NCLH Stock Price

[njhorseman]

2 hours ago, Crazy planning mom said:

This is not good.  I read on another website that their chance of bankruptcy within the next 2 years is 72%. https://www.macroaxis.com/invest/ratio/NCLH.VI/Probability-Of-Bankruptcy Would you keep your 2022 sailing?  We have a bucket list saiiling scheduled for October.

 

This quote from the piece you cited is absolutely hilarious and exposes this source's ignorance:

 

"The Probability of Bankruptcy SHOULD NOT be confused with the actual chance of a company to file for chapter 7, 11, 12, or 13 bankruptcy protection."

To say that something called a "probability" is not an "actual chance" flies in the face of the definition of the word "probability". The definition of "probability" is the chance or likelihood that an event will take place.

 

Then of course in the next sentence they say what they really mean...that "the company is having difficulty meeting its current financial obligations...".  Wow, what a revelation that is... every cruise line is in the same boat. 😁

 

We really needed these guys, whoever the heck they are , to tell us that .

[anyman]

11 minutes ago, njhorseman said:

 

This quote from the piece you cited is absolutely hilarious and exposes this source's ignorance:

 

"The Probability of Bankruptcy SHOULD NOT be confused with the actual chance of a company to file for chapter 7, 11, 12, or 13 bankruptcy protection."

To say that something called a "probability" is not an "actual chance" flies in the face of the definition of the word "probability". The definition of "probability" is the chance or likelihood that an event will take place.

 

Then of course in the next sentence they say what they really mean...that "the company is having difficulty meeting its current financial obligations...".  Wow, what a revelation that is... every cruise line is in the same boat. 😁

 

We really needed these guys, whoever the heck they are , to tell us that .

 The possibilities of a Chapter 11, or even a 12 should not be fearful to people. There both avail the company the right to reorganize while staving off the hounders for payments of debt. The key to a successful reorganization is whether the company has a future. I believe in NCL, I believe in the Cruise Industry.

[njhorseman]

4 minutes ago, anyman said:

 The possibilities of a Chapter 11, or even a 12 should not be fearful to people. There both avail the company the right to reorganize while staving off the hounders for payments of debt. The key to a successful reorganization is whether the company has a future. I believe in NCL, I believe in the Cruise Industry.

Yes, American, United and Delta airlines have all filed for bankruptcy in their histories and all emerged reorganized and continue to operate to this day. 

[At Sea At Peace]

41 minutes ago, oteixeira said:

We have had these conversations in the past (if I remember correctly).  I think the best way to say this is our opinions differ greatly on how these companies are doing.  Have a great day, and I hope you are betting with your research, which in this case would be shorting all 3 lines heavily.  Good luck to you, and I hope you wish me the same in my investing!

 

👍

 

Yes, I believe we've had these conversations.  NP.  I come across very cold and dry in my financial commentary.  😏

 

Not a betting person at all, and certainly not in stocks, especially in market segments that are distressed.  Holding no positions on any cruise line, no shorts, etc.  Just been following along as a cruise enthusiast subsequent to a career as a financial professional and after which I certainly still enjoy researching and absorbing SEC filing financial data and disclosures. 

 

I too hope they do well, however selfishly, as we hope to return to cruising on these new, beautiful ships and designs from NCL, RCL and MSC (privately held).

[BermudaBound2014]

No huge surprises with today’s release. I expect Q1 (to be released in May) will be worse since that will reflect January’s issues. Nothing here even remotely suggests that long is rational. I’m staying short- it has been very lucrative.

 

I do look forward to the day when I feel confident enough to flip long because I do want the industry to survive; but the industry is facing an uphill battle, and IMO NCL is in the worst position financially.

[oteixeira]

40 minutes ago, BermudaBound2014 said:

No huge surprises with today’s release. I expect Q1 (to be released in May) will be worse since that will reflect January’s issues. Nothing here even remotely suggests that long is rational. I’m staying short- it has been very lucrative.

 

I do look forward to the day when I feel confident enough to flip long because I do want the industry to survive; but the industry is facing an uphill battle, and IMO NCL is in the worst position financially.

There are plenty of ways to make money here.  I have been long since getting in just under 10, so I have made money there (that I wont touch, because there is a long way to go IMHO), and I make quick gains playing the swing trade between high teens and mid to upper 20s.  Done it a few times.  Basically I am playing the rise while you are playing the fall on the same ups and downs.  :)

[BermudaBound2014]

2 hours ago, oteixeira said:

There are plenty of ways to make money here.  I have been long since getting in just under 10, so I have made money there (that I wont touch, because there is a long way to go IMHO), and I make quick gains playing the swing trade between high teens and mid to upper 20s.  Done it a few times.  Basically I am playing the rise while you are playing the fall on the same ups and downs.  :

 

 

Very similar, except I cashed in my $10 shares when it hit $30 and switched to shorts for the major play. I day trade too, so swing trading has also been profitable, but right know I’m holding shorts at $32 and, like you, I feel this has a long way to go (but in the opposite direction :). 
 

I do agree, plenty of ways to make money here and i do wish you all the best with your trades :). 

[Crazy planning mom]

14 hours ago, njhorseman said:

Yes, American, United and Delta airlines have all filed for bankruptcy in their histories and all emerged reorganized and continue to operate to this day. 

Why is Genting going out completely rather than reorganizing?  What determines whether a company reorganizes rather than goes out completely?  Is the fact that NCL had been successful pre-pandemic a factor in its ability to reorganize and survive rather than dissolve?

[At Sea At Peace]

14 hours ago, njhorseman said:

Yes, American, United and Delta airlines have all filed for bankruptcy in their histories and all emerged reorganized and continue to operate to this day. 

 

Yep.  IMO, they operate 'at the pleasure' of US politicians' position (both sides) that the airline industry is a critical component of economic infrastructure.  In support, the airlines subsequently received over $74 Billion in at least three programs under one administrations CARES Act to another's American Rescue Plan.

 

The cruise lines are in an industry that (1) is certainly not deemed a critical component of economic structure and (2) is essentially non-US entities (and a large % of employees as well).  The have received $-0- and can expect $-0-.

 

I don't see ships 'going down, rather likely the reorganization of public lines (and their subsidiaries) whereby 'hedge fund and similar distressed debt investors; i.e., vultures) creditors, as usual, gain control.  Currently, following the debt trade activities is interesting from two perspectives; trying to ascertain priority (senior) creditor positions and trade % of face exchange.

 

Some believe the NCL might be the first of the big three to 'hit the wall and that certainly might be the case.  However, their relatively size and newer composition of the current and in build fleet also appears to provide more 'appetite' IMO than CCL which is a large beast, a mix of much older ships and others less desirable.  Yet, even their, the Saudi sovereign-wealth funds has already dipped their toes.

 

 

[Karaboudjan]

42 minutes ago, Crazy planning mom said:

Why is Genting going out completely rather than reorganizing?  What determines whether a company reorganizes rather than goes out completely?  Is the fact that NCL had been successful pre-pandemic a factor in its ability to reorganize and survive rather than dissolve?

I don't believe that Genting is 'going out.'  It is Crystal Cruises which is a subsidiary of Genting, so it's not the same situation as NCL, RCL or CCL.  They are the parent companies and the cruise lines are pretty much the whole pie.

[ziggyuk]

53 minutes ago, Crazy planning mom said:

Why is Genting going out completely rather than reorganizing?  What determines whether a company reorganizes rather than goes out completely?  Is the fact that NCL had been successful pre-pandemic a factor in its ability to reorganize and survive rather than dissolve?

 

Hong Kong does not have an equivalent of a chapter 11.

[98420934]

No idea if this analysis is accurate, but I thought it was an interesting take:

 

Norwegian Cruise Line: The Great Cruise Comeback

 

"The key investor takeaway is that Norwegian is far too cheap here. The market is too focused on debt levels while missing the strong profit picture on higher revenues. As the debt is repaid, the cruise line will use higher profits than 2019 to offset the additional outstanding shares to return the company back to pre-covid EPS levels of $5+. Investors should use the weakness from the war in Ukraine to finally load up on the cruise line."

[At Sea At Peace]

19 minutes ago, 98420934 said:

No idea if this analysis is accurate, but I thought it was an interesting take:

 

Norwegian Cruise Line: The Great Cruise Comeback

 

"The key investor takeaway is that Norwegian is far too cheap here. The market is too focused on debt levels while missing the strong profit picture on higher revenues. As the debt is repaid, the cruise line will use higher profits than 2019 to offset the additional outstanding shares to return the company back to pre-covid EPS levels of $5+. Investors should use the weakness from the war in Ukraine to finally load up on the cruise line."

 

I don't know what the source for the above is, but let's take a look at what such source is implying.

 

1.  Return of $5 per share.  With todays share count, that would equate to $1.8B in net income.

 

2.  Current losses, and projected quarterly burn and losses, are $4.0B annually.

 

MATH BREAK

 

From $4.0B in losses to $1.8B in net income is a SWING in earnings of $5.8B.

 

3.  NCL's total passenger revenues were $4.5B, $4.3B and $3.7B in 2019, 2018 and 2017 respectively.

 

UPDATED FACTORS

 

NCL's Fuel Cost have doubled through September 30th,  2021 to almost 20% of cruise operating expense from 9% prepandemic.

 

NCL's Long-Term Debt has double from $6B to $12B, with corresponding increases in Interest Expense.

 

I don't know what the source for the positive statement and outlook was from but it does not appear based from that of a reasonably prudent one.

Edited February 25, 2022 by At Sea At Peace

[njhorseman]

2 hours ago, Crazy planning mom said:

Why is Genting going out completely rather than reorganizing?  What determines whether a company reorganizes rather than goes out completely?  Is the fact that NCL had been successful pre-pandemic a factor in its ability to reorganize and survive rather than dissolve?

 

2 hours ago, Karaboudjan said:

I don't believe that Genting is 'going out.'  It is Crystal Cruises which is a subsidiary of Genting, so it's not the same situation as NCL, RCL or CCL.  They are the parent companies and the cruise lines are pretty much the whole pie.

 

2 hours ago, ziggyuk said:

 

Hong Kong does not have an equivalent of a chapter 11.

 

First, Genting HK is incorporated in Bermuda, not Hong Kong and while Bermuda also does not have a direct equivalent of Chapter 11, it does allow the liquidators to reorganize the company rather than liquidate if agreement of the company's creditors can be obtained. The end result would be the functional equivalent of a US Chapter 11 bankruptcy.

 

Genting HK is going out of business, not just its Crystal Cruises subsidiary. It's Genting HK that filed in Bermuda after a cascade of debt defaults triggered by Germany's refusal to provide additional loan guarantees for GHK's ship building operations in that country.

 

In the initial filing Genting HK's lawyers argued for attempting reorganization rather than liquidation, stating that creditors holding 52% of GHK's debt were in favor of reorganization. That quickly fell apart when a creditor had two of Crystal's three ocean-going ships arrested for non-payment of fuel bills. GHK had effectively abandoned Crystal by not permitting Crystal to file for Chapter 11 reorganization in the US. Crystal itself is an LLC incorporated in California. By not allowing Crystal to separately file for bankruptcy it could not protect its ships against the claims filed by the fuel supplier, which led to the ships' arrests.

[BermudaBound2014]

16 hours ago, Karaboudjan said:

I don't believe that Genting is 'going out.'  It is Crystal Cruises which is a subsidiary of Genting, so it's not the same situation as NCL, RCL or CCL.  They are the parent companies and the cruise lines are pretty much the whole pie.

Genting is going out and there is Absolutely Nothing preventing Ncl, rcl, and ccl from the same fate. There are private equity and hedge funds waiting in the wings. Saudi’s have already loaned to ccl. Chapter 7 and/or 11 seem likely. 

 

Who will come out the strongest when the music stops? I predict this might be a case of Goldilocks and the 3 bears. CCL may be too big to survive ‘as is’ because they are GIGANTIC; representing well over 50% of the cruise industry. NCL maybe too small (less than 10% of the cruise industry). RCL maybe just right to succeed as they are in the middle with 25%ish of the market. MSc is a private family owned company who also owns the largest shipping company in the world. With shipping container costs up nearly 3000%, they are a force to be reckoned with.

 

Side note/ Don’t hold me to the industry breakdown figures exactly because the numbers are reported differently depending on source, but they are pretty darn close for the purpose of this discussion. 
 

Short seems the safest bet at the moment. 

Edited February 26, 2022 by BermudaBound2014

[At Sea At Peace]

8 hours ago, BermudaBound2014 said:

 

Who will come out the strongest when the music stops? I predict this might be a case of Goldilocks and the 3 bears. CCL may be too big to survive ‘as is’ because they are GIGANTIC; representing well over 50% of the cruise industry. NCL maybe too small (less than 10% of the cruise industry). RCL maybe just right to succeed as they are in the middle with 25%ish of the market. MSc is a private family owned company who also owns the largest shipping company in the world. With shipping container costs up nearly 3000%, they are a force to be reckoned with.

 

 

Pretty straight forward summary and I agree.

 

As we witnessed in 2007, 2008 > the market enthusiasm was not fundamentally based and hence 'a mess' (take the banks just as an example (enthusiasm and hope over hard cold facts), support based on "we'll they'll never file for bankruptcy or be taken over).

 

NCL, the little one of the three, is easier to demonstrate.

 

12/31/2019 approximately $6.5B in 'book equity' 213M shares and a 'book value' of $30.50+- with a positive going forward outlook of earnings per share estimated at $4.25 per year, has a 'market CAP' of $12.5B at a market PPS of $59+-

 

FAST FORWARD

 

12/31/2021, imputed from earnings release and advanced from12/31/2020, $-0- in 'book equity' with a negative $2B loss outlook for the 1st half of 2022 alone and no reason to believe that the 2nd half of 2022 will rebound to prepandemic 100% passenger capacities, net of doubling of fuel cost as a % of cruise operating costs and interest expense on $12B of debt piling on, has a 'market CAP' of almost $8B at a market PPS of $18+-.  In the run up during 2021,  the PPS was $34+-!

 

DILUTED IMPACT

 

From 12/31/2019 to 12/31/2021 the number of common shares have increased from 213M shares to 364M shares, 151M share increase or 71%.

 

THE BIG THREE - PUBLICS

 

Generally, there are numerous similarities for RCL and CCL.  I agree that RCL might be the prize, but for the creditors in reorganization.

 

The debt markets' data stream seems to support such.

 

😟

 

 

[JustAPilot]

Truth be told we have Celebrity as the upper class cruise experience with the better service and higher end suite experience and their prices reflect that. Then we have the rest like NCL and RCL who compete for the family and experience which only worked before Covid happened and then we have Carnival who competes on price and is the Spirit airlines of the cruising experience.
 

Crystal was the first to fall because they offered a luxury experience for a none luxury price, you can only serve unlimited Champaign and caviar for $2500 a person until inflation starts to rear its head. There is nothing NCL is doing different to adapt and the stock shows that. 

[oteixeira]

57 minutes ago, JustAPilot said:

Truth be told we have Celebrity as the upper class cruise experience with the better service and higher end suite experience and their prices reflect that. Then we have the rest like NCL and RCL who compete for the family and experience which only worked before Covid happened and then we have Carnival who competes on price and is the Spirit airlines of the cruising experience.
 

Crystal was the first to fall because they offered a luxury experience for a none luxury price, you can only serve unlimited Champaign and caviar for $2500 a person until inflation starts to rear its head. There is nothing NCL is doing different to adapt and the stock shows that. 

So out of curiosity, since this is a stock thread.....what is it that Celebrity/RCL (That is who owns them) is doing different to adapt that their stock is showing?  Their stock is also very low compared to where it was trading before Covid hit, and they honestly just had a very bad earning report less then a month before NCLH did.  

[BermudaBound2014]

2 hours ago, JustAPilot said:

Truth be told we have Celebrity as the upper class cruise experience with the better service and higher end suite experience and their prices reflect that. Then we have the rest like NCL and RCL who compete for the family and experience which only worked before Covid happened and then we have Carnival who competes on price and is the Spirit airlines of the cruising experience.
 

Crystal was the first to fall because they offered a luxury experience for a none luxury price, you can only serve unlimited Champaign and caviar for $2500 a person until inflation starts to rear its head. There is nothing NCL is doing different to adapt and the stock shows that. 

I’m not following you…. At all. 

 

1) you seem to differentiate between Rcl and celebrity but these are the same company on the nyse. 
 

2) you talk about carnival as the spirit airlines, but CCL is the biggest player here by a long shot, encompassing HAL, Princess, Cunard, costa, etc…. And they also own seabourn, and we can hardly compare that to Spirit. 
 

3) Crystal fell because genting fell. 

 

1 hour ago, oteixeira said:

So out of curiosity, since this is a stock thread.....what is it that Celebrity/RCL (That is who owns them) is doing different to adapt that their stock is showing?  Their stock is also very low compared to where it was trading before Covid hit, and they honestly just had a very bad earning report less then a month before NCLH did.  

 

Nothing different (as I suspect you know :)). All three create very similar trending graphs over the last 2 years. When one goes up, they all go up. When one has a bad earnings report, all 3 drop. RCL has always traded higher with a higher market cap, but if they don’t “make it” they have the farthest to fall, by far! With that said, I short them less because I do think they a might be the  “just right” bear in my Goldilocks analogy:) 

[PaperSniper4]

On 3/9/2020 at 11:55 AM, Hrhbob said:

I was SO very proud of myself when i bought my NCL stock when it dove down to $33. As we speak it is at $21.52!  Well heck....

Oh that's nothing......I bought 100 shares of CCL for about $6000 mainly for the stock ownership OBC a few years ago....last time I checked a share was $21.😪

 

Doug

[complawyer]

we bought 100 shares at $7.00 so i'm holding on as long as possible. i figure even if the stock tanks, the most im out is $700. we blow more than that on a week end in vegas. i was tempted when it hit $32 per share, but what the h**l

[jules181]

Only read the last couple pages, but I'm surprised no one is looking at Cashflow. 

 

PnL is all opinion rather than fact based, with accounting treatments and accruals driving the numbers. 

 

The only thing that matters at this point is cashflow.  How much are they able to bring in (either through financing activities or deposits/payments on future cruises) and how does that correspond with the cash burn. 

 

Without reading the financial statements (just haven't had time to) I'm curious about how much flexibility exists in their debt issues, are they able to call them back and refinance at lower rates now that the turmoil of 2020 is behind us?  Or are they stuck with them until they mature?

 

As an investor, I just bought it (although not very much), just because $1800 gets you $100-250 (tax-free) immediate return in cruise cash on each of the 2-3 cruises I'll be taking this year.  

 

As a passenger, I can book with confidence.  It is extremely unlikely that they will cease operations.  Chapter 11...probable, but, they will continue to operate while they restructure.  Bankruptcy proceedings are all about getting the most out of the assets, and NCLs assets have the highest worth if they continue to sail with paying guests.  

[At Sea At Peace]

 

 

 

 

 

 

 

 

38 minutes ago, jules181 said:

Only read the last couple pages, but I'm surprised no one is looking at Cashflow. 

 

PnL is all opinion rather than fact based, with accounting treatments and accruals driving the numbers. 

 

The only thing that matters at this point is cashflow.  How much are they able to bring in (either through financing activities or deposits/payments on future cruises) and how does that correspond with the cash burn. 

 

Without reading the financial statements (just haven't had time to)

 

Well, you should also read the cash flow / liquidity posts IMO.  😕 

 

On 2/24/2022 at 9:00 AM, At Sea At Peace said:

Financial update finally released via SEC filing (press release 8K).

 

https://www.sec.gov/Archives/edgar/data/1513761/000117184322001310/exh_991.htm

 

Not going to sugar coat it, even without the events fomenting in Europe, there are so many 'red flags' in this filing.

 

The primary concern is 'liquidity.

 

First, their liquidity is $2.7B, of which $1.0B is in a credit commitment that concludes on August 15, 2022.  That will leave $1.7B of liquidity should such not be replaced.

 

Liquidity, Cash Burn and Financial Recovery Plan

The Company continues to take proactive measures to enhance liquidity and financial flexibility in the current environment and optimize its balance sheet. As of December 31, 2021, the Company’s total debt position was $12.4 billion and the Company’s liquidity was $2.7 billion, consisting of cash and cash equivalents, short-term investments and a $1.0 billion commitment available through August 15, 2022.

 

Then, there is their life-blood reliance on continued 'customer advances.

 

The Company’s advance ticket sales balance was $1.8 billion

 

In essence, they have no net debt or capital backed liquidity at all.

 

Then, there is the 'cash burn per month 'increasing.

 

The Company's monthly average cash burn for the fourth quarter of 2021 was approximately $345 million, slightly below the prior estimate of approximately $350 million. Looking ahead, the Company expects first quarter 2022 monthly average cash burn to increase to approximately $390 million driven by the continued phased relaunch of additional vessels.

 

So, it is a mess.

 

Global concerns now expanded beyond a crippling virus to unknown consequences even if resolved early.

 

Witnessing an already 50% increase in the most recent fuel costs per metric ton (also RCL and CCL) and using up most of the "hedging fuel derivatives" in a 30-40 window (also RCL and CCL), it just is looking so ominous for NCL to be able to sustain continuing going concern operations for 12-months.

 

They are required by SEC regulations to state such in the formal 10Q's and 10K's whether or not management believes they can support the assertion that they are a going concern 12-months out from the filing of such SEC disclosure.

 

There are consequences for not doing it, if such concern should be cautioned, but the going concern ability negative disclosure is the Kiss of D.... for creditors and cruise bookings.

 

They are essentially burning only other peoples money.

 

 

 

 

 

 

[jules181]

The liquidity note is great, but doesn't tell the whole story.  

 

They have 1.6bn in Account Receivable, which is probably growing and consistently rolling over as more people book and people pay their cruise fare 60 days out from the sailings. 

 

Someone needs to convert the indirect cash flow from operations statement to the direct method so you can see exactly how much cash came in for cruise purchases in Q4 (and F2021, although I think Q4 is a better predictor going forward, taking into account any seasonality)

 

Knowing the following will give a very good picture of exactly what the financial viability of NCL is, and if the below is favorable, I'd give it a buy

1. How much of AR was converted into cash in Q4
2. How much did AR grow in Q4
3. How much of the cash burn does #1 + the deposits paid in cover
4. Given the difference between #3 and the cash burn, how long will it take them to exhaust the $1.5bn of cash and cash equivalents on hand

And of course I'd build in some assumptions to that model to account for the fact that as each day goes by, the populace is more willing to travel and step foot on a cruise ship.  

Edited February 28, 2022 by jules181

[At Sea At Peace]

 

@jules181 I don't know where you are getting the $1.6B in accounts receivable for one, and on a Balance Sheet there are two sides' of amounts (simply debits/assets and credits/liabilities), so for two, one can't just cherry pick one asset (accounts receivable, a debit) and purport it is 'free cash ready' and then "forget the liabilities" (related credits).

 

https://www.sec.gov/Archives/edgar/data/1513761/000117184322001310/exh_991.htm

 

DECEMBER 31, 2021

 

The reported accounts receivable amount is $1.167B.

 

The reported accounts payable and accrued expenses are $233M and $1B, or $1.233B.

 

This too is selective account presentation. 

 

Overall, 'current assets' total $3.3B and 'current liabilities' total $3.7B, of which Advance Tick Sales (Customer Deposits) is the largest component at $1.56B.

 

Again, their liquidity as originally outlined in my previous post was represented that it is solely dependent on customer deposits (essentially unsecured creditors).

 

😉

 

14 hours ago, jules181 said:

The liquidity note is great, but doesn't tell the whole story.  

 

They have 1.6bn in Account Receivable, which is probably growing and consistently rolling over as more people book and people pay their cruise fare 60 days out from the sailings. 

 

Someone needs to convert the indirect cash flow from operations statement to the direct method so you can see exactly how much cash came in for cruise purchases in Q4 (and F2021, although I think Q4 is a better predictor going forward, taking into account any seasonality)

 

Knowing the following will give a very good picture of exactly what the financial viability of NCL is, and if the below is favorable, I'd give it a buy

1. How much of AR was converted into cash in Q4
2. How much did AR grow in Q4
3. How much of the cash burn does #1 + the deposits paid in cover
4. Given the difference between #3 and the cash burn, how long will it take them to exhaust the $1.5bn of cash and cash equivalents on hand

And of course I'd build in some assumptions to that model to account for the fact that as each day goes by, the populace is more willing to travel and step foot on a cruise ship.