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Not sure if there is anything to do ahead of CCL’s quarter tomorrow. We are slightly above consensus for Q3 and Q4 but below for 2010.

CCL reports its Q3 (ended August 31st) tomorrow morning with a conference call at 10am EST.  Fuel at $438 is 5% higher than when CCL last issued its guidance.  However, exchange rates have moved in the company’s favor.  We are projecting $1.22 in EPS for Q3 versus the Street at $1.20 and the company’s guidance of $1.15-$1.19.  Given the big capacity increase in Q1 2010, forward commentary regarding 2010 bookings and pricing will be critical.

The following table details the company’s guidance issued on 06/18/2009.

CCL YOUTUBE FOR Q3 (REVISED) - ccl guidance table

We’ve also provided a “Youtube” of the forward looking comments from CCL’s earnings release, conference call, and 10Q.

From the Earnings Release

  • The focus on cost cutting will remain intact and cost reductions are expected to continue for the rest of the year
  • The company expects full year net revenue yields, on a constant dollar basis, to decrease by 10 to 12%.  The company now forecasts a 14 to 16 percent decline in net revenue yields on a current dollar basis for the full year 2009 compared to 2008 caused by unfavorable changes in currency exchange rates
  • CCL expects net cruise costs excluding fuel for the full year 2009 to be in line with the prior year on a constant dollar basis. However, based on current spot prices for fuel, forecasted fuel costs for the full year have increased $233 million, or $0.29 per share, since the previous guidance
  • The company's revised 2009 guidance is based on current spot prices for fuel of $416 per metric ton and currency exchange rates of $1.39 to the euro and $1.61 to sterling
    • Fuel is currently at $438 per metric ton and exchange rates at $1.47 and $1.63, respectively
  • Full year 2009 earnings per share is expected to be in the range of $2.00 to $2.10, compared to its previous guidance range of $2.10 to $2.30
    • Research Edge is at $2.14
  • 3Q constant dollar net revenue yields are expected to decline in the 14%-16% range (down 19%-21% on a current dollar basis)
  • 3Q net cruise costs excluding the impact of fuel are expected to be 1% higher on a constant dollar basis.  Excluding the impact of the $26 million insurance settlement received in 3Q08, net cruise costs excluding fuel are expected to be down 1% on a constant dollar basis
  • Based on current fuel prices and currency exchange rates, the company expects earnings for the third quarter of 2009 to be in the range of $1.15 to $1.19 per share, down from $1.65 per share in 2008
    • Research Edge is at $1.22

From the Transcript

  • The fuel prices for the full year, based on current spot prices, are projected to be $252 per metric ton for 2009 vs $558 per metric ton in 2008, would result in savings of $600 million
  • Given these FX rates the year-over-year profit impact from currency is expected to be a reduction in the bottom line of $175 million or $0.22 per share
  • For the third quarter:
    • Alaska at 39% of capacity
    • Pricing for NA is lower across all itineraries with worst impact on Alaska
    • European prices are lower but not as bad as NA
    • Caribbean prices are also lower
    • Occupancies are lower for NA and slightly higher for Europe
    • UK yields only slightly lower, other mostly mid single digit declines, overall European yields lower in the single digit yield range
  • For the fourth quarter:
    • Fleet wide capacity is up 7.6%, 5.7% in North America and 9.4% for CCL’s European brands
    • NA brands Caribbean prices are lower, but booking momentum has been strong
    • European pricing is holding up better than Alaska but lower (on NA brands)
    • Occupancies for NA are still lower, but only modestly
    • European brands pricing better than the US brands during 4Q, and while occupancies still not much lower than last year, expect pricing to be down
  • For 1Q2010
    • Fleet wide capacity up 9.2% (13.3% in European brands, 5% in NA)
    • Do expect yield declines in 1Q2010, as a good portion of 1Q09 was booked during better times
    • However, volumes/ bookings are in line
    • If the strong booking momentum continues, it's possible that pricing may be close to 1Q09
  •  Capacity growth is expected to slow but not to stop (with respect to capacity growth in 2012 and beyond)

From the 10-Q

  • The year-over-year percentage increase in ALBD capacity for the third and fourth quarters of 2009 is currently expected to be 5.5% and 7.6%, respectively.  The ALBD capacity increase for fiscal 2009, 2010, 2011 and 2012 is currently expected to be 5.4%, 7.2%, 5.8% and 3.9%, respectively. The above percentage increases result primarily from new ships entering service and exclude any other future ship orders, acquisitions, retirements or sales.
  • Cash from operations and committed financing facilities for 2009 along with available cash and cash equivalent balances are forecasted to be sufficient to fund expected 2009 cash requirements
  • The company predicts that it will not be required to obtain additional new debt during the remainder of 2009; however, it may choose to do so opportunistically in order to meet expected 2010 liquidity needs
  • It is not expected that the current state of the financial markets will have a significant adverse impact on our ability to maintain an acceptable level of liquidity during the remainder of 2009 and throughout 2010.
  • Based on our forecasted operating results, financial condition and cash flows for fiscal 2009, CCL expects to be in compliance with their debt covenants during fiscal 2009.