• 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: CCL's '15 yield guidance may look low but it suggests demand isn't as robust as what the Street is projecting. Fuel saves the day.




  • Caribbean/Japan capacity issues 
  • Moving towards double digit ROIC
  • In China, operating profit more than tripled due to accommodation of capacity growth and yield improvement.
  • Fuel efficiency in 2014: 5%
  • Ship capacity:  At an average of roughly 1 ship per brand in total, over a four-year period reflecting commitment to measured capacity growth.
  • This past quarter reached agreements to sell three less efficient ships bringing total sales agreements to 24 and reinforcing commitment to measured capacity growth.
  • Further stepped up the marketing efforts with plans advertising spend higher than already elevated spend in the last two years. In total, plan spend is nearly 25% higher for 2015 versus 2012.
    • Targeted towards 1st timers
  • Conducted extensive interviews with 40k respondents to gain insight on growing demand
  • Cost-containment in 2014:  saved $20m via leveraging scale
    • Expect $100m cost cuts in 2015: including port and air agreements
  • Improved ROIC by 1 point in 2014 and expect another point in 2015
  • 4Q capacity +2% (NA: +2.5%, EAA: +1%)
  • 4Q Net ticket yield:  +2% - for both NA and EAA (NA- strong results from seasonal European programs, and late Alaska; EAA - strong results from Australia).
  • 4Q Net onboard yield:  +4% (almost across the board)
  • Lower fuel prices provided 9 cent boost to F4Q EPS
  • 4Q:  $18m restructuring charge:  relating to sell of 3 ships 
  • FY 2014 net revenue yields:  beat driven by better ticket continental European yields and better onboard/other yields in back half of year
  • CFO: $3.5 bn
  • 1Q 2015 net revenue yields: up slightly
  • 2Q/3Q/4Q 2015 yields collectively to be up 2.5% in constant dollars
  • If you normalize for the transactional currency impact, the yields for the remaining three quarters combined would be up 3%.
  • 1Q 2015
    • 50% Caribbean capacity
  • 2Q/3Q/4Q 2015
    • Caribbean represents less than 30% of capacity
  • Cautious on Australia where industry capacity expected to increase 20% YoY
  • For the first three quarters of 2015, cumulative fleet wide bookings are nicely ahead as slightly higher prices for both of our two major business segments.
    • NA brand, the Caribbean pricing is currently in line with the prior-year and nicely higher occupancy which bodes well for pricing on future bookings.
    • All other North American brand deployments combined which includes seasonal European program at Alaska are nicely ahead on both price and occupancy. Booking volumes during the last quarter have been good ahead of the prior-year but at lower prices driven by transactional currency impacts.
    • Europe itinerary are nicely ahead on occupancy and better prices. Booking volumes for these itineraries during the last quarter are also nicely higher than the prior-year at better prices.
  • ECA requirements will cost $0.10/share
  • Expect the majority of higher drydock costs in 2015 will be reversed in 2016.  Of the remaining one percentage increase, the majority is driven by higher advertising expense and product enhancements.
  • Price of Brent Oil used in guidance: $63
  • Oil benefit:  100% benefit as prices drop to $80; enjoy 50% benefit for any price drop below $80

Q & A

  • Expect another good year for Costa
  • Capacity increases by quarter:  1.7% (1Q), 2.3% (2Q), 0.6% (3Q), 3.3% (4Q); FY 2015: 2.0%
  •  $0.30 EPS guidance range which is essentially two points of yield.
  • Europe capacity concerns: European yields will be up in 2015 for NA and EAA.
  • Feel Costa recovery was impaired by the environment and economic environment in Europe. Expect to grow again next year.
  • Costa doing well, Cunard doing well, AIDA doing really well
  • Will review oil collar strategy
  • 550 dry dock days in 2015 (+50% YoY); will be reduced in 2016 (major tailwind)
  • new build
  • Carnival 2.0 benefiting onboard spend
  • Costa nice recovery in Europe and strong performance in Asia
  • Revenue mix:  50% (US$), 25% (euros), 12% (pound), 10% (Aussie)
  • No change from Sept guidance on 2015 NCC ex fuel
  • 2015 onboard guidance:  +2% (1% variance equates to 4 cents on EPS)
  • 2015 Caribbean capacity reduction:  late 2Q going into 3Q
  • ECA impact in 2016/2017:  in 2016, it will be reduced from 10 cents and mostly gone by 2017