In preparation for the RCL Q2 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from RCL's Q1 earnings release/call and CCL's recent FQ2 release




  • “The economy is clearly still weighing on our performance, and the improvement that we’ve had is off of a dismal base. But we have now reached an inflection point on yield and that’s an important milestone worth noting. We’re certainly not where we want to be, but turning the corner is the first step to real and significant improvement and we have clearly turned that corner.”
  • “On January 28 …We were about a month into the Wave Season and felt confident we would see yields improve between 3 and 6% for the year. Those projections have proven to be fairly accurate, although since our last call the demand environment has continued to gradually improve.”
  • “Sales since the start of the year have been very healthy, with booking volumes running about 20% ahead of the same time last year. We have also seen a modest improvement in the booking window, with European and Alaska itineraries being the biggest beneficiaries. As of today, the second, third and fourth quarters are booked well ahead of the same time last year.”
  • “Pricing is clearly better than last year, but frankly the comparables are pretty low by historical standards, especially in the second and third quarter. We expect all of our major product groups to show yield improvement this year, but we are especially pleased with the performance of our developmental itineraries.”
  • “We currently expect yields to improve around 6% in the second quarter, and between 4 and 5% for the full year…. From a business perspective, we are feeling better today than we were three months ago. However, since we provided guidance at the end of January, the dollar has strengthened about 4.3% versus the British pound and 6.7% versus the euro, and consequently devalued the European point-of-sale business. The travel disruptions resulting from the volcanic ash also had a negative impact on yields. Absent these changes, we would be improving our full year guidance by about 100 basis points based on the improvements we have seen since the middle of the Wave Season.”
  • “I had said last time that Spain has stabilized and it has. And in fact, we are a little bit ahead of budget with respect to Spain. The bad news is that it stabilized at a terrible level and the Spanish economy frankly doesn’t show a lot of signs of improvement yet.”
  • “Most of the first time cruisers we’re introducing our product to are international guests. In fact, our North American guest sourcing has been flat for the past several years.”
  • “We will continue to grow (new ships) but probably at a slower pace than heretofore.”
  • “Based upon our current guidance, many of our credit metrics will show significant improvement this year and we expect to maintain an improving trajectory over the next few years.”
  • “We have traditionally guided the Street for roughly $200 million in non-new build CapEx and for now, we would continue to maintain that guidance as we look to work on our fleet.”




Pricing & Geographic trend commentary:

  • For net ticket yields, we saw a yield increase of 1.6% in local currency. Our North American brands were up 3.8%, driven by increases in Europe, Alaska and other exotic itineraries. Our European brands experienced 1.2% lower local currency ticket yields... Similar to the first quarter, the declines were driven by challenging winter season in the Brazilian market, with significant capacity increases this past winter. If you exclude the five ships that Costa and Ibero had in Brazil in the month of March, the European brands’ net ticket revenue yields in local currency was flat.”
  • For net on-board and other revenue yields, we reported a yield increase of 3.1% in local currency. The increase occurred on both sides of the Atlantic. Our North American brands were up 4.6% and our European brands were up 3.2% in local currency.” 
  • “We expect greater improvements in yields for the remainder of the year.”
  • “On a fleet-wide basis, booking volumes and pricing …in the last 13 weeks or so, covering the next three quarters have held up quite well. Even booking volumes for the last six weeks during a significant downturn in global equity markets have held up well, although we have seen reduced booking volumes for certain itineraries”
  • “For our North American brands on slightly lower year-over-year booking volumes for the last 13 weeks, we have experienced double-digit price increases. Keep in mind our comparisons of this year’s booking volumes are against a 26% increase in booking volumes for the same period as last year, when we were selling at deeply discounted prices to move our inventory.
  • “With respect to bookings by itinerary during the last 13 weeks for North American brands
    • We have seen strong volumes and pricing for Caribbean programs…
    • Alaska...on lower booking volumes has experienced significantly higher year-over-year pricing…
    • Europe itineraries have also experienced lower booking volumes but with significantly higher pricing…
    • We have also seen stronger year-over-year pricing for our Mexican Riviera itineraries”
  • "For our European brands during the last 13 weeks, booking volumes for the next three quarters have been quite strong, with moderate year-over-year local current pricing improvements."
    • "Booking volumes for European itineraries…have been higher and are keeping pace with year-over-year European brand capacity increases. These bookings are showing moderate increases in prices on a local currency basis…”
  • “Beginning in early May, the effect of the volcanic ash issue in the UK and Western Europe did cause nervousness about air travel, particularly for North American consumers taking airline flights across the Atlantic. Compounding this was the European sovereign debt crisis and the resultant negative effect it had on global equity markets… from late April through late May, U.S. equity markets…were down about 12% or so. We believe this caused consumers, especially those in North America, to re-think their discretionary travel decisions. But even with these events, fleet-wide bookings for the last six weeks for our cruises over the next three quarters continue to run ahead of last year on a fleet-wide basis, significantly ahead for Europe… and just slightly behind for North American brands. And prices for bookings for North America and Europe brands continue to be running nicely higher.”

CCL Cost commentary:

  • “Cruise costs per available lower berth day, excluding fuel and in local currency, were down 4.9% versus the prior year. The decline was driven by fewer dry docks, economies of scale relating to double-digit growth at certain of our brands, benefits from cost reduction programs, a low inflationary environment and the timing of certain SG&A expenses.”
  • “Net cruise costs per available lower berth day, excluding fuel for the third quarter, would have been projected to be flat to down 1%.  For the full year, net cruise costs per available lower berth day, excluding fuel and in local currency, are projected to be down 2.5 to 3.5%. The decline is driven by our ongoing cost reductions, the first-quarter gain on the sale of the P&O Cruises’ Artemis and lower dry dock costs.” 

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more