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1 hour ago, bruzin_for_a_cruizin said:

Can you elucidate for us investing n00bs who really only a few shares for the OBC?

 

What I take from this is that all three major cruise lines took on a ton of debt in the past year to... stay afloat (sorry for the pun!). I presume that is anathema to future profits? Even though the 2023 number appears to be much smaller and more manageable? 

 

The net debt-to-EBITDA (earnings before interest depreciation and amortization) ratio is a measurement of leverage, calculated as a company's interest-bearing liabilities minus cash or cash equivalents, divided by its EBITDA. The net debt-to-EBITDA ratio is a debt ratio that shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant.

 

The net debt-to-EBITDA ratio is popular with analysts because it takes into account a company's ability to decrease its debt. Ratios higher than 4 or 5 typically set off alarm bells because this indicates that a company is less likely to be able to handle its debt burden, and thus is less likely to be able to take on the additional debt required to grow the business.

 

Forecasts earlier this month from Truist’s Patrick Scholes show Carnival, which started the pandemic better-capitalized than peers, ending next year with a net debt to Ebitda ratio of around 4.6 times, versus 6.4 times for Norwegian and 5.5 times for Royal Caribbean.

 

Does this makes a bit of sense?

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Posted (edited)

Should be interesting to see what effect the full fleet sailing has had on the bottom line this quarter:

 

As the Royal Caribbean Group completes its restart plans, Cruise Industry News recaps the trajectory of the cruise brands in bringing all their ships back after the pandemic.

 

Royal Caribbean International
Original Service Resumption: Quantum of the Seas in December 2020
Restart Completion Plan: Rhapsody of the Seas in May 2022
Ships Now in Service: Full Fleet – 26 ships 

 

In December 2020, Royal Caribbean International became one of the first major cruise lines to resume service after the COVID-19 pandemic. Seven months after pausing its entire worldwide operations, the company welcomed guests back in Singapore, with a series of cruises to nowhere onboard the Quantum of the Seas.

Half a year later, in June 2021, Royal Caribbean returned to North America and the Caribbean, with a special program in the Bahamas. Based in Nassau, the Adventure of the Seas became one of the first ships to resume service in the region, offering seven-night cruises to Freeport, CocoCay and Cozumel.

After returning to the United States in July 2021, the company continued restarting operations in additional destinations, such as the Alaska, the Mediterranean and the UK.

 

In May 2022, the brand’s restart plan was finally concluded with the service restart of the Rhapsody of the Seas. Marking the return of the company’s full fleet, the ship kicked off a summer program in the Mediterranean.

 

Celebrity Cruises
Original Service Resumption: Celebrity Millennium in June 2021
Restart Completion Plan: Celebrity Infinity in June 2022
Ships Now in Service: Full Fleet – 15 ships

 

Celebrity Cruises completed its restart plans in just one year. As the first ship to resume guest services in North America, the Celebrity Millennium was the first ship to welcome guests back for the premium brand, launching a St. Maarten-based Caribbean program in June 2021.

 

A few weeks later, the company later marked the return of the large cruise ships to the United States, with the Celebrity Edge becoming the first mainstream ship to sail from a stateside port since March 2020. Also in June, Celebrity resumed operations in the Mediterranean with the new Celebrity Apex.

Quickly adding ships back into service, Celebrity returned to the UK, the Alaska and the Galapagos in July 2021.

 

Completing the company’s restart plans – and also marking the return of the entire Royal Caribbean Group – the Celebrity Infinity welcomed guests back in June 2022.

 

Silversea Cruises
Original Service Resumption: Silver Moon in June 2021
Restart Completion Plan: Silver Shadow in June 2022
Ships Now in Service: Full Fleet – 10 ships

 

Silversea Cruises resumed guest services in June 2021. Almost at the same time, the luxury company welcomed guests back in two new ships – the Silver Moon in the Mediterranean and the Silver Origin in the Galapagos.

 

A month later, the brand added more two ships into the active lineup, resuming service in Iceland and Alaska as well.

After retuning to additional destinations, including the Antarctica in November 2021 and the Kimberley region in June 2022, the company completed its restart plans in June 2022.

 

Marking the return of Silversea’s entire ten-ship fleet, the Silver Shadow kicked off a summer program in the Alaska.

 

TUI Cruises
Original Service Resumption: Mein Schiff 2 in July 2020
Restart Completion Plan: Mein Schiff Herz in April 2022
Ships Now in Service: Full Fleet – Seven ships

 

TUI Cruises pioneered the cruise restart in July 2020, becoming the first cruise line to have a large ship back in guest operations. At the time, the German brand launched its “Blue Cruises," a series of ocean getaways onboard the Mein Schiff 2.

 

Departing from Hamburg, the sailings included several new health protocols, in addition to scenic cruising in Norway and other countries of the region. The Mein Schiff 1 followed in August 2020, offering a similar product. 

 

Still in 2020, TUI also returned to the Mediterranean, with the Mein Schiff 6 offering a program in Greece, and to the Canaries, with the Mein Schiff 2 kicking off a series of itineraries from St. Cruz de Tenerife in November.

 

After adding more destinations and ships back into the active lineup, the brand concluded its restart plans in April 2022. At the time, the Mein Schiff Herz resumed service in the Mediterranean, marking the return of TUI’s entire fleet.

 

Hapag-Lloyd
Original Service Resumption: Hanseatic Inspiration in June 2021

Restart Completion Plan: Hanseatic Spirit in August 2021
Ships Now in Service: Full Fleet – Five ships

 

Hapag-Lloyd first resumed guest services in July 2020, with an expedition ship, the Hanseatic Inspiration, and a luxury vessel, the Europa 2.

 

Sailing from Hamburg, the ships initially offered short cruises to nowhere. Later that year, the German brand later returned to the Canary Islands before relaunching service in the Mediterranean in 2021.

 

Looking Back at the Royal Caribbean Group Restart - Cruise Industry News

Edited by Biker19
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On 6/30/2022 at 2:37 PM, exm said:

 

The net debt-to-EBITDA (earnings before interest depreciation and amortization) ratio is a measurement of leverage, calculated as a company's interest-bearing liabilities minus cash or cash equivalents, divided by its EBITDA. The net debt-to-EBITDA ratio is a debt ratio that shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant.

 

The net debt-to-EBITDA ratio is popular with analysts because it takes into account a company's ability to decrease its debt. Ratios higher than 4 or 5 typically set off alarm bells because this indicates that a company is less likely to be able to handle its debt burden, and thus is less likely to be able to take on the additional debt required to grow the business.

 

Forecasts earlier this month from Truist’s Patrick Scholes show Carnival, which started the pandemic better-capitalized than peers, ending next year with a net debt to Ebitda ratio of around 4.6 times, versus 6.4 times for Norwegian and 5.5 times for Royal Caribbean.

 

 

Good stuff.  Net Debt to EBITDA.  👍

 

One anomaly I see for the cruise lines is that the calculation of "net debt" (interest bearing liabilities less cash and cash equivalents) is that the Customer Deposits "cash" is used to calculate (and lower) the "net debt" number; however, the same amount of Customer Deposits is "not included" in the Debt amount to begin with (as such are non-interest bearing).

 

i.e., having ones cake and eating it too.

 

CCL for example, 10Q 5/1/22

 

Debt (excluding $4.767B in Customer Deposits) $29.263B LESS Cash and Cash Equivalents of $7.054B (which includes the $4.767B in Customer Deposits) is $22.21B in Net Debt for the ratio to EBITDA.  They had operating income (pre-interest) of ($2.964B), add back Depreciation of $1.126B so EBITDA isn't even calculable as a negative.

 

To hit the 4.6X Net Debt / EBITDA they would need EBITDA of $4.83B ($22.21 / 4.6).

 

Removing Customer Deposits in the calculation, they would need EBITDA of $5.86B ($26.98 / 4.6)

 

On 6/30/2022 at 2:37 PM, exm said:

Does this makes a bit of sense?

 

It just doesn't appear attainable or even within reach.

 

* Check my math, I'm retired.  😉

 

 

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Posted (edited)

RCL Stock, hit the 52 week low this morning.

 

Expect more brands of liquor unavailable. 🤣

 

 

Shares of Carnival, the world's largest cruise operator, plunged 14% on Wednesday after a bearish research note by Morgan Stanley predicted the stock could fall to $0 in a worst-case scenario. That's not a typo.

 

Rivals sank, too. Shares of Royal Caribbean Group (RCL) slid 10% that day, while Norwegian Cruise Line Holdings (NCLH) dropped 9%. The stocks lost more ground Thursday, though not as much.

Edited by Jimbo
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1 hour ago, At Sea At Peace said:

 

Good stuff.  Net Debt to EBITDA.  👍

 

One anomaly I see for the cruise lines is that the calculation of "net debt" (interest bearing liabilities less cash and cash equivalents) is that the Customer Deposits "cash" is used to calculate (and lower) the "net debt" number; however, the same amount of Customer Deposits is "not included" in the Debt amount to begin with (as such are non-interest bearing).

 

i.e., having ones cake and eating it too.

 

CCL for example, 10Q 5/1/22

 

Debt (excluding $4.767B in Customer Deposits) $29.263B LESS Cash and Cash Equivalents of $7.054B (which includes the $4.767B in Customer Deposits) is $22.21B in Net Debt for the ratio to EBITDA.  They had operating income (pre-interest) of ($2.964B), add back Depreciation of $1.126B so EBITDA isn't even calculable as a negative.

 

To hit the 4.6X Net Debt / EBITDA they would need EBITDA of $4.83B ($22.21 / 4.6).

 

Removing Customer Deposits in the calculation, they would need EBITDA of $5.86B ($26.98 / 4.6)

 

 

It just doesn't appear attainable or even within reach.

 

* Check my math, I'm retired.  😉

 

 

Net Debt to EBITDA is a fine ratio but with all general ratios it has to be 'tweaked' for the individual industry. The main drawback with Net Debt to EBITDA is that it treats all debt as the same. Some company's debt will be costing them 4-5% while other company's will have debt that costs them 8-9%. Obviously a 4X Net Debt to EBITDA for a company paying 8-9% on it's debt is way worse than the same ratio for a company whose debt is costing them 4-5%. 

 

 

 

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2 hours ago, At Sea At Peace said:

 

Good stuff.  Net Debt to EBITDA.  👍

 

One anomaly I see for the cruise lines is that the calculation of "net debt" (interest bearing liabilities less cash and cash equivalents) is that the Customer Deposits "cash" is used to calculate (and lower) the "net debt" number; however, the same amount of Customer Deposits is "not included" in the Debt amount to begin with (as such are non-interest bearing).

 

i.e., having ones cake and eating it too.

 

CCL for example, 10Q 5/1/22

 

Debt (excluding $4.767B in Customer Deposits) $29.263B LESS Cash and Cash Equivalents of $7.054B (which includes the $4.767B in Customer Deposits) is $22.21B in Net Debt for the ratio to EBITDA.  They had operating income (pre-interest) of ($2.964B), add back Depreciation of $1.126B so EBITDA isn't even calculable as a negative.

 

To hit the 4.6X Net Debt / EBITDA they would need EBITDA of $4.83B ($22.21 / 4.6).

 

Removing Customer Deposits in the calculation, they would need EBITDA of $5.86B ($26.98 / 4.6)

 

 

It just doesn't appear attainable or even within reach.

 

* Check my math, I'm retired.  😉

 

 

 

While it's good you called this out, it is technically correct. 

 

This is because it stems from the idea of a business as a going concern. In that context, the deposits paid do not fall under debts as they are not expected to be paid back. As a going concern, they are prepayments towards G&S purchased, so not debt as such. (Of course if the business was being wound up they would be added to the list of creditors, so debts at that point.)

 

OTOH, the reason to calculate net debt is to see the coverage of liquid assets (e.g. cash) as true debts need to be repaid. So in this context again they are part of cash that can be paid to cover those debts. (The use of cash for these purposes is legitimate as part of business operations. Deposits do not have to be held until the product/service is supplied.)

 

You are considering things from a liquidation perspective, but that is not how an operating business is assessed.

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11 minutes ago, The_Big_M said:

 

While it's good you called this out, it is technically correct. 

 

This is because it stems from the idea of a business as a going concern. In that context, the deposits paid do not fall under debts as they are not expected to be paid back. As a going concern, they are prepayments towards G&S purchased, so not debt as such. (Of course if the business was being wound up they would be added to the list of creditors, so debts at that point.)

 

OTOH, the reason to calculate net debt is to see the coverage of liquid assets (e.g. cash) as true debts need to be repaid. So in this context again they are part of cash that can be paid to cover those debts. (The use of cash for these purposes is legitimate as part of business operations. Deposits do not have to be held until the product/service is supplied.)

 

You are considering things from a liquidation perspective, but that is not how an operating business is assessed.

 

For sure it is technically correct.  Agreed.

 

What has become clear pandemic and almost post-pandemic is how uniquely the cruise industry has had access to interest and security free customer deposits in the many billions as de facto lines of credit.

 

I'd like to see a regulatory requirement for customer deposits to be held as "restricted cash" and not comingled with the operating funds of the cruise lines or even possibly held in escrow by a 3rd party.

 

In the alternate, openly disclose "that payments made for your future cruise are unsecured and not segregated from other company accounts and may, in lieu of your cruise, be used to satisfy debt obligations of the company and provide for operating cash flow for cruises prior to yours."😉

 

Not going to happen unless one or more of these companies "go down" and the customer deposits are used to satisfy the vultures.  

 

Again, you are right and they are technically right.

 

 

 

 

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2 hours ago, Jimbo said:

RCL Stock, hit the 52 week low this morning.

 

Expect more brands of liquor unavailable. 🤣

 

 

Shares of Carnival, the world's largest cruise operator, plunged 14% on Wednesday after a bearish research note by Morgan Stanley predicted the stock could fall to $0 in a worst-case scenario. That's not a typo.

 

Rivals sank, too. Shares of Royal Caribbean Group (RCL) slid 10% that day, while Norwegian Cruise Line Holdings (NCLH) dropped 9%. The stocks lost more ground Thursday, though not as much.

Yup.  I bought 100 shares of cci.  Just waiting for the other 2 to dip to 4/20 prices again or close.   I have buys set up for them so I don’t miss them like last time.    Lol.  

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Over the weekend Barrons did a mea culpa, backing away from a favorable piece they had done on the cruise industry just two months ago.  "In retrospect Barrons was overly bullish on the sector".  I found this concerning because absent some major event Barrons typically allows a fair amount of time to pass before re-examining a recommendation.  To reverse their opinion this quickly implies either their original analysis was flawed or the situation has noticeably deteriorated.  Now, in addition to the leverage issue they quote analysts concerned about recession fears, inflation and interest rates.  They admit the cruise industry has weathered a number of prior recessions but not with the debt levels they're carrying today.

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3 hours ago, At Sea At Peace said:

In the alternate, openly disclose "that payments made for your future cruise are unsecured and not segregated from other company accounts and may, in lieu of your cruise, be used to satisfy debt obligations of the company and provide for operating cash flow for cruises prior to yours."

Some of the language in the RCG SEC quarterly filing regarding deposits:

 

Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise. Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues during the duration of the cruise. ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We do not consider customer deposits to be a contract liability until the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund. Customer deposits presented in our consolidated balance sheets include contract liabilities of $1.2 billion and $0.8 billion as of March 31, 2022 and December 31, 2021, respectively.
 

 

Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds, allow the sureties to request collateral. We also have agreements with our credit card processors relating to customer deposits received by us for future voyages. These agreements allow the credit card processors to require us, under certain circumstances, including breach of the financial covenants, the existence of other material adverse changes, excessive chargebacks, and other triggering events, to maintain a reserve that can be satisfied by posting collateral. As of March 31, 2022, we have posted letters of credit as collateral with our sureties and credit card processors under our revolving credit facilities in the amount of $117.2 million.

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11 hours ago, Wilson said:

Ok, I read 90 pages and still don't know if I should buy or not. LoL

Really interesting looking back at some of the old comments.

 

When Covid hit and all cruise lines were shutdown, RCL was hovering around $22. When everything re-opened and cruising restarted, RCL hit $80. All-time high is around $120 or so. Right now it's trading around $32. They have a ton of debt, but with all ships sailing they should be in a good position to pay off the debt relatively quickly.

 

In my opinion RCL will stay between the $30-$40 bandwith this year until we know if inflation levels off. Next year I expect RCL to easily double. Anyway, my personal take.

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2 minutes ago, yogimax said:

Beware statements like this.

 

Easily double means a price around $60-$65. You don't think that's a possibility?

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54 minutes ago, exm said:

 

Easily double means a price around $60-$65. You don't think that's a possibility?

 

What happened before Covid doesn't matter. Right now it's all about the ability to service what appears to be insurmountable debt. RCL has never seen debt like this before. And it's still growing.

 

Anything is possible, but I do not expect RCL to hit $60 next year. 

 

 

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1 hour ago, exm said:

 

Easily double means a price around $60-$65. You don't think that's a possibility?

I don't have a crystal ball.  The problem is that some folks are coming to these boards  assuming that everyone who posts has expertise.  In addition, this is a board for those who love RCCL which tends to skew the responses.

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13 hours ago, Wilson said:

Ok, I read 90 pages and still don't know if I should buy or not. LoL

Really interesting looking back at some of the old comments.

Probably best to seek the advice of your Financial Consultant.

 

m

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19 minutes ago, cruisegirl1 said:

Probably best to seek the advice of your Financial Consultant.

 

m

 

They've lost versus thrown darts numerous times.  ☺️

 

Whether human or other.

 

https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/?sh=3e40dc9f630a

 

https://www.marketwatch.com/story/random-darts-beat-hedge-fund-stars-again-2019-06-26

 

 

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1 hour ago, At Sea At Peace said:

Does it make a difference that the first article was published in 2012 and the second one in 2019, we’ll before the pandemic??

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There is a 52 week low thread over on the Celebrity board too.

I have copied one of my posts below.

 

I was in the investment business for over 30 years as and analyst and portfolio manager. Companies' like Royal have never met my definition of an 'investment'. At best they are speculations. Too leveraged, both operationally and financially. I never would risk my clients' money with these types of companies. If I would not buy these type of companies for my clients I would never buy them for my personal account. 

 

I'm retired now from the industry and I'm teaching at University (Hey, you have to do something fun in your retirement!). So I was free to purchase RCL shares in March 2020. I made money with my speculation but I could have done the same by going to the local casino and betting at the roulette table, probability with less risk too. Today, RCL's financial position is far worse than it was in March 2020. For me, to even speculate with this stock now, I'd have to do a detailed credit analysis of the company to determine the probability that this Company might go bankrupt over any reasonable holding period. With the sharp decline in the prices of other true 'investments' which have similar upsides, the risk reward is not currently very attractive for even a speculation on RCL stock in my opinion.

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1 hour ago, grandgeezer said:

Does it make a difference that the first article was published in 2012 and the second one in 2019, we’ll before the pandemic??

 

No, not at all.

 

Have monkeys or other dart throwers changed?  😁

 

Alternately, how has the pandemic made the record of financial advisors more successful?

 

But hey, I only took the first two links.  Here's some more time sensitive ones, post pandemic.  🙄

 

https://buffett.cnbc.com/video/2022/05/02/buffett-would-bet-on-monkeys-throwing-darts-to-outperform-financial-advisers.html

 

2022 ANNUAL MEETING

Buffett would bet on monkeys throwing darts to outperform financial advisers

 

https://financhill.com/blog/investing/can-a-monkey-beat-the-market

 

Finally, the post was 'sarcasm' about relying on financial advisors as a solid, proven, homogenous group of always successful, correct stock market pickers; i.e., which they are not.

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38 minutes ago, John&LaLa said:

Bought 100 shates on Thursday @ $35 per share. Allready have OBC applied to 10 future cruises. Instant $1000 dividend. 😇

 

How do you applied this for 10 cruises in the future? I was under the impression you can only apply this a few weeks prior to cruising?

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1 minute ago, exm said:

 

How do you applied this for 10 cruises in the future? I was under the impression you can only apply this a few weeks prior to cruising?

You can apply it to as many cruises as you have booked. However, the statement of ownership cannot be more than 90 days old at the time that you apply for the credit.

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43 minutes ago, John&LaLa said:

Bought 100 shates on Thursday @ $35 per share. Allready have OBC applied to 10 future cruises. Instant $1000 dividend. 😇

How much do you have tied up in deposits with this company for the 10 cruises? If I'm not mistaken if this thing goes Chapter 11 customer deposits are just another unsecured creditor ranking behind the secured creditors.  Any U.S. consumer law lawyers out their want to chime in. 

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