Royal Caribbean Navigates Rough Seas: Fool by Numbers

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On May 1, cruise line operator Royal Caribbean (NYSE: RCL) released first-quarter results for the period ended March 31. Here are the quick and dirty details.

• Total sales grew 6.7%. Management cited seasonality and weak Caribbean demand in explaining the anemic growth.
• Reported net yields fell 4.2%. Net yields are similar to same-store sales and for the company represent "cruise revenues earned by us net of our most significant variable costs."
• Diluted earnings fell to $0.04 as higher expenses also hit the bottom line.
• Management expects a flat to 2% net yield increase for 2007 and earnings of $3.05-$3.20 per share. It's calling for second-quarter earnings of $0.59-$0.63 and has a way to go to meet full-year guidance.    
• Royal Caribbean has a three-star rating in Motley Fool CAPS, ahead of rival Carnival Cruises (NYSE: CCL) (NYSE: CUK) at two stars. Cruise spa operator Steiner Leisure (Nasdaq: STNR) carries the highest five-star rating while Walt Disney (NYSE: DIS) runs a couple of cruise ships and sports a four-star rating.

(Figures in thousands, except per-share data)

Income Statement Highlights

	Avg. Est.	Q1 2007	Q1 2006	Change
Sales	$1,180,000	$1,223,126	$1,146,536	6.7%
Net Profit	--	$8,825	$119,499	(92.6%)
EPS	$0.06	$0.04	$0.55	(92.7%)
Diluted Shares		214,005	230,695	(7.2%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
Operating Margin	6.51%	12.30%	(5.79)
Net Margin	0.72%	10.42%	(9.70)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$199,616	$271,977	(26.6%)
Accounts Rec.	$207,020	$82,259	151.7%
Inventory	$80,781	$59,027	36.9%

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable	$194,271	$150,092	29.4%
Long-Term Debt	$4,845,962	$3,592,772	34.9%

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2007	Q1 2006	Change
Cash From Ops.	$359,870	$343,888	4.6%
Capital Expenditures	$152,173	$135,898	12.0%
Free Cash Flow	$207,697	$207,990	(0.1%)

Find out why free cash flow is a Fool's best friend.

Related Foolishness:

• Warren Buffett's Priceless Investment Advice
• Royal Caribbean Submerged
• The Best Growth Stocks

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Steiner Leisure is a Rule Breakers pick, and Disney is a Stock Advisor selection. To see what other great companies have been recommended to Stock Advisor subscribers, take a free 30-day trial today.

Fool contributor Ryan Fuhrmann is long shares of Royal and Carnival but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned. The Fool has an ironclad disclosure policy.