What were the main drivers of revenue growth in the third quarter of 2005?

Revenue growth in the third quarter of 2005 was primarily driven by an increase in cruise ticket prices, a 1.9% rise in capacity compared to the prior year, and improvements in onboard revenues. Additionally, Net Yields increased by 6.9%, reflecting the company's ability to command higher prices.

How did the change in accounting for drydocking costs affect the financial results?

In the third quarter of 2005, Royal Caribbean changed its accounting method for drydocking costs to the deferral method, which is considered preferable as it reduces estimation judgment. This change resulted in a one-time cumulative effect gain of $52.5 million (or $0.22 per diluted share) for the nine-month period, which was recognized in net income.

What is the company's outlook regarding fuel costs and their impact?

Fuel costs remain a significant concern. For the third quarter of 2005, fuel prices were 47% higher than the previous year, and by late October 2005, they had risen an additional 17%. The company estimates that sustained high fuel prices could negatively impact earnings per share by approximately $0.10 for Q4 2005 and $0.60 for the full year 2006.

What is the company's capital expenditure plan and how is it being financed?

Royal Caribbean has significant capital commitments for new ship construction, with four ships on order totaling approximately $3.2 billion. Anticipated overall capital expenditures are projected to be $0.5 billion for 2005, $1.1 billion for each of 2006 and 2007, and $1.6 billion for 2008. The company expects to fund these commitments through a combination of cash flows from operations, existing credit facilities, and potential new debt or equity issuances.

RCL 10-Q Quarterly Report Q3 FY2005 — Revenue, Net Income, EPS

Summary

Royal Caribbean Cruises Ltd. (RCL) reported a strong third quarter and first nine months of 2005, demonstrating significant year-over-year growth in both revenue and net income. Total revenues for the third quarter increased by 8.4% to $1.5 billion, driven by higher cruise ticket prices, increased capacity, and robust onboard revenues. Net income for the quarter surged to $374.7 million, or $1.64 per diluted share, up from $282.5 million, or $1.26 per diluted share, in the prior year. For the nine-month period, total revenues reached $3.9 billion, with net income climbing to $719.6 million, or $3.22 per diluted share, a substantial increase from $500.5 million, or $2.31 per diluted share, in 2004. The company also benefited from a non-recurring gain of $52.5 million from a change in accounting principle related to drydocking costs. Despite rising fuel prices, which significantly impacted operating costs, RCL managed to improve net yields and control net cruise costs effectively. The company maintains a positive outlook for the remainder of 2005 and into 2006, expecting continued yield improvements, though fuel costs remain a key area of concern for the upcoming year.

Key Highlights

1Strong revenue growth with Q3 2005 total revenues up 8.4% to $1.5 billion and nine-month revenues up 7.9% to $3.9 billion.
2Significant net income increase in Q3 2005 to $374.7 million (diluted EPS $1.64) from $282.5 million (diluted EPS $1.26) in Q3 2004.
3Nine-month net income reached $719.6 million (diluted EPS $3.22), a substantial increase from $500.5 million (diluted EPS $2.31) in the prior year.
4Net Yields improved by 6.9% in Q3 and 7.1% for the nine-month period, indicating effective pricing power.
5The company recognized a one-time gain of $52.5 million from a change in accounting for drydocking costs.
6Despite a 47% increase in fuel prices for Q3 2005 compared to Q3 2004, Net Cruise Costs per APCD increased by a manageable 6.4% for the quarter.
7Advance bookings for 2006 show healthy demand with positive pricing trends, although future fuel costs remain a significant watch item.

ROYAL CARIBBEAN CRUISES LTD Quarterly Report for Q3 Ended Sep 30, 2005

Summary

Key Highlights

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