Summary
Royal Caribbean Cruises Ltd. (RCL) reported its second-quarter 2007 financial results, showcasing a solid performance driven by increased capacity and slightly improved yields. Total revenues rose by 14.6% year-over-year, largely due to the acquisition of Pullmantur, the delivery of the "Liberty of the Seas," and the full-year contribution of "Freedom of the Seas." Despite higher operating expenses associated with expansion and the new acquisition, net income saw a modest increase to $128.7 million, or $0.60 per diluted share, up from $122.4 million, or $0.57 per diluted share, in the prior year's second quarter. For the first six months of 2007, however, net income decreased significantly to $137.6 million from $241.9 million in the same period of 2006. This decline is primarily attributable to a substantial increase in interest expenses, largely stemming from higher average debt levels and recent debt issuances used to finance acquisitions and new ship deliveries. The company is actively investing in its fleet expansion, with significant capital expenditures planned for the next several years, including seven new ships on order. Despite the increased debt load and planned future investments, RCL maintains a strong liquidity position with substantial cash and available credit facilities.
Key Highlights
- 1Total revenues for Q2 2007 increased by 14.6% to $1.5 billion, driven by a 12.4% increase in capacity and a 1.9% rise in Gross Yields, partially offset by a 0.9% increase in Net Yields.
- 2Net income for Q2 2007 was $128.7 million ($0.60 per diluted share), an improvement from $122.4 million ($0.57 per diluted share) in Q2 2006, indicating profitable operations despite increased expenses.
- 3For the first six months of 2007, net income significantly decreased to $137.6 million from $241.9 million in the same period of 2006, mainly due to a substantial rise in interest expenses.
- 4The company took delivery of the "Liberty of the Seas" and continued its fleet expansion, with seven new ships on order expected to add approximately 25,800 berths.
- 5Capital expenditures are projected to be substantial, with approximately $6.9 billion anticipated for the seven ships on order, and overall capital expenditures estimated at $1.3 billion for 2007 and increasing in subsequent years.
- 6Net Debt-to-Capital ratio increased to 47.3% as of June 30, 2007, from 43.4% in the prior year, reflecting higher debt levels primarily due to financing new ship deliveries and acquisitions.
- 7The company launched its new luxury cruise brand, Azamara Cruises, to target the deluxe cruise segment.