Royal Caribbean Reports Better Than Expected Fourth Quarter Earnings and 2010 Outlook
By Royal Caribbean Cruises Ltd., PRNEWednesday, January 27, 2010
MIAMI, January 28 - Royal Caribbean Cruises Ltd. (NYSE: RCL; Oslo) today announced earnings
for the fourth quarter and full year of 2009 and provided guidance for 2010.
Key Highlights
-- Fourth quarter 2009 net income increased to US$3.4 million, or US$0.02
per share, compared to net income of US$1.5 million, or US$0.01 per
share in 2008. The results were better than the company's previous
guidance of a loss of approximately (US$0.05) per share due to
stronger than expected revenues and continued good cost discipline.
-- Net Yields for the fourth quarter decreased 7.2% as compared to 2008
and guidance of a 7% to 8% decline.
-- Net Cruise Costs per APCD ("NCC") for the fourth quarter decreased
10.5% versus 2008. NCC excluding fuel for the fourth quarter declined
8.8% versus 2008.
-- For the full year 2009, Net Yields declined 14.2%; NCC excluding fuel
declined 7.0%; and earnings per share were US$0.75.
-- The company noted an improving booking environment and expects Net
Yields for 2010 to improve 3% to 6% versus 2009. First quarter 2010
Net Yields are expected to improve approximately 2%.
-- NCC excluding fuel are expected to be flat to slightly up for the full
year of 2010 and up around 1% in the first quarter. After adjusting
for changes in currency, NCC excluding fuel are forecasted to be flat
to down slightly for the first quarter and the full year.
-- EPS for the year (assuming current fuel prices) is expected to be in
the range of US$2.00 to US$2.20 including US$0.39 related to a legal
settlement. The first quarter EPS is expected to be in the range of
US$0.25 to US$0.30.
"Good cost discipline and better than expected revenues have enabled us
to end 2009 on a decidedly upbeat note," said Richard D. Fain, chairman and
chief executive officer. "We're happy to say goodbye to 2009 and pleased to
embark on 2010 with an outlook of solid yield improvement, strong cost
controls and improving returns to our shareholders." Fain continued, "We are
also benefiting from the terrific success of our latest Oasis- and
Solstice-class vessels. These ships are generating very healthy returns due
to high guest satisfaction, excellent revenues and lower operating costs."
Fourth Quarter 2009 Results
Royal Caribbean Cruises Ltd. today announced net income for the fourth
quarter 2009 of US$3.4 million, or US$0.02 per share, compared to net income
of US$1.5 million, or US$0.01 per share, in 2008.
Revenues were unchanged year over year at US$1.5 billion for the fourth
quarter of both 2009 and 2008. Net Yields decreased 7.2% from the prior year
or 9.7% after adjusting for year over year changes in currency. Net Yields
were at the upper end of previous guidance due to strength in both ticket and
onboard revenues.
NCC decreased 10.5% from the prior year or 12.4% after adjusting for
changes in currency. NCC excluding fuel, declined 8.8% from the prior year or
11.2% after adjusting for changes in currency.
Fuel costs were US$5.0 million higher than the company's previous
calculations. Fourth quarter pricing averaged US$500 per metric ton and
consumption was 325.2 thousand metric tons.
Full Year 2009 Results
Net income for the full year 2009 was US$162.4 million, or US$0.75 per
share, compared to net income of US$573.7 million, or US$2.68 per share, for
the full year 2008. Revenues for the full year 2009 declined to US$5.9
billion from revenues of US$6.5 billion for the full year 2008. Fuel costs
per metric ton decreased 18% to US$486 for the full year and consumption was
1,235,000 metric tons. Fuel expenses for the year would have been higher if
not for a 3.7% consumption improvement per APCD during 2009. Since 2005 the
company has reduced energy consumption per APCD by 11%.
Revenue Environment
The company reported that early "wave season" bookings have been
encouraging and that since the beginning of September, new bookings have been
running approximately 30% higher than the corresponding period a year ago.
Current price levels are also ahead of the same time last year across the
majority of the company's product groups.
The company reported that booked load factors and average per diems are
ahead of same time last year for all four quarters and the full year. The
company expects net yields to increase approximately 2% for the first quarter
and between 3% and 6% for the full year. After adjusting for changes in
currency, Net Yields are forecasted to be around flat in the first quarter
and increase 3% to 5% for the full year.
"Wave season is off to a promising start," said Brian J. Rice, executive
vice president and chief financial officer. "It is still early in the selling
cycle for 2010, but our order book is stronger and prices are higher than at
this same time last year. We clearly are not at pre-recession demand levels,
but we are pleased to see solid yield recovery underway."
Legal Settlement
In addition to the previously disclosed US$0.30 per share legal
settlement, a further US$0.09 per share gain will be recognized related to
the settlement in the first quarter. As a result, a total of US$0.39 will be
recorded as a one-time gain in other income/(expense) during the first
quarter of 2010.
Expense Guidance
NCC are forecasted to be flat for the first quarter and flat to up
slightly for the full year 2010. After adjusting for changes in currency, NCC
are forecasted to decline approximately (1%) in the first quarter and be flat
for the full year.
Excluding fuel, NCC are expected to increase approximately 1% for the
first quarter and are expected to be flat to up slightly for the full year.
After adjusting for changes in currency, NCC excluding fuel are forecasted to
be flat to down slightly for the first quarter and the full year.
Fuel Expense
The company does not forecast fuel price changes and its cost
calculations are based on current at-the-pump prices net of hedging impacts.
Based on today's fuel prices the company has included US$163 million and
US$687 million of fuel expense in its first quarter and full year 2010
guidance, respectively.
The company's fuel consumption is currently 58% hedged for the first
quarter. In keeping with its previously disclosed hedging strategy,
forecasted consumption is now 50% hedged in 2010, 50% hedged in 2011 and 15%
hedged in 2012.
(All currency is in US Dollars unless noted otherwise)
First Quarter 2010 Full Year 2010
------------------ --------------
Fuel Consumption 320,000 mt 1,379,000 mt
Fuel Expenses $163 Million $687 Million
Percent Hedged (forward consumption) 58% 50%
Impact of 10% change in fuel prices $7 Million $34 Million
Forward Guidance Summary
The company provided the following estimates for the first quarter and
full year 2010. Except for EPS, interest expense and depreciation &
amortization, all estimates are as compared to the first quarter and full
year 2009, respectively.
First Quarter 2010 Full Year 2010
------------------ --------------
EPS $0.25 - $0.30 $2.00 - $2.20
Capacity 9.2% 11.4%
Net Yields Approx. 2% 3% to 6%
Net Cruise Costs per APCD Approx. Flat Flat to up slightly
Net Cruise Costs per APCD,
excluding Fuel Approx. 1% Flat to up slightly
Depreciation and
Amortization $155 to $160 Million $640 to $660 Million
Interest Expense $82 to $87 Million $330 to $350 Million
Liquidity and Financing Arrangements
As of December 31, 2009, liquidity was US$0.9 billion, including cash and
the undrawn portion of the company's unsecured revolving credit facility. The
company recently announced financing arrangements for Allure of the Seas and
further commented that outside of possible opportunistic actions, it does not
anticipate a need to access the capital markets during 2010.
Capital Expenditures and Capacity Guidance
Based on current ship orders, projected capital expenditures for 2010,
2011 and 2012 are unchanged at US$2.2 billion, US$1.0 billion, and US$1.0
billion, respectively.
Capacity increases for the same three years are 11.4%, 8.9% and 2.7%,
respectively.
Conference Call Scheduled
The company has scheduled a conference call at 10 a.m. Eastern Daylight
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
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 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,
Azamara Club Cruises and CDF Croisieres de France. The company has a combined
total of 38 ships in service and four 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
www.royalcaribbean.com, www.celebrity.com,
www.pullmantur.es, www.azamaraclubcruises.com or
www.rclinvestor.com.
Certain statements in this release constitute forward-looking statements
under the Private Securities Litigation Reform Act of 1995. Words such as
"anticipate", "believe", "could", "estimate", "expect", "goal", "intend",
"may", "plan", "project", "seek", "should", "will", and similar expressions
are intended to identify these 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. Examples of these risks, uncertainties and other factors include,
but are not limited to the following: the continuing adverse impact of the
worldwide economic downturn and the persistent U.S. unemployment rate on the
demand for cruises, the impact of the economic downturn on the availability
of our credit facility and our ability to generate cash flows from operations
or obtain new borrowings from the credit or capital markets in amounts
sufficient to satisfy our capital expenditures, debt repayments and other
financing needs, the impact of disruptions in the global financial markets on
the ability of our counterparties and others to perform their obligations to
us, the uncertainties of conducting business internationally and expanding
into new markets, the volatility in fuel prices and foreign exchange rates,
the impact of changes in operating and financing costs, including changes in
foreign currency, interest rates, fuel, food, payroll, airfare for our
shipboard personnel, insurance and security costs, impact of problems
encountered at shipyards and their subcontractors including insolvency or
financial difficulties, vacation industry competition and changes in industry
capacity and overcapacity, the impact of compliance with or changes in tax,
environmental, health, safety and other laws and regulations affecting our
business or our principal shareholders, the impact of pending or threatened
litigation, enforcement actions, fines or penalties, the impact of delayed or
cancelled ship orders, the impact of emergency ship repairs, including the
related lost revenue, the impact on prices of new ships due to shortages in
available shipyard facilities, component parts and shipyard consolidations,
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 and the unavailability or cost of air service, the
international political climate, fears of terrorist and pirate attacks, armed
conflict and the resulting concerns over safety and security aspects of
traveling, the impact of the spread of contagious diseases, the impact of
changes or disruptions to external distribution channels for our guest
bookings, the loss of key personnel or our inability to retain or recruit
qualified personnel, changes in our stock price or principal shareholders,
uncertainties of a foreign legal system as we are not incorporated in the
United States, the unavailability of ports of call, 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 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 www.rclinvestor.com.
Financial Tables Follow
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Quarter Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Passenger ticket
revenues $1,029,236 $1,054,088 $4,205,709 $4,730,289
Onboard and other
revenues 422,431 402,189 1,684,117 1,802,236
------- ------- --------- ---------
Total revenues 1,451,667 1,456,277 5,889,826 6,532,525
--------- --------- --------- ---------
Cruise operating expenses:
Commissions,
transportation
and other 256,517 274,003 1,028,867 1,192,316
Onboard and other 109,436 94,405 457,772 458,385
Payroll and Related 176,476 169,870 681,852 657,721
Food 90,562 87,090 345,272 342,620
Fuel 162,586 182,200 600,203 722,007
Other operating 241,668 267,252 957,136 1,030,617
------- ------- ------- ---------
Total cruise operating
expenses 1,037,245 1,074,820 4,071,102 4,403,666
Marketing, selling and
administrative expenses 185,655 183,918 761,999 776,522
Depreciation and
amortization expenses 146,412 133,980 568,214 520,353
------- ------- ------- -------
Operating Income 82,355 63,559 488,511 831,984
------ ------ ------- -------
Other income (expense):
Interest income 1,902 2,973 7,016 14,116
Interest expense, net
of interest capitalized (78,311) (87,718) (300,012) (327,312)
Other (expense) income (2,593) 22,665 (33,094) 54,934
------ ------ ------- ------
(79,002) (62,080) (326,090) (258,262)
------- ------- -------- --------
Net Income $ 3,353 $ 1,479 $ 162,421 $ 573,722
========== ========== ========== ==========
Earnings Per Share:
Basic $0.02 $0.01 $0.76 $2.69
===== ===== ===== =====
Diluted $0.02 $0.01 $0.75 $2.68
===== ===== ===== =====
Weighted-Average Shares
Outstanding:
Basic 213,925 213,575 213,809 213,477
======= ======= ======= =======
Diluted 216,386 213,789 215,295 214,195
======= ======= ======= =======
STATISTICS
Quarter Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Passengers Carried 1,012,059 923,806 3,970,278 4,017,554
Passenger Cruise Days 7,397,151 6,938,413 28,503,046 27,657,578
APCD 7,335,032 6,823,470 27,821,224 26,463,637
Occupancy 100.8% 101.7% 102.5% 104.5%
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
As of
------
December 31, December 31,
2009 2008
---- ----
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 284,619 $ 402,878
Trade and other receivables, net 338,804 271,287
Inventories 107,877 96,077
Prepaid expenses and other assets 180,997 125,160
Derivative financial instruments 114,094 81,935
------- ------
Total current assets 1,026,391 977,337
Property and equipment, net 15,268,053 13,878,998
Goodwill 792,373 779,246
Other assets 1,146,677 827,729
--------- -------
$18,233,494 $16,463,310
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $756,215 $471,893
Accounts payable 264,554 245,225
Accrued interest 147,547 128,879
Accrued expenses and other liabilities 487,764 687,369
Customer deposits 1,059,524 968,520
Hedged firm commitments 33,426 172,339
------ -------
Total current liabilities 2,749,030 2,674,225
Long-term debt 7,663,555 6,539,510
Other long-term liabilities 321,192 446,563
Commitments and contingencies
Shareholders' equity
Preferred stock ($0.01 par value; 20,000,000
shares authorized; none outstanding) - -
Common stock ($0.01 par value; 500,000,000
shares authorized; 224,258,247 and 223,899,076
shares issued, December 31, 2009 and
December 31, 2008, respectively) 2,243 2,239
Paid-in capital 2,973,495 2,952,540
Retained earnings 4,754,950 4,592,529
Accumulated other comprehensive income (loss) 182,733 (319,936)
Treasury stock (10,308,683 and 11,076,701
common shares at cost, December 31, 2009 and
December 31, 2008, respectively) (413,704) (424,360)
-------- --------
Total shareholders' equity 7,499,717 6,803,012
--------- ---------
$18,233,494 $16,463,310
=========== ===========
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended
December 31,
------------
2009 2008
---- ----
(unaudited)
Operating Activities
Net income $162,421 $573,722
Adjustments:
Depreciation and amortization 568,214 520,353
Changes in operating assets and liabilities:
(Increase) decrease in trade and other
receivables, net (3,633) 28,150
Increase in inventories (11,295) (140)
(Increase) decrease in prepaid expenses and
other assets (3,085) 12,884
Increase in accounts payable 16,424 22,322
Increase (decrease) in accrued interest 18,668 (3,571)
Increase in accrued expenses and other
liabilities 15,391 39,766
Increase (decrease) in customer deposits 32,038 (118,541)
Other, net 49,738 (3,690)
------ ------
Net cash provided by operating activities 844,881 1,071,255
------- ---------
Investing Activities
Purchases of property and equipment (2,477,549) (2,223,534)
Cash received on settlement of derivative
financial instruments 110,830 269,815
Loans and equity contributions to
unconsolidated affiliates (181,683) (52,323)
Proceeds from the sale of Celebrity Galaxy 290,928 -
Proceeds from sale of investment in Island
Cruises - 51,400
Other, net (16,983) (22,607)
------- -------
Net cash used in investing activities (2,274,457) (1,977,249)
---------- ----------
Financing Activities
Proceeds from issuance of debt 2,317,158 2,223,402
Debt issuance costs (61,157) (23,872)
Repayments of debt (948,467) (987,547)
Dividends paid - (128,045)
Proceeds from exercise of common stock options 569 3,817
Other, net 4,103 (4,369)
----- ------
Net cash provided by financing activities 1,312,206 1,083,386
--------- ---------
Effect of exchange rate changes on cash (889) (5,298)
Net (decrease) increase in cash and cash
equivalents (118,259) 172,094
Cash and cash equivalents at beginning of
period 402,878 230,784
------- -------
Cash and cash equivalents at end of period $284,619 $402,878
======== ========
Supplemental Disclosure
Cash paid during the period for:
Interest, net of amount capitalized $288,458 $321,206
======== ========
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,
2009 2008 2009 2008
---- ---- ---- ----
Passenger ticket revenues $1,029,236 $1,054,088 $4,205,709 $4,730,289
Onboard and other revenues 422,431 402,189 1,684,117 1,802,236
------- ------- --------- ---------
Total revenues 1,451,667 1,456,277 5,889,826 6,532,525
========= ========= ========= =========
Less:
Commissions,
transportation and
other 256,517 274,003 1,028,867 1,192,316
Onboard and other 109,436 94,405 457,772 458,385
------- ------ ------- -------
Net revenues $1,085,714 $1,087,869 $4,403,187 $4,881,824
========== ========== ========== ==========
APCD 7,335,032 6,823,470 27,821,224 26,463,637
Gross Yields $ 197.91 $ 213.42 $ 211.70 $ 246.85
Net Yields $ 148.02 $ 159.43 $ 158.27 $ 184.47
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,
2009 2008 2009 2008
---- ---- ---- ----
Total cruise operating
expenses $1,037,245 $1,074,820 $4,071,102 $4,403,666
Marketing, selling and
administrative expenses 185,655 183,918 761,999 776,522
------- ------- ------- -------
Gross Cruise Costs 1,222,900 1,258,738 4,833,101 5,180,188
========= ========= ========= =========
Less:
Commissions,
transportation and
other 256,517 274,003 1,028,867 1,192,316
Onboard and other 109,436 94,405 457,772 458,385
------- ------ ------- -------
Net Cruise Costs $ 856,947 $ 890,330 $3,346,462 $3,529,487
========== ========== ========== ==========
APCD 7,335,032 6,823,470 27,821,224 26,463,637
Gross Cruise Costs per
APCD $ 166.72 $ 184.47 $ 173.72 $ 195.75
Net Cruise Costs per
APCD $ 116.83 $ 130.48 $ 120.28 $ 133.37
Net Debt-to-Capital was calculated as follows (in thousands):
As of
December 31, December 31,
------------ ------------
2009 2008
---- ----
Long-term debt, net of
current portion $ 7,663,555 $ 6,539,510
Current portion of long-
term debt 756,215 471,893
----------- -----------
Total debt 8,419,770 7,011,403
Less: Cash and cash
equivalents 284,619 402,878
------- -------
Net Debt $ 8,135,151 $ 6,608,525
=========== ===========
Total shareholders'
equity $ 7,499,717 $ 6,803,012
Total debt 8,419,770 7,011,403
----------- -----------
Total debt and
shareholders' equity 15,919,487 13,814,415
========== ==========
Debt-to-Capital 52.9% 50.8%
Net Debt 8,135,151 6,608,525
--------- ---------
Net Debt and
shareholders' equity $15,634,868 $13,411,537
=========== ===========
Net Debt-to-Capital 52.0% 49.3%
Ian Bailey, Royal Caribbean Cruises Ltd., +1-305-982-2625
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