities 19,112 (23,207) Increase in customer deposits 307,227 162,388 Other, net 244 (7,558) --------- ---------- Net cash provided by operating activities 710,388 390,867 --------- ---------- INVESTING ACTIVITIES Purchases of property and equipment (476,002) (98,108) Other, net (3,951) (22,688) --------- ---------- Net cash used in investing activities (479,953) (120,796) --------- ---------- FINANCING ACTIVITIES Repayments of long-term debt, net (93,724) (169,672) Net proceeds from issuance of debt 225,000 244,910 Dividends (54,321) (50,211) Proceeds from exercise of stock options 55,329 4,230 Other, net 13,532 (12,929) --------- ---------- Net cash provided by financing activities 145,816 16,328 --------- ---------- Net increase in cash and cash equivalents 376,251 286,399 Cash and cash equivalents at beginning of period 330,086 242,584 --------- ---------- Cash and cash equivalents at end of period $706,337 $528,983 ========= ========== Supplemental Disclosure Cash paid during the year for: Interest, net of amount capitalized $131,623 $111,887 ========= Best regards, Ray LIGHTHOUSE TRAVEL 800-719-9917 or 805-566-3905 http://www.lighthousetravel.com |
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