• It's Coming...

    MARKET EDGES

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

In preparation for Carnival's Q3 earnings release on September 21 , we’ve put together the pertinent forward looking commentary from CCL’s Q2 earnings release/call.

YOUTUBE

General Comments:

  • “We are maintaining earnings guidance of $2.25 to $2.35 a share.”
  •  “Looking at bookings over the last six weeks by major trades for North American brands, Caribbean itineraries, which are more than 50% of North American capacity over the next nine months, continue to be strong at higher prices. Bookings for Alaska cruises however, ran behind the last six-week period but at substantially higher prices. But fortunately, there is very little Alaskan inventory left to sell. Bookings for North American brand Europe programs were also lower, but there’s also not much inventory left to sell in Europe for the reminder of the year.”
  • “Despite the brief slowdown in these trades, we are still expecting significant year-over-year pricing improvement for Alaska and Europe for 2010.”
  • “There may be a slight increase in fuel consumption because we have to navigate around what may be the worst areas, but the ships are being inspected every time they return to the U.S. We haven’t had to clean a hull once yet. We’ve seen no slowdown in booking pattern.”
  • “As we get bigger and bigger and bigger in our European brands, you become more and more seasonal. And so our advance ticket deposits at the end of 2Q is always going to be significantly higher than at the end of the year. As we grow the European brands, you can expect lower earnings in the first quarter and more earnings in the third quarter.”
  • [Booking curve] “The curve is about at the same levels as last year.”
  • “But typically for the next quarter, which in this case would be the 3Q, we’re always 85 to 95% booked. Two quarters out, which is 4Q, our historical range is 55 to 75% booked. And for three quarters out, which would be 1Q, traditionally we are in the range of 30 to 50% booked, and we’re still in those historical ranges.”

3Q 2010:

  • “For the third quarter, fleet-wide capacity is 6.2% higher than last year, 3.7% in North America, 8% for Europe brands. At this point, with very little inventory left to sell in the quarter, fleet-wide capacity is slightly ahead -- fleet-wide occupancy, I should say, is slightly ahead YoY, with local currency pricing well ahead.”
  • “We are expecting that third quarter ticket pricing for North American brands to increase in the low double-digit levels by the time the third quarter closes.”
  • “By the time the quarter closes out, we are expecting European brand pricing to be flattish YoY, which is a very good result given the 8% increase in capacity. We are forecasting third quarter fleet-wide revenue yields will increase in the 5 to 6% range on a local currency basis, flat to up slightly on a current dollar basis.”

4Q 2010

  • “Now turning to the fourth quarter, wide capacity is up 6.1% in the quarter, 1.7% in North America and 10.6% in Europe. On an overall basis, fourth quarter occupancy is slightly lower, with local currency pricing running nicely higher. North American brands in the fourth quarter are 50% in the Caribbean, with all other itineraries individually below 10%.”
  • “At the present time, pricing is running nicely ahead year-over-year with lower occupancies. Overbooking volumes for the fourth quarter for North American brands continue to be strong.”
  • “European brands are 73% in Europe in the fourth quarter, with all other itineraries individually under 10%. Europe itinerary pricing on a local currency basis is nicely ahead of last year with slightly better occupancy. Bookings continue to be strong for the fourth quarter, and we are forecasting that by the time the fourth quarter closes Europe brand local currency pricing will be higher YoY, which is a very good result considering the 10% capacity increase that we have during the quarter.”
  • “On a fleet-wide basis, we expect fourth quarter revenue yields to be up approximately 3% on a local currency basis.”

1Q 2011

  • “Our fleet-wide capacity is going to be up 6.6%--3.8% for North American brands and 11.7% for European brands.”
  • “1Q pricing is running higher on a YoY basis with occupancy running slightly behind.”
  • “North American brands are 66% in the Caribbean, 11% in Mexican Riviera cruises and the balance in all other itineraries. Presently, Caribbean pricing is slightly higher on lower occupancies and Mexican Riviera pricing is higher on higher occupancies. Pricing on virtually all other itineraries, mostly longer premium-price cruises, is higher on lower occupancies.”
  • “European brands are 25% in European itineraries, 23% in the Caribbean and 18% in South America with the remaining in various other itineraries. Local currency pricing for Europe and South America cruises is running higher on lower occupancies and pricing for European brand Caribbean cruises is higher on higher occupancies. Overall, pricing in local currency for Europe brand cruises is nicely higher at this time with occupancies, when you combine it all, at the same level as the prior year.”