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MIAMI – January 4, 2022 - Royal Caribbean Group (NYSE: RCL) (the “Company”) today announced that it has priced its private offering of $1,000,000,000 aggregate principal amount of 5.375% senior unsecured notes due 2027 (the “Notes”). The aggregate principal amount of Notes to be issued was increased to $1.0 billion. The Notes will mature on July 15, 2027. The Notes are expected to be issued on or around January 7, 2022, subject to customary closing conditions.

 

The Company intends to use the proceeds from the sale of the Notes to repay principal payments on debt maturing in 2022 (including to pay fees and expenses in connection with such repayments). Pending such uses, the Company may temporarily apply the proceeds to repay borrowings under its revolving credit facilities or other borrowings.

 

https://www.sec.gov/Archives/edgar/data/884887/000110465922000989/tm221412d1_ex99-1.htm

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  • 4 weeks later...

Conference call at 10AM to discuss this:

 

MIAMI – February 4, 2022 – Royal Caribbean Group (NYSE: RCL) today reported financial results for the 2021 fiscal year and provided business updates.
 
“2021 marked the beginning of our return to our mission of delivering the very best vacation experiences,” said Jason Liberty, president and chief executive officer of the Royal Caribbean Group. “During 2021, we made significant progress toward our recovery with over 85% of our capacity returning to operations and delivering safe and memorable experiences to approximately 1.3 million guests at record guest satisfaction scores. Our team has worked tirelessly to execute our successful and healthy return, and we are grateful for their extraordinary efforts.”
 
“We expect 2022 will be a strong transitional year, as we bring the rest of our fleet back into operations and well-nigh historical occupancy levels,” Liberty said. “Omicron created short-term operational challenges that have unfortunately weighed on close-in bookings. While the timing of Omicron was particularly unfortunate for the first half of 2022 bookings and will likely delay our return to profitability by a few months, we do not expect it to impact our overall recovery trajectory and the strong demand for cruising.”
 
Resumption of Sailing and Business Highlights
By the end of 2021, the Group had returned 50 out of 61 ships to operations across its five brands, representing over 85% of its worldwide capacity. During the year, the Group carried approximately 1.3 million guests across the five brands, achieving record guest satisfaction scores and onboard spend per passenger.
Due to the impact of the Omicron variant, the company experienced some service disruptions and cancelled several sailings in Q1, although it still expects to operate approximately 95% of its planned capacity in Q1.
Bookings in the fourth quarter were sequentially higher than the third quarter. Due to the impact of the Omicron variant, bookings decreased in December and remained lower over the holiday period, but have started to increase with each consecutive week since the beginning of 2022 and are now back to pre-Omicron levels.
Cumulative advance bookings for the second half of 2022 are within historical ranges and at higher prices, with and without future cruise credits (FCCs).
The Group expects to return the full fleet before the summer season of 2022 and load factors approaching historical levels in the third quarter of 2022. The company is thoughtfully ramping up the fleet and load factors while emphasizing industry-leading health and safety standards, world-class guest experiences and financial prudence.
Notwithstanding the impact from Omicron, the Group expects to be operating cash flow positive in late spring. The Group also expects a net loss for the first half of 2022 and a return to profitability in the second half of 2022.
 
 
Full Year 2021 results
The company gradually resumed its global cruise operations beginning in December 2020 in Singapore and June 2021 in the U.S. For the full year, the company reported US GAAP Net Loss of $(5.3) billion or $(20.89) per share compared to US GAAP Net Loss of $(5.8) billion or $(27.05) per share in the prior year. The company also reported
 
Adjusted Net Loss of $(4.8) billion or $(19.19) per share for the full year 2021 compared to Adjusted Net Loss of $(3.9) billion or $(18.31) per share in the prior year.
 
Fourth Quarter 2021 results
The company reported US GAAP Net Loss for the fourth quarter of 2021 of $(1.4) billion or $(5.33) per share compared to US GAAP Net Loss of $(1.4) billion or $(6.09) per share in the prior year. The company also reported Adjusted Net Loss of $(1.2) billion or $(4.78) per share for the fourth quarter of 2021 compared to Adjusted Net Loss of $(1.1) billion or $(5.02) per share in the prior year. During the fourth quarter of 2021, the company eliminated the three-month reporting lag for Silversea Cruises to reflect the brand’s financial position, results of operations and cash flows concurrently and consistently with the company’s fiscal calendar. The effect of this change resulted in a negative impact of approximately $(0.25) per share for the fourth quarter of 2021, which has been excluded from the company’s adjusted results for transparency and comparability purposes. The Net Loss and Adjusted Net Loss for the fourth quarter and full year of 2021 are the result of the impact of the COVID-19 pandemic on the business.
 
In the fourth quarter, 12 additional ships returned to service. The company is thoughtfully ramping up the fleet and load factors while emphasizing industry-leading health and safety standards, world-class guest experiences and financial prudence.
 
Ships that operated the Group's core winter itineraries in the fourth quarter achieved a load factor of 65%. Core itineraries exclude sailings during the early ramp-up period of up to four weeks and exclude new itineraries implemented during the COVID period.  Fourth quarter total load factor was 59%. Total revenue per Passenger Cruise Day in the fourth quarter was up 10% versus record 2019 levels driven by strong onboard revenue performance. Despite the impact from Omicron, total cash flow from ships in operation turned positive in the fourth quarter.
 
“While 2021 was another challenging year financially, we finished the year in a stronger position than at the beginning and made great progress toward our recovery,” said Naftali Holtz, chief financial officer. “We are also immensely grateful for the incredible hard work and determination of our teams that made our return to sailing possible.”
 
 
Continued Fleet Ramp-up
 
Due to the impact from the Omicron variant, the company experienced some service disruptions and cancelled several sailings in Q1 2022. Service disruptions have recently abated as COVID cases have declined. Despite these service disruptions and cancellations, the overall trajectory of the return to service remains unchanged. By the end of the first quarter of 2022, the Group expects that 53 out of 62 ships will have been brought back to service, with the rest of the fleet returning to operations before the summer season. Wonder of the Seas was delivered in January 2022 and expanded the Group’s fleet size to 62 ships. Australia is anticipated to open for cruising for its summer season. China remains closed, and the company has redeployed ships planned for China to other core markets for the time being to capitalize on strong pent-up demand, while it remains optimistic to capture long-term growth opportunities in that market.
 
First quarter load factors are expected to be lower than initially anticipated due to the Omicron impact on bookings and cancellations, particularly on January sailings. As such, the Group anticipates load factors on core itineraries of approximately 60% during the first quarter of fiscal year 2022 with sequential monthly improvement. The company anticipates approximately 7.7 million Average Passenger Cruise Days (APCD) for the first quarter. The Group expects total cash flow from ships in operation in the first quarter to be positive.
 
Update on Bookings
 
The travel industry has experienced significant short-term disruptions due to the Omicron variant. Such disruptions intensified during the holiday season and in early January, with the spread of the variant, and impacted the company’s cancellations and bookings for near-term sailings.
 
Load factors for sailings in the first half of 2022 are expected to remain below historical levels, consistent with the company’s return to service schedule, which includes the impact from Omicron. Load factors for sailings in the second half of 2022 continue to be booked within historical ranges, at higher prices with and without FCCs.
 
“Following a record U.S. black Friday and cyber weekend, the spread of the Omicron variant resulted in a softening in booking volumes and an increase in near-term cancellations,” said Holtz. “Similar to our experience following Delta, we expect bookings to materially increase as we get further beyond the peak of cases. We are already seeing cancellations subside and bookings improve to pre-Omicron levels, and we have adjusted our sales and marketing efforts in anticipation of a delayed and extended WAVE period.”
 
The company is excited about the introduction in 2022 of two new ships, Wonder of the Seas and Celebrity Beyond. These new ships add to the six new ships that joined the fleet over the last 20 months and are expected to be important contributors to yield growth and profitability.
 
As of December 31, 2021, the company had approximately $3.2 billion in customer deposits. This represents an improvement of about $400 million over the previous quarter despite the significant quarter-over-quarter increase in revenue recognition and near-term cancellations due to Omicron, both of which reduce the customer deposits balance. The customer deposit balance at year-end for Q2 2022 forward sailings was higher than the balance held at the end of 2019 for Q2 2022 forward sailings. Approximately 32% of the customer deposit balance is related to FCCs compared to 35% in the prior quarter, a positive trend indicating new demand.
 
Liquidity and Financing Arrangements
 
As of December 31, 2021, the company’s liquidity was $3.5 billion, which includes cash and cash equivalents, undrawn revolving credit facility capacity, and a $0.7 billion commitment for a 364-day term loan facility. This excludes proceeds from the $1 billion unsecured bond offering completed January 7, 2022.
 
During 2021, the company re-established access to unsecured markets and refinanced $2.3 billion of secured and/or guaranteed debt, in some instances reducing the coupon by up to 600 bps.
 
“We remain focused on our disciplined approach to capital allocation and returning to profitability. Our liquidity position remains strong as we execute on our return to service. We continue to take actions to improve our balance sheet, address near-term maturities and reduce interest expense,” said Holtz.
 
In January 2022, the Group issued $1 billion of 5.375% senior unsecured notes due 2027. The company is planning to use the proceeds from the offering to repay principal payments on debt maturing in 2022.
 
As of the date of this release, there are $2.3 billion in scheduled debt maturities for 2022.
 
Net interest expense for the first quarter of 2022 is expected to be in the range of $270-275 million.
 
During the fourth quarter, the Group amended its $7.3 billion of outstanding export credit agencies (ECAs) financing plus its committed ECA facilities to reset covenant levels for 2023 and 2024, following a waiver period through the end of 2022.
 
 
Fuel Expense
 
Bunker pricing net of hedging for the fourth quarter was $549 per metric ton and consumption was 303,000 metric tons.
 
As of December 31, 2021, the company had hedged approximately 54% and 15% of its total projected metric tons of fuel consumption for all of 2022 and 2023, respectively. For all of 2022 and 2023, the annual average cost per metric ton of the fuel swap portfolio is approximately $490, and $515, respectively.
 
Based on current fuel prices, the company expects approximately $206 million of fuel expense in its first quarter 2022 at an average pricing of $615 per metric ton net of hedging.
 
 
Capital Expenditures
The expected capital expenditures for 2022 are $3.1 billion. These expenditures are mainly driven by newbuild projects that have committed financing. Depreciation and amortization expenses for the first quarter of 2022 are expected to be in the range of $335-340 million.
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8 hours ago, CarelessAndConfused said:

And if Q3 was $1.14B, then Q4 probably wasn't any less so if they can get to a point where they are "only" losing $1.0 Billion, they will actually be operationally cash flow positive.

I'm certain that our financial advisor would not agree on your assessment, and for that I am grateful.  (He may even reference your cc handle).

Edited by bucfan2
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11 hours ago, CarelessAndConfused said:

The numbers actually look much better than I thought.  The $1.14 billion in depreciation was just for Q3-2021.  Hence the $1.4B loss in Q3 is just merely a $250M cash loss.  They may be losing a lot of cash for some other reasons and so forth but operationally, this is definitely manageable. 

 

And if Q3 was $1.14B, then Q4 probably wasn't any less so if they can get to a point where they are "only" losing $1.0 Billion, they will actually be operationally cash flow positive.

The numbers are getting better at least. But that is like the Jags winning three games this year vs 1 last year.  Yes, the number is getting better but it's nowhere good enough. 

 

                                    2020  vs  2021 (prelim)

Net Op. Cash Flow   -3.7B      -1.9B

Free cash Flow         - 5.7B     -4.1B

EDITDA/Interest        -2.0X      -1.9X

 

And they were able to raise $1B in 5 year debt in January which is a good sign. Of course, at 5.375% that was about 3.60% over 5 year treasuries. I'm not an expert on the bond markets but I think that is still in Junk bond territory. 

 

I think it might take another couple of more years to transform this Jaguar into a Bengal. 😉

🐯

 

Edited by DirtyDawg
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17 hours ago, Baron Barracuda said:

In 4q '20 with entire fleet laid up RCL had only $34MM in revenue and lost $1.4B.  In 4q '21 with most of fleet back in service (though operating at reduced capacity)  revenue increased to $1.0B yet they once again  lost $1.4B.  

 

Yep, tough times.

 

https://www.sec.gov/Archives/edgar/data/884887/000088488722000003/a10k2021earningsrelease8-k.htm

 

 

 

11 hours ago, CarelessAndConfused said:

 

I have not read the filed reports so don't know the full details, but the $1.4B loss probably overstates the cash outflow from operations by probably like $700-800 million (just a guess).  

 

JIMO, one has to read the detail in the financial reports to make financial commentary about the details in the financial reports?

 

11 hours ago, CarelessAndConfused said:

 

They recorded $1.14 billion in depreciation in 2021. 

 

They recorded depreciation in 2021 and 2020, annually and for the 4th quarter of each.  They are comparable.  Depreciation is initiated once acquired and placed in service over the estimated useful lives of each asset.  Depreciation is not 'suspended' during operational pauses after placement in service.

ncl.JPG.9d7be4995ad919b185a1003da7c8f70e.JPG

 

 

For example, from the 10Q quarterly for September 30, 2021 ~

 

"Depreciation and amortization expenses for 2021 increased by $8.8 million, or 2.8%, to $325.9 million from $317.1 million in 2020 primarily due to the addition of Odyssey of the Seas to our fleet during the first quarter of 2021."

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/0000884887/000088488721000028/rcl-20210930.htm

 

dep.JPG.7d18d4416a599c56ffad93fb5a542662.JPG

 

 

11 hours ago, CarelessAndConfused said:

The numbers actually look much better than I thought.  The $1.14 billion in depreciation was just for Q3-2021.  Hence the $1.4B loss in Q3 is just merely a $250M cash loss.  They may be losing a lot of cash for some other reasons and so forth but operationally, this is definitely manageable. 

 

And if Q3 was $1.14B, then Q4 probably wasn't any less so if they can get to a point where they are "only" losing $1.0 Billion, they will actually be operationally cash flow positive.

 

Nope, the depreciation is quarterly per the quarterly SEC filings.

 

Year Ended December 31, 2021/2020

$1,292,878,000 / $1/279/753,000

 

Quarter Ended December 31, 2021/2020

$333,366,000 / 318,029,000

 

Quarter Ended September 30, 2021/2020

$325,907000 / $317,139,000

 

Quarter Ended June 30, 2021/2020

$323,439,000 / $319,757,000

 

Quarter Ended March 31, 2021/2020

$310,166,000 / $324,330,000

 

😉

Edited by At Sea At Peace
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Also of note, the delicate survival balance almost 100% reliant on 'customer deposits' for liquidity. 

 

From the earnings 8K contents ~

 

"As of December 31, 2021, the company’s liquidity was $3.5 billion, which includes cash and cash equivalents, undrawn revolving credit facility capacity, and a $0.7 billion commitment for a 364-day term loan facility."

 

AND

 

"As of December 31, 2021, the company had approximately $3.2 billion in customer deposits."

 

PLUS this ominous impact on liquidity ~

 

"In January 2022, the Group issued $1 billion of 5.375% senior unsecured notes due 2027. The company is planning to use the proceeds from the offering to repay principal payments on debt maturing in 2022.
 
As of the date of this release, there are $2.3 billion in scheduled debt maturities for 2022."
 
Just saying.
 
 
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From a press release yesterday:

 

MIAMI – February 11, 2022 – Royal Caribbean Group (NYSE: RCL) today announced the appointment of Governor Michael O. Leavitt, three-time elected governor of Utah and former Secretary of Health and Human Services during President George W. Bush’s administration, to its Board of Directors.

 

“Governor Leavitt’s leadership of the Healthy Sail Panel and tireless work to synthesize cross-disciplinary expertise into safety guidelines for the entire cruise industry led directly to our successful return to sail amid the COVID-19 pandemic,” said Richard Fain, Chairman of the Board of Directors of Royal Caribbean Group. "His knowledge and experience in finding solutions to public health issues will be a valuable addition to the board."

 

Governor Leavitt co-chaired the Healthy Sail Panel, a group of experts across disciplines tasked with collaboratively developing recommendations for cruise lines to advance their public health response to COVID-19, improve safety, and return to a safe resumption of operations. The panel developed a comprehensive report, including 74 detailed best practices, to protect the public health and safety of guests, crew and the communities where cruise ships call. The recommendations were adopted by the entire cruise industry and submitted to the U.S. Centers for Disease Control and Prevention (CDC), in response to a CDC request for public comment to inform future public health guidance and preventative measures relating to travel on cruise ships.

 

Leavitt is the Co-Chairman of Health Management Associates, a health care consulting firm, and chairman of Leavitt Equity Partners, a private equity fund. In 1984, Leavitt became chief executive of The Leavitt Group, a family business that is now the nation’s second largest, privately held insurance brokerage. In 1993, Leavitt was elected governor of Utah. He served three terms from 1993 through 2003. In 2003, he joined the Cabinet of President George W. Bush, serving in two positions, first as administrator of the Environmental Protection Agency from 2003 through 2005 and then as secretary of Health and Human Services (HHS) from 2005 through 2009. At HHS, he administered a $750 billion budget — nearly 25 percent of the entire federal budget — and 67,000 employees. He currently serves on the board of directors of American Express.

 

Leavitt grew up in Cedar City, Utah. He earned a bachelor’s degree in business from Southern Utah University.

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  • 3 weeks later...

The RCL 2021 Annual 10K.

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/0000884887/000088488722000008/rcl-20211231.htm

 

As always, I suggest a good long read.

 

72 pages of SEC and Management Disclosures.

 

59 pages including the Auditor's Report and Financial Statements

 

Snippets can be cherrypicked throughout. 

 

For example 'Passenger Revenue" decreased from 71% of total revenue in 2019 to 61% in 2021.

 

Fuel costs, as another example, have increased from 6% of total revenue to 25% in 2021.

 

It is very heavy in risk disclosure in many regards.  Rightfully so, and expect the same from all public lines.

 

There all kinds of ways to look at the data.  However, with so many uncontrollable variable (pandemic, variants, country-by-country and port-by-port differences, travel restrictions, geopolitical events, fuel, ability to refinance, etc.) it simply "is what it is."

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9 minutes ago, At Sea At Peace said:

Looks like the MKT didn't react well to the 10K and Annual Audit released today by RCL.  There is a lot in that filing.  A lot.

 

IMG_5388.thumb.jpg.278ebfb63e06fec1bd511e20a3332371.jpg

+ a lot of Royal cancelations from Putins escapades. 

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56 minutes ago, taglovestocruise said:

+ a lot of Royal cancelations from Putins escapades. 

 

I'm sure that is a contributing factor to the many that the cruise lines are dealing with in two aspects, cruise or port cancelations and impacts on air and transportation to other departure points.

 

I don't believe, at this date and time, that RCL has canceled such in the suggested country.  

 

The 10K makes numerous references to 'risks' related to 'geopolitical factors' so you're likely on point.

 

IMO, the biggest factor, by a wide margin, is the virus and specifically the next variant or variants (if at all), regarding each such transmission and lethality.  Such would then 'trigger' reconstituted regulatory restrictions and limitation or curtailment on cruising, and in domino effect, the inability to finance the next lull period cash requirements.

 

Pretty sure there would be no 'US bail out' unless the situation is so dire that the vultures (distressed debt hedge funds already in deep and prepped for control) don't even want them.  Then, with their political influence$, there might be something.  🧐

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13 hours ago, At Sea At Peace said:

 

I'm sure that is a contributing factor to the many that the cruise lines are dealing with in two aspects, cruise or port cancelations and impacts on air and transportation to other departure points.

 

I don't believe, at this date and time, that RCL has canceled such in the suggested country.  

 

The 10K makes numerous references to 'risks' related to 'geopolitical factors' so you're likely on point.

 

IMO, the biggest factor, by a wide margin, is the virus and specifically the next variant or variants (if at all), regarding each such transmission and lethality.  Such would then 'trigger' reconstituted regulatory restrictions and limitation or curtailment on cruising, and in domino effect, the inability to finance the next lull period cash requirements.

 

Pretty sure there would be no 'US bail out' unless the situation is so dire that the vultures (distressed debt hedge funds already in deep and prepped for control) don't even want them.  Then, with their political influence$, there might be something.  🧐

I wonder what the political apatite would be for a US bailout of an industry that historically has paid very little US federal taxes. 🤔

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18 minutes ago, DirtyDawg said:

I wonder what the political apatite would be for a US bailout of an industry that historically has paid very little US federal taxes. 🤔

 

Very little.  Agreed.

 

For several reasons.  First and foremost, in todays emerging personal to public milieu, cruising is inequitable.  That paints it in a very low social hierarchy and in a zero sum slant as also without basis in need. 

 

Then back to the lack of US incorporation, domicile, employees, ship flagging, etc. adds support to your point.

 

Fractionally, potential 'new owners' in a distressed reorganization are hedge funds that are vulture financial operative with political influence at their disposal as much as their cash (also because of their cash).  They get what they want, they always do.  So, that was the 'aside' regarding the political appetite, or asterisk.

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Here's a question for all you stock market pros:  RCL stock has gone done 23% in the last 14 days. Granted most stocks are down in this bear market due to the world conflict, but would it be a good time to buy on the dip?  The stock is trading slightly above its 52 week low at $64.17 in the futures market. Should I bite and buy some more now?  TIA

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3 minutes ago, livingonthebeach said:

Here's a question for all you stock market pros:  RCL stock has gone done 23% in the last 14 days. Granted most stocks are down in this bear market due to the world conflict, but would it be a good time to buy on the dip?  The stock is trading slightly above its 52 week low at $64.17 in the futures market. Should I bite and buy some more now?  TIA

Stock market pros on CC...I would think through that for a bit...

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Posted (edited)
10 minutes ago, livingonthebeach said:

Here's a question for all you stock market pros:  RCL stock has gone done 23% in the last 14 days. Granted most stocks are down in this bear market due to the world conflict, but would it be a good time to buy on the dip?  The stock is trading slightly above its 52 week low at $64.17 in the futures market. Should I bite and buy some more now?  TIA

I'm thinking maybe wait longer until it gets around $40 it seems to be tanking like everything else.

Edited by Jimbo
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19 minutes ago, livingonthebeach said:

 

From $98.27 (52 week high) to $40?  My, that's a big drop. That volatility reminds me of crypto. 🤣

Never know...........

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21 minutes ago, Biker19 said:

At the start of the pandemic it went from $130 to about $20. RCCL is still losing money.

 

Yes - I bought some on that dip but didn't get the all time low of $19.25 - missed the boat on that one. 

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Fuel cost is about 15% of operating costs, and while cruise lines hedge it only lasts so long... at this point oil is up about 40% from a couple of weeks ago.  That's a massive increase in cost that is hard to offset without passing the cost along.

 

I've got to think too that this increasing inflation that will likely spill out of this will only help to eat away at peoples' discretionary income too.

 

Been a bit painful to watch RCL the last couple weeks

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