Summary
Royal Caribbean Cruises Ltd. (RCL) filed a Form 6-K report on August 8, 2001, detailing its financial results for the second quarter and the first six months ended June 30, 2001. The report indicates a notable increase in revenues, driven by capacity expansion through new vessel deliveries, although this was partially offset by a decline in revenue per passenger day and disruptions from unscheduled repairs. Despite revenue growth, net income and earnings per share decreased compared to the same period in 2000, influenced by higher operating expenses, increased interest expenses due to higher debt levels, and the impact of ship outages. The company continues to invest heavily in fleet expansion, with significant capital expenditures planned for new vessel construction. To support this growth and operational needs, RCL actively managed its debt, issuing new notes and drawing on credit facilities. While liquidity remains strong, investors should note the competitive pricing environment and the company's forecast for continued pressure on revenue per passenger day in the latter half of the year.
Key Highlights
- 1Revenue for the second quarter of 2001 increased by 20.7% to $821.7 million compared to $680.7 million in the prior year, driven by a 30.5% increase in capacity.
- 2Net income for the second quarter of 2001 decreased to $81.7 million ($0.42 diluted EPS) from $108.3 million ($0.56 diluted EPS) in the same period of 2000.
- 3Operating expenses rose significantly by 29.0% in Q2 2001 to $504.0 million, primarily due to the expanded fleet, with operating costs per available passenger cruise day decreasing slightly after accounting for ship incidents.
- 4The company incurred substantially higher interest expenses, with gross interest expense (excluding capitalized interest) increasing to $70.8 million in Q2 2001 from $42.4 million in Q2 2000, reflecting higher average debt levels.
- 5Capital expenditures for the first six months of 2001 were $1.0 billion, up from $0.6 billion in the prior year, mainly for new vessel deliveries and deposits on ships under construction.
- 6RCL issued new debt in early 2001, including Senior Notes and Liquid Yield Option(TM) Notes, and drew on a term loan facility to support its capital expenditure program and repay existing debt.
- 7The company forecasts net revenue per available passenger cruise day for the last six months of 2001 to be down 2%-3% year-over-year due to economic softness and industry capacity growth.