CCL REPORT CARD

Takeaway: Even excluding the favorable cost shift, quarter was good and guidance solid

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance.

 

 

OVERALL

  • BETTER:  CCL gave slightly better FY 2012 yield guidance.  Volumes remained healthy, cost subdued, while pricing showed a pulse

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F4Q GUIDANCE 

  • SAME: No change in fleetwide yield/occupancy guidance.  NA brand pricing still down lower but occupancies improved. For EAA brands performance on yield and occupancy was consistent although European pricing weakened QoQ. Costa occupancies improved on lower yields.
  • PREVIOUSLY: 
    • Fleet-wide pricing (ex Costa) slightly lower on lower occupancy 
    • NA brands: Pricing slightly lower at lower occupancy
    • EAA brands (ex Costa): Pricing higher at lower occupancy but expect pricing to decline as the quarter closes
      • European pricing slightly higher at lower occupancy
      • Costa's pricing and occupancy are lower than a year ago.
      • All other pricing higher on lower occupancy

F1Q 2013 GUIDANCE

  • SAME:  Fleet-wide pricing remain slightly lower on lower occupancy.  NA pricing overall is slightly better than previous guidance while EAA pricing is worse.
  • PREVIOUSLY:
    • Fleet-wide capacity of 4.0%; fleet-wide pricing slightly lower on lower occupancy
    • NA
      • Overall pricing lower with flat occupancy
    • EAA
      • Overall pricing higher with lower occupancy
      • Costa pricing higher with lower occupancy

COSTA

  • LITTLE BETTER:  Costa pricing and occupancy should show improvement once the Concordia incident is lapped in 2013.  The operating loss for Costa in 2012 is tracking a little better than ~$100MM forecasted on the March call. A normalized level of profitability for Costa will take a few years to reach. Given the sale of 3 ships, CCL doesn't expect a return to pre-Concordia levels.
  • PREVIOUSLY:  "We do expect that when year-over-year occupancy levels begin to normalize, Costa's cruise prices for 2013 should start to firm up. Costa's revenue yields for 2012 are forecasted to be down in the mid-teens levels on a year-over-year basis and we expect Costa's operating loss to be in the range of $100 million."

SHARE REPURCHASE PROGRAM

  • BETTER:  CCL purchased 2MM shares in F3Q for $67MM.  $265MM remained under the buyback authorization program
  • PREVIOUSLY:  "At the moment... $330 million that remains on the program."

ONBOARD SPEND

  • SAME:  Excluding Costa, onboard increased 5%.  Both NA and EAA brands saw an increase of over 3% YoY compared to an increase of 2-3% in 1H12.  There healthy across most categories: casino, bar, and retail. 4Q11 recorded credit for guaranteed payments so the coming quarter will appear flat to down before adjustments. 
  • PREVIOUSLY:
    • "We are seeing some increases in onboard. We were very pleased. In fact, we took the guidance up almost a point on onboard from March to the June guidance, so the trend is very favorable and I hope it is a leading indicator."

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