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StumbleUponAmbassadors' Continues Losses in Q1 2008 as MAL Revenues Decline
Cruise News posted on Mon, 05/05/2008 - 18:06
NEWPORT BEACH, Calif., May 5, 2008 -- Ambassadors International, which owns both Windstar Cruises and Majestic America Line, has released Q1 2008 earnings that reflect a continuing downward trend for the company's cruise operations.
While revenues rose due to the acquisition of Windstar last year, Majestic America Line showed a 20% decline in revenues.
The full release follows...
Title: Ambassadors International, Inc. Reports Increased Revenue and Improvement in Pretax Results for the First Quarter 2008
NEWPORT BEACH, Calif., May 5 -- Ambassadors International, Inc. (NASDAQ:AMIE) reported revenue of $56.8 million for the three months ended March 31, 2008, compared to $32.9 million, for the three months ended March 31, 2007, an increase of $24.0 million. Loss before benefit for income taxes for the three months ended March 31, 2008 decreased to $12.1 million from $14.3 million for the three months ended March 31, 2007, an improvement of $2.2 million.
For the three months ended March 31, 2008, the Company only reported a tax benefit of $0.1 million due its policy established in the fourth quarter of 2007 in which the Company records a valuation allowance equal to 100% of its domestic deferred tax assets. This is in contrast to the 39.9% effective tax rate used in the first quarter of 2007 which resulted in a tax benefit of $5.7 million. As a result, the Company reported a net loss of $12.0 million, or $1.10 per diluted share for the three months ended March 31, 2008, compared to a net loss of $8.6 million, or $0.77 per diluted share, for the three months ended March 31, 2007. Adjusting for the effects of the valuation allowance, the Company would have recorded a tax benefit of $0.2 million for the quarter ended March 31, 2007. On a comparable year-over-year basis, adjusting for the effects of the valuation allowance, net loss for the three months ended March 31, 2007 would have been $14.1 million or $1.27 per diluted share compared to net loss of $12.0 million or $1.10 per diluted share for the three months ended March 31, 2008, an improvement by $2.1 million or $0.17 per diluted share.
Comparison of First Quarter Results
Revenues in the first quarter of 2008 were $56.8 million compared to $32.9 million in the first quarter of 2007, an increase of $24.0 million. Cruise revenues increased $18.6 million primarily due to $19.4 million of additional revenue generated from Windstar Cruises which was acquired in April 2007. Marine revenues increased $5.9 million over the first quarter of 2007 as a result of an increase in sales in Bellingham Marine, the Company's marina construction business. Our travel, incentive and event related revenue increased $0.2 million primarily due to an increase in program volume. These increases in revenue were slightly offset by a decrease in insurance premiums earned of $0.6 million due to a decrease in premiums earned on existing insurance programs as a result of not entering into any new programs in 2008.
Costs and operating expenses were $68.1 million in the first quarter of 2008, an increase of $21.6 million from the first quarter of 2007. This increase was primarily due to cruise operating expenses and other selling, general and administrative and depreciation expenses associated with our cruise segment. Approximately $19.1 million of this increase was due to the addition of expenses associated with Windstar Cruises which was acquired in April 2007. In addition, cost and expenses in our marine division increased $5.1 million in the first quarter of 2008 compared to the same period in the prior year primarily due to the increase in cost of marine revenue resulting from increased revenues generated during the period.
We reported other expense for the quarter ended March 31, 2008 of $0.8 million compared to $0.6 million for the three months ended March 31, 2007. Other income (expense) for the quarter ended March 31, 2008 included $1.1 million in interest expense related to our convertible debt and $1.0 million in interest expense related to our ship financing, partially offset by insurance recoveries of $0.6 million for the Queen of the West and the Empress of the North related to incidents in 2006 and 2007, respectively, and $0.2 million in recovery from a marine group contract that was written off in 2007.
First Quarter Results and Statistics by Segment
Cruise
Three Months Three Months
Ended March 31, 2008 Ended March 31, 2007
Majestic Windstar Majestic Windstar*
(unaudited) (unaudited)
Statistical Information:
Sailing days 47 259 79 N/A
Passengers Carried 1,934 7,221 3,055 N/A
Occupancy Percentage 74.9% 94.9% 82.2% N/A
Passenger Cruise Days 12,696 50,547 17,964 N/A
APCD 16,943 53,256 21,858 N/A
APD $295 $257 $251 N/A
Three Months Three Months
Ended March 31, 2008 Ended March 31, 2007
Majestic Windstar Majestic Windstar*
(unaudited) (unaudited)
Revenue $4,371 $19,386 $5,202 N/A
Operating Income (Loss) (11,674) 281 (12,542) N/A
* Windstar was acquired in April 2007.
The following is additional summary of the Majestic America Line results by vessel for the quarter ended March 31, 2008 (in thousands, except passengers carried and APD):
Passengers Net Ticket
Carried APD Revenue
(unaudited)
Delta Queen - $ - $ -
American Queen 1,638 306 3,249
Total Mississippi River 1,638 $306 $3,249
Columbia Queen - $ - $ -
Queen of the West 131 163 150
Total Columbia River 131 $163 $150
Empress of the North 165 $300 $347
Notes:
In April 2008, a small fire occurred in the engine room of the Queen of the West while the vessel was cruising between The Dalles and John Day Locks in Oregon. The fire was quickly extinguished with no injuries to guests. The Columbia Queen was brought into service in April which was earlier than originally scheduled in order to accommodate guests while the Queen of the West is undergoing repairs. The initial incident sailing and one additional sailing were cancelled.
On April 29, 2008, the Company announced its plans to sell Majestic America Line. The Company is committed to operating the 2008 season of Majestic America Line while conducting the exit of the business in an orderly and effective manner.
The following is summary of the cruise booking trends for each of our brands as of April 19, 2008:
As of April 19, 2008
Majestic Windstar
(unaudited)
Cruise Booking Trend:
Passengers Booked 21,703 21,199
APD $378 $319
The following is additional summary of the Majestic America Line booking trends by vessel as of April 19, 2008 compared to the same week in 2007 (in thousands, except passengers carried and APD) (unaudited):
Passengers Net Ticket
Booked APD Revenue
Delta Queen:
2008 4,146 $365 $11,708
2007 3,685 298 $7,386
Increase (decrease) 461 $67 4,322
Percentage change 12.5% 22.5% 58.5%
American Queen:
2008 9,715 $379 $25,354
2007 9,901 314 19,398
Increase (decrease) (186) $65 5,956
Percentage change (1.9%) 20.7% 30.7%
Total Mississippi River:
2008 13,861 $374 $37,062
2007 13,586 309 26,785
Increase (decrease) 275 $65 10,277
Percentage change 2.0% 21.0% 38.4%
Columbia Queen:
2008 2,262 $396 $6,266
2007 2,567 346 6,215
Increase (decrease) (305) $50 51
Percentage change (11.9%) 14.5% 0.8%
Queen of the West:
2008 2,708 $405 $7,682
2007 3,732 412 10,757
Increase (decrease) (1,024) $(7) (3,075)
Percentage change (27.4%) (1.7%) (28.6%)
Total Columbia River:
2008 4,970 $401 $13,948
2007 6,299 385 16,972
Increase (decrease) (1,329) $16 (3,024)
Percentage change (21.1%) 4.1% (17.8%)
Empress of the North:
2008 2,872 $357 $7,442
2007 5,355 415 15,753
Increase (decrease) (2,483) $(58) (8,311)
Percentage change (46.4%) (14.0%) (52.8%)
Marine
Three Months Ended
March 31,
2008 2007
(unaudited)
Revenue $29,352 $23,484
Operating Income 968 226
As of As of
March 31, December 31,
2008 2007
(unaudited)
Marine Backlog $47,820 $66,704
Travel and Events
Three Months Ended
March 31,
2008 2007
(unaudited)
Revenue $3,726 $3,524
Operating Income 375 361
Cruise Related Terminology
Available Passenger Cruise Days ("APCD")
APCD's are our measurement of capacity and represent double occupancy per cabin multiplied by the number of cruise days for the period.
Occupancy Percentage
Occupancy percentage, in accordance with the 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 in their respective cruises.
Average Per Diem ("APD")
Average Per Diem represents average daily net ticket revenue our passengers pay for their respective cruises.
Net Ticket Revenue
Net ticket revenue represents total cruise ticket revenues plus non-discountable amounts, less discounts and commissions.
Conference Call
Ambassadors International, Inc. will host a conference call to discuss the results of operations on Tuesday, May 6, 2008 at 8:30 a.m. Pacific Daylight Time. Interested parties may join the call by dialing (866) 632-2359, conference ID #: ANALYST. The conference call may also be joined via the Internet at http://www.ambassadors.com/. For conference replay access, parties may dial (800) 642-1687, conference ID #: 44840078 and follow the prompts or visit http://www.ambassadors.com/. Post-call replay will be available two hours following the completion of our call.
About Ambassadors International, Inc.
Ambassadors International, Inc. is a cruise, marine, and travel and event company. The Company operates Windstar Cruises, an international, luxury cruise line and Majestic America Line, a North American river and coastal cruising company. The Company is also a global provider of construction and consulting services to marina owners. In addition, the Company provides travel and event services. The Company is headquartered in Newport Beach, California. In this press release, any reference to "Company," "Ambassadors," "management," "we," "us" and "our" refers to Ambassadors International, Inc. and its management team.
Forward-Looking Statements
This press release contains forward-looking statements, including without limitation, statements regarding anticipated future financial performance and potential utilization of established tax benefits that involve various risks and uncertainties. The forward-looking statements contained in this release are based on our current expectations and entail various risks and uncertainties that could cause our actual results to differ materially from those suggested in our forward-looking statements. We believe that such risks and uncertainties include, among others, general economic and business conditions; overall conditions in the cruise, marine, travel and insurance industries; potential claims related to our reinsurance business; further declines in the fair market value of our investments; lower investment yields; unexpected events that disrupt the operations of our cruise operations; environmental related factors; our ability to successfully integrate the operations of companies or businesses we acquire and realize the expected benefits of our acquisitions; our ability to successfully and efficiently operate the businesses that we acquire; our ability to compete effectively in the U.S. and international cruise markets; our ability to compete effectively in the U.S. and international marina construction markets, including our ability to obtain construction contracts; our ability to effectively and efficiently manage our rapid growth; our ability to continue to identify attractive acquisition targets and consummate future acquisitions on favorable terms; our ability to accurately estimate contract risks; our ability to service our debt and other factors discussed more specifically in our annual, quarterly and periodic filings with the Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K. Any projections provided in this release are based on limited information currently available to management and are subject to change. We are providing this information as of the date of this release and do not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
Additional Information
For further information please contact: Blake Barnett of Ambassadors International, Inc. at (949) 759-5900.
Summary financial information is as follows (in thousands, except per share amounts):
Three Months
Ended March 31,
2008 2007
(unaudited)
Revenues:
Passenger ticket revenue $18,783 $4,843
Onboard and other cruise revenue 4,974 359
Marine revenue 29,352 23,484
Travel, incentive and event related 3,726 3,524
Net insurance premiums earned 5 654
56,840 32,864
Costs and operating expenses:
Cruise operating expenses 20,601 7,001
Cost of marine revenue 22,545 19,444
Selling and tour promotion 6,416 6,524
General and administrative 14,999 11,320
Depreciation and amortization 3,476 1,560
Loss and loss adjustment expenses, insurance
acquisition costs and other operating expenses 97 715
68,134 46,564
Operating loss (11,294) (13,700)
Other income (expense):
Interest and dividend income 467 692
Interest expense (2,073) (1,005)
Realized losses on sale of available-for-sale
securities - (48)
Other, net 817 (190)
(789) (551)
Loss before benefit for income taxes (12,083) (14,251)
Income tax benefit (106) (5,689)
Net loss $(11,977) $(8,562)
Earnings (loss) per share:
Basic $(1.10) $(0.77)
Diluted $(1.10) $(0.77)
Weighted-average common shares outstanding:
Basic 10,890 11,089
Diluted 10,890 11,089
The Company operates in the following business segments: (i) Cruise, which includes the operations of Ambassadors Cruise Group, LLC (ii) Marine, which includes the operations of Ambassadors Marine Group, LLC, (iii) Travel and Events, which includes the operations of Ambassadors, LLC, and (iv) Corporate and Other, which consists of general corporate assets (primarily cash and cash equivalents and investments), the operations of Cypress Reinsurance, Ltd and other activities which are not directly related to our operating segments.
Summary of selected financial information is as follows:
Three Months
Ended March 31,
2008 2007
(unaudited)
Revenues:
Passenger ticket revenue $18,783 $4,843
Onboard and other cruise revenue 4,974 359
Marine revenue 29,352 23,484
Travel, incentive and event related 3,726 3,524
Net insurance premiums earned 5 654
56,840 32,864
Costs and operating expenses:
Cruise operating expenses 20,601 7,001
Cost of marine revenue 22,545 19,444
Selling and tour promotion 6,416 6,524
General and administrative 14,999 11,320
Depreciation and amortization 3,476 1,560
Loss and loss adjustment expenses, insurance
acquisition costs and other operating expenses 97 715
68,134 46,564
Operating loss (11,294) (13,700)
Other income (expense):
Interest and dividend income 467 692
Interest expense (2,073) (1,005)
Realized losses on sale of available-for-sale
securities - (48)
Other, net 817 (190)
(789) (551)
Loss before benefit for income taxes (12,083) (14,251)
Income tax benefit (106) (5,689)
Net loss $(11,977) $(8,562)
Earnings (loss) per share:
Basic $(1.10) $(0.77)
Diluted $(1.10) $(0.77)
Weighted-average common shares outstanding:
Basic 10,890 11,089
Diluted 10,890 11,089
Summary balance sheet information is as follows (in thousands):
Three Months
Ended March 31,
2008 2007
(unaudited)
Segment Information (in thousands):
Revenue:
Cruise $23,757 $5,202
Marine 29,352 23,484
Travel and Events 3,726 3,524
Corporate and Other 5 654
$56,840 $32,864
Operating Income (Loss)
Cruise $(11,393) $(12,542)
Marine 968 226
Travel and Events 375 361
Corporate and Other (1,244) (1,745)
$(11,294) $(13,700)
Summary balance sheet information is as follows (in thousands):
March 31, December 31,
2008 2007
(unaudited)
Assets:
Current assets:
Cash and cash equivalents $17,292 $21,998
Restricted cash 32,528 31,084
Available-for-sale securities 2,396 2,514
Accounts receivables and other receivables,
net 34,585 40,798
Costs in excess of billings on construction
contracts 9,236 8,410
Premiums receivable 8,493 10,188
Reinsurance recoverable 660 1,148
Inventory 6,592 5,751
Deferred income taxes 1,244 1,262
Prepaid costs and other current assets 12,009 8,530
Total current assets 125,035 131,683
Property, vessels and equipment, net 220,804 219,793
Goodwill 9,181 9,181
Other intangibles, net 10,008 11,152
Other assets 4,474 4,680
Total assets $369,502 $376,489
Liabilities:
Current liabilities:
Accounts payable $31,298 $36,564
Passenger and participant deposits 61,002 47,067
Accrued expenses 14,663 16,175
Billings in excess of costs on construction
contracts 14,418 13,108
Loss and loss adjustment expense reserves 5,089 6,674
Current portion of long term debt 4,587 5,479
Total current liabilities 131,057 125,067
Long term debt, net of current portion and
net of discount 159,604 161,584
Long term deferred tax liabilities 1,635 1,676
Long term passenger and participant deposits 305 35
Total liabilities 292,601 288,362
Stockholders' equity 76,901 88,127
Total liabilities and stockholders' equity $369,502 $376,489
Keywords: