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RCL beat the quarter but 1Q2010 guidance of ($0.09) to ($0.14) excluding the legal settlement gain falls far short of the street's $0.04 estimate. However, investors are focused on higher full year 2010 guidance.




"Good cost discipline and better than expected revenues have enabled us to end 2009 on a decidedly upbeat note. We're happy to say goodbye to 2009 and pleased to embark on 2010 with an outlook of solid yield improvement, strong cost controls and improving returns to our shareholders.We are also benefiting from the terrific success of our latest Oasis- and Solstice-class vessels. These ships are generating very healthy returns due to high guest satisfaction, excellent revenues and lower operating costs."

- Richard D. Fain, chairman and chief executive officer


  • Net Yields for 2010: 3% to 6% (3-5% adjusted for currency)
  • 1Q2010: Approximately 2% (flat adjusted for currency)
  • 2010 NCC excluding fuel: flat to slightly up (flat to down slightly adjusted for currency)
  • 1Q2010 NCC excluding fuel: up around 1% (flat to down slightly adjusted for currency)
  • 2010 EPS: $2.00 to $2.20 including $0.39 related to a legal settlement
  • 1Q2010: $0.25 to $0.30 including $0.39 related to a legal settlement

Trend commentary from release

  • "Net Yields were at the upper end of previous guidance due to strength in both ticket and onboard revenues."
  • "Early "wave season" bookings have been encouraging and that since the beginning of September, new bookings have been running approximately 30% higher than the corresponding period a year ago. Current price levels are also ahead of the same time last year across the majority of the company's product groups."
  • "Wave season is off to a promising start. It is still early in the selling cycle for 2010, but our order book is stronger and prices are higher than at this same time last year. We clearly are not at pre-recession demand levels, but we are pleased to see solid yield recovery underway."
  • "As of today booked load factors and average per diems are ahead of same time last year for all four quarters and the full year."


  • Management sustainably decreased fuel costs per berth by 7%
  • $900MM of liquidity at 12/31/2009
  • Slow and steady improvement in their environment (like that of the economy)
  • Operating cost continue to remain a priority for mgmt
  • Onboard spending on Oasis is handily above average.  Solstice is also "kicking butt."
  • Management went out of their way to emphasize that the ROI on new ships is quite good
  • Excluding Oasis and Soltice class ships yields would still be positive in 2010
  • Slower capacity growth and any new orders wouldn't impact results until 2013 at the earliest
  • Acceleration in booking volumes has started to have a positive impact on pricing. While current price levels are still impacted by the economy, they can better control discounting and in select cases raise prices
  • Recieved financing commitment for 80% of the purchase price for Allure of the Seas
  • Have $770MM of debt maturities which they can easily fund from cash flow from operations
  • International products all experiencing positive momentum.  
  • Outlook for Europe (8 ships) is particularly encouraging.  3 ships in Alaska also booking well. Promising bookings in Caribbean product - but still have limited visibility as they have a lot left to sell. 
  • Eclipse to be delivered in April
  • In Caribbean continuedto see close in bookings in the quarter. 
  • This months European season is looking very strong
  • Bookings are also performing well on non-Solstice class ships in Europe
  • Will continue to operate 3 ships in Alaska
  • Back in the Bermuda cruises after a 7 year absence.


  • Oasis was a special case and opportunity - less likelihood that they will have more of them
  • SG&A is likely to be flat to slightly up in 2010
  • Capacity growth in Europe and pricing impact? So far Europe is looking very robust and not impacted by capacity growth
  • What drove the divergence of ticket revenue and onboard revenue?  Ticket revenue tends to be more volatile than onboard. Are seeing positive trends in onboard spending
  • As they have matured in certain new markets, margins on off shore excursions improve
  • Booking window had a slight amount of expansion.  Some premium destinations are seeing an expansion but Mexican cruises saw a contraction
  • Capital spend looks $400MM higher than guided, (offset by gain on derivatives costs)
  • Load factors were about 2% down from 2008 in 2009. Expect load factors to recover a little
  • First quarter yield guidance? Gave prior guidance that it would be positive ex currency, and now it looks flat.
    • "talking about marginal changes" and feel like they are fairly consistent in prior guidance
    • Well, regardless of how management feels, they are clearly missing 1Q2010 expectations
  • Once the second wave of Solstice and Oasis ships come online do they expect any price degradation?
    • So far they aren't seeing any fall off at all
    • Allure of the Seas wasn't delivered until Dec
  • Disney ship? Historically they have seen that their ships add a halo to the market as it legitimizes cruising in general
  • Wave season continues to be very important to them 
  • Pullmantur? Spanish economy continues to be the weakest economy where they are currently operating.  Feel that Pullmantur has yield recovery potentially, but sounds like Pullmantur is still weak prob not accretive in 2010
  • Oasis is seeing more of an increase on ticket yields than onboard
  • Onboard spending is better across the board
  • Legal settlement detail? First $0.30 that were already announced and some deferred aspects to be recognized over several years, however, GAAP dictates they have to take the additional deferred payment in 1Q2010. So they will get $68MM in 1Q2010 and remaining $20MM will be paid on a deferred basis