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Trading the volatility of $RCL, $NCLH & $CCL for the last few weeks has been immensely profitable, i'm definitely bearish on RCL stock at this point after closing out my position at just below $47 per share last week. 

 

The 8-K report (https://fintel.io/doc/sec-rcl-8k-royal-caribbean-cruises-2020-may-04-18386) they filed with the SEC on April 28th is pretty telling, particularly the following snippet:

 

"In the event we take certain actions while the Bpi Deferred Tranche is outstanding, we will be required to prepay the outstanding balance of the Bpi Deferred Tranche. These actions include the payment of dividends, the repurchase of stock, and the issuance of debt or equity other than for liquidity. These restrictions are subject to customary carveouts such as, in the case of new debt, debt incurred to finance new ships."

 

While securing additional liquidity is certainly a positive for the company in these turbulent times, taking 4-5 year loans that eliminate their ability to pay dividends or buyback stock for the duration (unless repaid in full) makes it extraordinarily unlikely that $RCL will recover anywhere close to its ATH stock price for a long time. Additionally the added caveat that the 'issuance of equity' for liquidity purposes is exempted from these restrictions suggests that there is a very real possibility that RCL will need to significantly dilute their stock in order to secure additional revenue to stay afloat in the event of a prolonged cruising hiatus, which would limit the potential ceiling of their stock price during the (hopefully) eventual recovery.

 

The company is certainly not on deaths door, but I would advise anyone investing in cruise stocks to tread cautiously as it is far from a foregone conclusion that they will recover to anywhere close to their pre-coronavirus levels, in fact quite the opposite. RCL didn't have the healthiest balance sheet to begin with (significant liabilities) as they were stretching themselves to rapidly expand in a booming industry, they were not well positioned whatsoever to deal with a crisis of this magnitude.

 

I also fear their stock is currently overbought and the price somewhat inflated by an influx of amateur/retail investors who have seen the substantial decline in prices and think they'll see an enormous return once the pandemic blows over and things return to 'normal'. While i'm still fairly confident RCL will survive, they will be feeling the economic repercussions of this downturn for years to come, as it has burdened them with additional liabilities with no guarantee that the cruising industry that emerges on the other side will be anywhere close to as profitable as it has been up until now; with every single day that passes exacerbating these problems further.

 

Not trying to be doom & gloom, I love cruising with RCL & Celebrity and hope to return as soon as it is safe and responsible to do so, but anyone thinking of investing them in as a company for long-term gains (not just 100 shares for the OBC) should be extremely cautious, as I anticipate another slide (and continued volatility) is all but guaranteed.

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On 4/30/2020 at 12:33 AM, Ourusualbeach said:

A friend of mine submitted theirs and had them approved almost a year in advance. 

 

Question - if you apply shareholder benefit to a cruise & then cruise is cancelled - does shareholder obc get cancelled too & then you re-apply to get obc for new cruise?  or does it become part of 125% FCC for a future cruise along with any other obc you have?  

NJ 

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7 minutes ago, NJ&Ozzie said:

 

Question - if you apply shareholder benefit to a cruise & then cruise is cancelled - does shareholder obc get cancelled too & then you re-apply to get obc for new cruise?  or does it become part of 125% FCC for a future cruise along with any other obc you have?  

NJ 

It gets cancelled.  If you still own the stock you can reapply for it to be added to the new cruise. 

 

OBC never transfers over as part of the FCC. There are a few types of OBC that you can move to a new sailing as OBC...redeployment, next cruise and service issue OBC.  All other OBC is lost.

Edited by Ourusualbeach
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2 minutes ago, Ourusualbeach said:

It gets cancelled.  If you still own the stock you can reapply for it to be added to the new cruise. 

 

OBC never transfers over as part of the FCC. There are a few types of OBC that you can move to a new sailing as OBC...redeployment, next cruise and service issue OBC.  All other OBC is lost.

Wow - thanks for the quick response.  Appreciate it.  so guess I will apply to all our cruises & cross the little fingers/toes cruise doesn't get cancelled.

Thanks!

NJ 

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not a great vote of confidence over the weekend when Berkshire pulled out of all airlines.  Granted, 2 different industries, but if he thinks airlines are going to be in trouble, i think cruise lines are really going to be hurting if this drags on longer than q4.  

Would love to be a fly on the wall at the cruise line strategy sessions on how to reopen.  I would definitely buy the strategy book if they manage to pull out of this thing without going into some type of bankruptcy. 

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1 hour ago, 20165 said:

not a great vote of confidence over the weekend when Berkshire pulled out of all airlines.  Granted, 2 different industries, but if he thinks airlines are going to be in trouble, i think cruise lines are really going to be hurting if this drags on longer than q4.  

Would love to be a fly on the wall at the cruise line strategy sessions on how to reopen.  I would definitely buy the strategy book if they manage to pull out of this thing without going into some type of bankruptcy. 

Also not good sign for travel & leisure companies that Disney eliminated their dividend tonight.  They have solid balance sheet and expect parks to recover faster than cruises.

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I think the cruise industry is now over populated with ships. It will be about two years before anything approaching normal will be with us. The cruise lines will probably look at the cost of each ship and the revenue it can return. Those ships that don't make the cut will be sold or scrapped. I would think that about 1/3 of the ships now sailing will be in the sold or scrapped category.

 

It must be remembered that new pollution control rules are coming into effect that required a more expensive fuel or more efficient scrubbers for exhaust. The newest ships are being powered by LNG. If you look at the design of the new RCL mega ships, they actual float on a platform of small air bubbles that reduce drag. I don't think ships like the Empress of the Seas, Rhapsody of the Seas, etc. will be with us much longer.

 

The BIG question now is can the three big cruise lines stay financially afloat. I expect that NCL may declare bankruptcy if they cannot find new funding. Carnival should be OK. RCL should be OK after a substantial rearrangement of the deck chairs.

 

Right now...I'm just in the mood for a nice cruise. Hopefully our November 29th Harmony cruise is a go.

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There's a new filing at the SEC: https://www.sec.gov/Archives/edgar/data/884887/000110465920058425/tm2018985d1_ex99-1.htm

 

It's mostly about a PR piece. One interesting item is that only 45% customers are opting for refunds.

 

MIAMI  May 8, 2020 – Royal Caribbean Cruises Ltd. (NYSE: RCL) today provided a business update and the Company’s response to the impact of the COVID-19 pandemic.

 

"These are unprecedented times for all of us. Travel restrictions and stay-at-home orders are important to slowing the spread of the virus, but they have severely impacted our operations," said Richard D. Fain, Chairman and CEO. "We are taking decisive actions to prioritize the safety of our guests and crew while protecting our fleet and bolstering liquidity.”

 

COVID-19 Related Suspension

 

The outbreak of COVID-19 has resulted in an unprecedented global response to contain the spread of the disease. These global efforts have resulted in travel restrictions and created significant uncertainty regarding worldwide port closures and availability. As part of the global containment effort, the Company previously announced a voluntary suspension of its global cruise operations from March 13 through at least June 11, 2020. Continued disruptions to travel and port operations in various regions may result in further suspensions.

 

“Our top priority is to ensure the safety of our guests and crew during the suspension period and when we resume operations,” said Mr. Fain. “The Company’s fleet is now either in port or at anchor and we have developed strict protocols to protect our crew that is still onboard our ships.”

 

The Company has been developing a comprehensive and multi-faceted program to address the unique public health challenges posed by COVID-19. This includes, among other things, enhanced screening, upgraded cleaning and disinfection protocols and plans for social distancing. The Company will continue to work with the Centers for Disease Control and Prevention, global public health authorities and national and local governments to enhance measures to protect the health, safety and security of guests, crew and the communities visited when we are out of service and once operations resume.

 

 

 

 

 

Update on Bookings

 

Prior to the outbreak of COVID-19, the Company started the year in a strong booked position and at higher prices on a prior year comparable basis. Given the impact of COVID-19, booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at prices that are down low-single digits. Due to the suspension in sailings, booking trends reflect elevated cancellations for 2020 and more typical levels for 2021 and beyond. Although still early in the booking cycle, the booked position for 2021 is within historical ranges when compared to same time last year with 2021 prices up mid-single digits compared to 2020.

 

The Company has instituted several programs in order to best serve its guests: for cancelled cruises, guests are offered the choice of future cruise credits valued at 125% of the initial cruise fare paid in lieu of providing cash refunds. As of April 30, 2020, approximately 45% of the guests have requested cash refunds. For non-cancelled cruises, the Company has implemented a “Cruise with Confidence” policy.

 

As of March 31, 2020, the Company had $2.4 billion in customer deposits. This includes approximately $0.8 billion of future cruise credits related to previously announced voyage cancellations through June 11, 2020.

 

The Company also continues to take future bookings for 2020, 2021 and 2022, and receive new customer deposits and final payments on these bookings.

 

 

2

 

 

Update on Recent Liquidity Actions and Ongoing Uses of Cash

 

“Since late January, we have undertaken several proactive measures to mitigate the financial and operational impacts of COVID-19.” said Jason T. Liberty, executive vice president and CFO. “Our focus is on bolstering liquidity through significant cost cutting, capital spend reductions, and other cash conservation measures. In addition, the Company is considering additional financing sources. We continue to evaluate all options available to us to further enhance liquidity.”

 

As of April 30, 2020, the Company had liquidity of approximately $2.3 billion all in the form of cash and cash equivalents. On May 4, 2020 the company increased the 364-day senior secured credit facility and drew $150 million further enhancing the Company’s liquidity profile.

 

Reduced Operating Expenses

 

The Company has taken significant actions to reduce operating expenses during the suspension of its global cruise operations:

 

· Significantly reduced ship operating expenses, including crew payroll, food, fuel, insurance and port charges
   
· The Company’s ships are currently transitioning into various levels of layup with several ships in the fleet transitioning into cold layup, further reducing operating expenses
   
· Eliminated or significantly reduced marketing and selling expenses for the remainder of 2020
   
· Reduced workforce by approximately 26 percent of more than 5,000 shoreside employees in the US
   
· Suspended travel for shoreside employees and instituted hiring freeze across the organization.

 

The Company estimates that its average ongoing ship operating expenses and administrative expenses is approximately $150 million to $170 million per month during the suspension of operations. The Company may seek to further reduce this average monthly requirement under a prolonged non-revenue scenario.

 

 

3

 

 

Reduced Capital Expenditures

 

Since the last earnings call, the Company has identified approximately $3.0 billion and $1.4 billion of capital expenditure reductions or deferrals in 2020 and 2021, respectively. The 2020 reductions and deferrals are comprised of:

 

· $1.2 billion, of non-newbuild, discretionary capital expenditures and
   
· $1.8 billion in reduced spend or deferred installment payments for newbuild related payments which the Company is currently finalizing.

 

The Company believes COVID-19 has impacted shipyard operations and will result in delivery delays of ships previously planned for delivery in 2020 and 2021.

 

Debt Maturities, New Financings and Other Liquidity Actions

 

Since the last earnings call, the Company has taken several additional actions to further improve its liquidity position and manage cash flow:

 

  · Increased the capacity under its revolving credit facilities by $0.6 billion, and fully drew on both facilities

 

  · Entered into a $2.35 billion 364-day senior secured credit facility with an option to extend (secured by 28 ships with a net book value of approximately $12 billion as of March 31, 2020)

 

  · Obtained a $0.8 billion, 12-month debt amortization and financial covenant holiday from certain export-credit backed facilities

 

  · Amended its non-export-credit backed bank facilities to incorporate a 12-month financial covenant holiday

 

  · Agreed with its lenders that it will not pay dividends or engage in stock repurchases.

 

As of May 5, 2020, expected debt maturities for the remainder of 2020 and 2021 are $0.4 billion and $0.9 billion, respectively.

 

 

4

 

 

The Company estimates its cash burn to be, on average, in the range of approximately $250 million to $275 million per month during a suspension of operations. This range includes ongoing ship operating expenses, administrative expenses, and debt service expense, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings. The Company is considering ways to further reduce the average monthly requirement under a prolonged out-of-service scenario and during start-up of operations.

 

The Company continues to identify and evaluate further actions to improve its liquidity. These include and are not limited to: further reductions in capital expenditures, operating expenses and administrative costs and additional financings.

 

On March 10, 2020, the Company withdrew its first quarter and full-year 2020 guidance. The magnitude, duration and speed of COVID-19 remains uncertain. As a consequence, we cannot estimate the impact of COVID-19 on our business, financial condition or near or longer-term financial or operational results with reasonable certainty, but we expect to incur a net loss on both a US GAAP and adjusted basis for the first quarter ended March 31, 2020 and the 2020 fiscal year; the extent of which will depend on the timing and extent of our return to service.

Edited by Biker19
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From Motley Fool May 9 2020.

Royal Caribbean International (NYSE:RCL) didn't make the same kind of noise as its peers. It didn't follow Carnival into committing to a handful of named ships sailing out of three specific ports this summer. It didn't put out the same cautionary boilerplate language as Norwegian Cruise Line, largely because it lined up necessary financing earlier in this crisis. However, for one of the industry's hardest hit industries of 2020, Royal Caribbean is starting to stand out at the class act in this niche. If you have the stomach to buy into the cruise industry in these uncertain times, you can do worse than buying into Royal Caribbean.

Royal flush 

Before setting up the bullish argument for Royal Caribbean, it needs to be said that buying into the cruise line industry right now is risky business. We may be more than three months away from when any of the publicly traded players are greeting passengers again. We haven't hit rock bottom as lawsuits will continue pile in, negative headlines will keep mounting, and congressional investigations have yet to play out.  

Royal Caribbean stands out in the crowd. Net margins have clocked in at 17.4% or better for Royal Caribbean in each of the past three years. Net income margin has been in the low- to mid-teens for its two rivals in the same timeframe. Gross margin has also been higher than the competition. Margins may be the last thing you're thinking about right now when the cruise fleets are in the process of emptying out their crews this week, but when we are back in business it means that Royal Caribbean will likely be the first player to return to profitability. No player will be immune from the hit that the industry's reputation is in the process of absorbing, and Royal Caribbean hasn't always been a saint here. However, if you had to pick the one cruise line operator that would outlast the competition in the slow recovery, it would have to be Royal Caribbean.Royal Caribbean's superiority isn't a secret. There have been times in recent weeks when Carnival and Royal Caribbean have had comparable enterprise values despite Carnival generating roughly double the revenue of Royal Caribbean. It trades at multiple premiums to its peers, and deservedly so. In these iffy times -- between the drawn-out COVID-19 fallout and the global recession -- if you're going to take a chance, you may as well invest in the best. Royal Caribbean is the best run cruise line.

 

 

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I applied for the credit yesterday afternoon and received the confirmation email at 10:15 last night.  Would not have thought that department was open on the weekend.  At least something is happening fast at Royal😇

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2 minutes ago, Sunshine3601 said:

Stock on decline again.  Just under $35 moments ago.  Overall market trend is down today.   DH ready to buy more stocks today maybe?   I'm still leery but feel confident that rcl will survive.

I would not buy RCL stock now....................it will go lower. Be patience.

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I would wait. They will report earnings/loss at the end of this month. Also next round of cancellations will be coming. I still don't see how they sail on June 12th, as expected. 

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SEC filling this morning:

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/884887/000110465920061054/tm2018985d5_8k.htm

 

On May 13, 2020, Royal Caribbean Cruises Ltd. (NYSE: RCL) (the “Company”) issued a press release announcing that it has priced its private offering of $1.0 billion aggregate principal amount of 10.875% Senior Secured Notes due 2023 (the “2023 Notes”) and $2.32 billion aggregate principal amount of 11.500% Senior Secured Notes due 2025 (the “2025 Notes,” together with the 2023 Notes, the “Notes”). The Notes are expected to be issued on or around May 19, 2020. 

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If you're an investor and have the stomach to buy into the cruise industry then why wait for it to go any lower. Investors have conviction and are in it for the long hall. If you're just trading highs and lows then it's a fool's errand trying to predict a stock bottom.

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39 minutes ago, ALWAYS CRUZIN said:

But way up from the low when I purchased. 😎

 

It wasn't going up fast enough for me....so I bought it, sold it, bought it back, sold it again...and then bought it again 😉

 

Hoping for another little bounce up so I can cash out again......I'm turning into a day trader....gonna be killer on my account come tax season

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