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heidikay

By heidikay,
in Royal Caribbean International

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DirtyDawg

DirtyDawg

Posted
Posted (edited)
1 hour ago, BermudaBound2014 said:

People are buying these headlines today:

 

"Royal Caribbean sees return to profitability in second quarter"

"Royal Caribbean's loss narrows as cruise bookings rebound"

 

But the devil is in the details. Interest rates and fuel cost continue to hinder any long range progress:

"Royal Caribbean Now Expects Loss in Second Half of 2022"

 

 

And Free Cash Flow in Q2 was in the range of -$3B (-.5B from Ops and -2.5B from Capex and Cash paid on settlement of derivative financial instruments) 

 

But hey, RCL is dropping mask requirements! 🥳

 

Edited by DirtyDawg
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AlohaLivin

AlohaLivin

Posted
Posted

We have continued to buy stock in RCL, NCL, and AirBNB from the initial dive through the last weeks. I have no more ability to predict the future than anyone else, but we feel good about these for the future. But the numbers show that at this time the things that people are still spending money on are gas, food, and travel.

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BermudaBound2014 Great Review Rare

BermudaBound2014

Posted
Posted
Just now, AlohaLivin said:

We have continued to buy stock in RCL, NCL, and AirBNB from the initial dive through the last weeks. I have no more ability to predict the future than anyone else, but we feel good about these for the future. But the numbers show that at this time the things that people are still spending money on are gas, food, and travel.

 

I don't have an ability to predict the future anymore than you do, but what people are spending money on may not be enough to save the cruise lines from restructuring. To me, servicing the debt appears  insurmountable, even if cruises are sailing at 100% occupancy. IMO, the option of wiping out debt and starting fresh is on the table. 

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Baron Barracuda

Baron Barracuda

Posted
Posted

Jason Liberty apparently commented RCL has no current plans to issue equity.  That's the good news.

 

Read through the earnings announcement which shows continued slow, gradual improvement.  Little hope for rapid return to profitability but no new red flags either.  Would have hoped for greater enthusiasm for 4q '22 when loads are expected to top 100%.  

 

One item that struck me was the expense ratios at the  end of the financials.  They report total Gross Costs per APCD at just over $200.  Gross costs include just about everything except interest expense.  Adding that $300mm brings total costs up to $230 per APCD implying that if every ship was sailing at 100% occupancy they need to earn $230/pp/day to break even. While suites run a lot higher they only make up around 15% of cabins.  Yesterday while perusing October '22 - April '23 sailings for a number of ships I was struck by how most were offering balconies for only around $77/night.  Even next summer balconies on Caribbean itineraries are only running $150 - $170 pp/day.  Onboard sales will help but they'll need stronger pricing to generate any meaningful earnings.

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Ocean Boy

Ocean Boy

Posted
Posted
30 minutes ago, Baron Barracuda said:

Jason Liberty apparently commented RCL has no current plans to issue equity.  That's the good news.

 

Read through the earnings announcement which shows continued slow, gradual improvement.  Little hope for rapid return to profitability but no new red flags either.  Would have hoped for greater enthusiasm for 4q '22 when loads are expected to top 100%.  

 

One item that struck me was the expense ratios at the  end of the financials.  They report total Gross Costs per APCD at just over $200.  Gross costs include just about everything except interest expense.  Adding that $300mm brings total costs up to $230 per APCD implying that if every ship was sailing at 100% occupancy they need to earn $230/pp/day to break even. While suites run a lot higher they only make up around 15% of cabins.  Yesterday while perusing October '22 - April '23 sailings for a number of ships I was struck by how most were offering balconies for only around $77/night.  Even next summer balconies on Caribbean itineraries are only running $150 - $170 pp/day.  Onboard sales will help but they'll need stronger pricing to generate any meaningful earnings.

No way would I pay $230 pp per day for a standard balcony cabin.

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Another_Critic

Another_Critic

Posted
Posted (edited)
17 minutes ago, John&LaLa said:

 

5 years retired. Miles all gone. Actually fine with that😁

The one-way economy air from LHR was priced at $2k+ per person, so it was definitely better to use miles.

 

The miles were actually my [now deceased] fathers.  Also booked air to CPH for 30k each with his miles. 

 

I have a bunch of AA miles, plus tons of points with Chase and AMEX that I can convert to miles.

 

Maybe I will use some of my miles after I retire in December.  🙂

 

Edited by Another_Critic
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John&LaLa "Live from...." Rare

John&LaLa

Posted
Posted
6 minutes ago, Another_Critic said:

You stole that cabin.  😄

 

My Spacious Oceanview for my Voyager TA is $75 pppd.  It's currently going for $200 pppd.  😲

 

L&S from Adventure to Jewel to Voyager.

 

Started with a VP. Jewel doesnt have them, so TA got me a GS. Moved to Voyager and got an extra day. 😇

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exm "Live from...." Rare

exm

Posted
Posted

And sold my stocks purchased just before the ER with a nice 10% profit. I'm not sure about NCL, so I'm taking a wait-and-see approach until they release their numbers.

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Baron Barracuda

Baron Barracuda

Posted
Posted (edited)

Q:  What do Bank of America, Susquehanna, CFRA, Morgan Stanley and Deutsche Bank all have in common?

 

A:  After reviewing 2q financials and listening to conference call all cut their price target on RCL today.  B of A is the lowest at $35.

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John&LaLa "Live from...." Rare

John&LaLa

Posted
Posted
7 minutes ago, Biker19 said:

^ and yet, the stock is up a bit more, when usually downgrades like that tank the stock.

 

Cruise stocks rarely make sense. 

 

Bought back in at $35, the booked OBC has me covered down to $15

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livingonthebeach "Live from...." Rare

livingonthebeach

Posted
Posted
19 minutes ago, Baron Barracuda said:

Q:  What do Bank of America, Susquehanna, CFRA, Morgan Stanley and Deutsche Bank all have in common?

 

A:  After reviewing 2q financials and listening to conference call all cut their price target on RCL today.  B of A is the lowest at $35.

 

It's up to $38 as of now - went up since yesterday - Carnival and NCL are down. 

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DirtyDawg

DirtyDawg

Posted
Posted
44 minutes ago, Baron Barracuda said:

Q:  What do Bank of America, Susquehanna, CFRA, Morgan Stanley and Deutsche Bank all have in common?

 

A:  After reviewing 2q financials and listening to conference call all cut their price target on RCL today.  B of A is the lowest at $35.

Perhaps those investment banks had higher price targets hoping to be part of an underwriting group for a Royal equity issue and all the very large underwriting fees that go along with an equity issue. Now that Royal said no to a new equity issue in the near future ....... 😉

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BermudaBound2014 Great Review Rare

BermudaBound2014

Posted
Posted

RCL kept to their word and didn't issue new common stock (yet) but they just offered up 900 million in Bonds lol... stock should react to this tidbit

 

 

Royal Caribbean Group said Monday it has commenced a private offering of $900 million of senior convertible bonds that mature in 2025. The company said it would grant the initial purchasers an option to purchase up to $135 million more in convertible bonds. "The purpose of the offering is to replace some of the existing near-term maturities of convertible bonds with new longer-term convertible bonds in a manner which is non-dilutive to shareholders as described below," said Naftali Holtz, Chief
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DirtyDawg

DirtyDawg

Posted
Posted
45 minutes ago, BermudaBound2014 said:

RCL kept to their word and didn't issue new common stock (yet) but they just offered up 900 million in Bonds lol... stock should react to this tidbit

 

 

Royal Caribbean Group said Monday it has commenced a private offering of $900 million of senior convertible bonds that mature in 2025. The company said it would grant the initial purchasers an option to purchase up to $135 million more in convertible bonds. "The purpose of the offering is to replace some of the existing near-term maturities of convertible bonds with new longer-term convertible bonds in a manner which is non-dilutive to shareholders as described below," said Naftali Holtz, Chief

It looks like these are quasi private placement convertible bonds to replace some current issues of convertible bonds, a 2.875% convertible senior notes due November 15, 2023 and 4.25% convertible senior notes due June 15, 2023. i.e. non dilutive and my guess at a high interest rate and better conversion price for the purchasers. Sadly, they will only be sold to Institutional buyers and will not be registered for public purchases if anyone was interested.  

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