• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Takeaway: Strong close-in bookings and controlled costs helped RCL deliver an strong quarter. No 2013 guidance, but RCL feels good about next year

Strong close-in bookings and continued controlled costs helped RCL deliver an impressive quarter. Without providing 2013 guidance, RCL felt optimistic on 2013.

"The company noted that while it is very early in the 2013 bookings cycle and visibility at this time is limited, the company is encouraged by the trends so far.  For the year 2013, booked load factors and average per diems are both slightly higher currently than at this same time last year. This is particularly encouraging in light of the fact that these prior year comparisons relate to bookings before the Costa Concordia incident which occurred in January 2012."  

- Richard D. Fain, chairman and chief executive officer


  • Satisfied by results
  • Fuel/FX provided 3 cent benefit
  • Exceeded expectations in all regions including Europe, in spite of all those pressures from Southern Europe e.g. Spain
  • Fairly stable bookings environment.  Early 2013 bookings are encouraging.
  • Will move Celebrity Reflection (just over 3,000 berths) to Med in Summer 2013
  • Sunshine 1 project is two years away
  • Half of the $0.06 reduction was due to timing and marketing costs and will be incurred in 4Q
  • 3Q early extinguishment of debt (3 cent loss): Repurchase of Eurobond (Jan 2014)--$7MM charge when they brought them back at par
  • 3Q ticket yields: Europe -5.4%. Ex Europe, + 2.6%
  • 3Q onboard yields: +3.5% 
  • Demand environment relatively steady; bookings for last 3 months up 4% YoY
  • 4Q:  load factors slightly lower YoY but APD up YoY. Caribbean leading with Europe down slightly
  • 2013 capacity:  +1.3% (greatest increase from Asia-Pacific region)
  • 2013:  still expect challenges particularly in Southern Europe but other regions should offsett that weakness
  • 4Q CC guidance lowered by 1% due to loss revenue on early October ship in Asia stemming from tensions between China and Japan; it was one sailing with 60% load factor.
  • 5-year gross CAGR: +3%
  • 2013 Revitalization:  Enchantment of the Seas, Serenade of the Seas, Legend of the Seas and Brilliance of the Seas



  • Tough Q1 2013 comps:  Hope for a normalized year; APD is running ahead but load factors are slightly behind
  • Costa Concordia has affected 2012 yields by 3%.
  • More normalized booking curve for North American and Northern Europe market; Southern Europe booking curve has contracted
  • 2013 27% Capacity for Europe: Western Med 13% (-20% YoY), Eastern Med 8% (-9% YoY) and Northern Europe 6% (28% YoY)
  • Onboard:  saw strength in gaming, retail, and shore excursions
  • There might be very slight upward pressure in terms of the itineraries on fuel consumption but generally in fairly stable environment
  • Cost expenses:  improvements in all categories
  • New ship build outlook:  slower pace than in the past; do not have a specific target number of new ships per year 
  • EICA new regulations:  came in effect Aug 1, 2012 but the more significant cost burden based on sulfur requirements won't come until 2015
  • ROI expected on new Oasis ship:  no specified threshold but expect comparable performance from other Oasis ships.
  • 25% of European cruise capacity came from North America.  Asian customers also helped fill the gap for European cruises.
  • 2013 NCC:  not ready to give guidance on costs, couple of areas they are watching--may have modest increases in IT, insurance...pockets of pressure but pretty controlled environment
  • In hindsight, had held on to European pricing longer than what they would have liked
  • Europe in 2013 still a very large unknown
  • Order book sold in 2013 has been higher than any year since 2008... aka best visibility since 2008
  • TUI continues to perform very well both in guest satisfaction and results   
  • Capex outlook:  Slight bump up in installment payments if they complete Oasis order; other items to consider: IT revitalization, and revitalizations of the vessels


RCL 3Q12 CONF CALL NOTES - rcl11111

  • "The strong third quarter certainly validates our confidence in our business model. Strong close-in demand and our focus on costs drove substantially better results than expected.  I am especially gratified that we are still seeing price increases in a year marked by so many external pressures"

  • "Close-in bookings for the third quarter across most itineraries — including Europe — were stronger than anticipated... NCC excluding fuel were also better than anticipated.  Approximately 200 basis points of the Net Yield improvement and approximately 220 basis points of the NCC excluding fuel increases during the quarter relate to previously announced deployment initiatives and changes to the company's international distribution system."
  • "As the company anticipated in February, the tragedy in Italy had its biggest yield impact in the second and third quarters of the year.  The effect of the incident on bookings has continued to wane and fourth quarter 2012 Net Yields are expected to increase approximately 1% on both Constant-Currency and As-Reported bases.  Excluding previously referenced deployment initiatives and changes to the company's international distribution system, Net Yields for the quarter are expected to be approximately flat."
  • RCL is "engaged in negotiations for the possible construction of an Oasis-type newbuild that would be delivered in middle to late 2016.  While the company has not entered into any agreement at this time, it hopes to do so before year's end.  The new ship is expected to cost less on a per berth basis than either of the first two Oasis-class vessels."
  • "Forecasted consumption is now 58% hedged via swaps for the remainder of 2012 and 54%, 45%,  25% and 7% hedged for 2013, 2014, 2015 and 2016, respectively.  For the same five-year period, the average cost per metric ton of the hedge portfolio is approximately $522, $568, $623, $610 and $582, respectively."
  • "As of September 30, 2012, liquidity was $­­­1.9 billion... the company has taken a number of actions this year to augment liquidity in advance of its 2013 and 2014 scheduled debt maturities, including increasing the size of its revolving credit facility due July 2016 by $233 million and establishing a €365 million 5-year unsecured delayed-draw bank facility.  More recently, the company further bolstered its liquidity through a new $290 million 3 ½ year unsecured bank facility."
  • "In part, this additional liquidity was used for the early extinguishment of €255 million (or approximately 25%) of the company's €1.0 billion senior notes due in January 2014."
  • "The company also has committed unsecured financing for its remaining newbuilds.  The company noted that scheduled debt maturities for 2012, 2013 and 2014 are now $600 million, $1.5 billion and $1.5 billion, respectively."
  • "Based on current ship orders, projected capital expenditures for 2012, 2013, 2014 and 2015 are $1.3 billion, $600 million, $1.1 billion and $1.0 billion, respectively." 
  • "Capacity increases for 2012, 2013, 2014 and 2015 are 1.4%, 1.3%, 1.0% and 6.5%, respectively."